Global Inequality

by

Ayse Kaya

• LAST REVIEWED: 29 November 2011
• LAST MODIFIED: 29 November 2011
• DOI: 10.1093/obo/9780199756223-0025

Introduction

The study of global economic inequality focuses primarily on the income inequalities across states or across individuals in the world. While the former type of inequality is defined as “international inequality,” the latter kind is generally referred to as “global inequality.” Although the primary focus is on income measures, such as measures of per capita gross domestic product of countries, the literature also focuses on other aspects of inequality across states and individuals, such as measures of wealth, disparities in life expectancy, and gender inequalities. It should be noted that establishing firm causal links between globalization, simply understood as increasing openness to trade and investment flows, and increasing inequality within and across countries can be an elusive task. Regardless of whether and the extent to which globalization can be identified as the culprit in putative increases in inequality, discussions on international or global inequality (herein referred to as “worldwide inequalities”) are embedded in a number of debates surrounding globalization. First, the debate on what engenders economic growth is crucial to the discussion on economic inequality, with the assumption that the absence of economic growth equals the absence of economic development, strictly defined. The literature on the relationship between inequality and growth also illuminates the crucial social and political repercussions of inequality, including inequality’s negative effects on social cohesion. Second, the issue of worldwide inequality raises a number of questions about the role of key international organizations. Crucially, economic inequality can easily translate into political inequality, such as disparities in representation and voice, in international organizations. In this respect, it can not only undermine the legitimacy of these organizations but also hamper efforts at international cooperation. When shaped by the rich, these organizations can easily underemphasize, as some authors contend, issues that matter deeply to the poor, including migration as a tool of economic development. At the same time, it is important to assess whether foreign aid provided by the rich—often, though not exclusively, through international organizations—engenders economic development. Authors disagree on how and whether aid helps. Third, the issue of worldwide inequalities invokes normative questions, such as whether global inequality matters, what the duties of the rich toward the poor across the world should be, and whether such duties should exist in the first place. In exploring the duties of the rich toward the poor, scholars once again emphasize many of the negative repercussions of inequality, including reduced levels of social cohesion (nationally and internationally), power asymmetries between the rich and the poor at international organizations, and the way inequality stifles the political voice of the poor, both domestically and in international forums. Fourth, there is a lively debate on the interrelationship between inequality and violent conflict, such as civil wars and terrorism, with authors disagreeing on the extent to which and the mechanism through which poverty and inequality relate to incidences of violence. The literature on global economic inequality is inevitably dominated by econometric analyses.

General Overviews on Globalization

Globalization, understood as openness to trade and investment and the institutions that govern this interdependence, is a historical process (Held, et al. 1999; O’Rourke and Williamson 1999; Wolf 2004; and Kaplinsky 2005). The following works are chosen for their significance to understanding worldwide inequalities, as they discuss, implicitly or explicitly, not only how the world became more integrated again in the post–World War II period but also how a specific set of principles—neoliberal principles of privatization, liberalization, and deregulation—came to mark globalization, especially from the 1980s onward (see especially Singer 2002 and Stiglitz 2006). For instance, as Pritchett 1995 argues, globalization has accompanied divergence between rich and poor countries, renewing the debate on worldwide inequality, and Hurrell and Woods 1995 emphasizes asymmetric influences of globalization on states with different strengths. Wolf 2004 largely emphasizes the positive repercussions of globalization on states and narrowing interstate inequalities. Other relevant work on globalization is listed under the heading International Organizations and Global Inequality (for instance, Bhagwati 2004). Gilpin 2001 discusses key debates and issues in international political economy, including the evolution of theories of economic development.

• Gilpin, Robert. Global Political Economy: Understanding the International Economic Order. Princeton, NJ: Princeton University Press, 2001.

  The book provides a thorough overview of key debates and theories regarding the global economy. On the topic of economic development, chapter 12 discusses different theories of economic development, ranging from import substitution to neoliberal economics. In doing so, Gilpin discusses major classics, including those by Arthur Lewis, Alexander Gerschenkron, Gunnar Myrdal, and Albert Hirschman, among others.

• Held, David, Anthony McGrew, David Goldblatt, and Jonathan Perraton. Global Transformations: Politics, Economics, and Culture. Stanford, CA: Stanford University Press, 1999.

  This work is a comprehensive analysis of globalization that compares the first (roughly from the 1870s to World War I) and second (post–World War II) periods of globalization. Of particular concern to this topic, it discusses the stratifications—developed versus developing countries—as well as the changing role of developing countries in the global economy.

• Hurrell, Andrew, and Ngaire Woods. “Globalisation and Inequality.” Millennium: Journal of International Studies 24.3 (1995): 447–470. Available online for purchase or by subscription.

  DOI: 10.1177/03058298950240031001

  This article discusses the asymmetric impact of globalization on states with varying strengths and also includes a systematic discussion of the liberal accounts of globalization as well as the emergence of a transnational civil society.

• Kaplinsky, Raphael. Globalization, Poverty and Inequality: Between a Rock and a Hard Place. Cambridge, UK: Polity, 2005.

  With students in mind, this book provides a useful analysis of the genesis of the global economy. The core argument is that globalization, by altering production and trade relations, exacerbates global poverty.

• O’Rourke, Kevin, and Jeffrey G. Williamson. Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy. Cambridge, MA: MIT Press, 1999.

  Focusing on the first period of globalization (late 19th century), the authors trace the interaction among forces of globalization, trade and migration, and domestic policies.

• Pritchett, Lant. “Divergence, Big Time.” Policy Research Working Paper 1522. Washington, DC: World Bank, 1995.

  This article argues that a prominent feature of modern economic relations is the shocking growth of the gap between the average incomes of rich and poor countries. It shows the divergence between the growth rates of developed and developing countries and the convergence within the former group of countries.

• Singer, Peter. One World: The Ethics of Globalization. Terry Lectures Series. New Haven, CT: Yale University Press, 2002.

  The book, with a utilitarian focus, examines the kind of ethical questions that confound a globalized world. Case studies include climate change, humanitarian intervention, the rich’s assistance to the world’s poor, and world trade.

• Stiglitz, Joseph. Making Globalization Work. New York: Norton, 2006.

  This expands on Stiglitz 2002 (see International Organizations and Global Inequality) to discuss the asymmetric influences of international organization on developed versus developing countries, including the role of intellectual property rights in trade and the management of global financial markets.

• Wolf, Martin. Why Globalization Works. New Haven, CT: Yale University Press, 2004.

  In addition to providing a comparison between the first and second periods of globalization, this book argues that openness to trade and investment allowed many developing countries to experience spectacular growth recently. The book’s chapter on inequality can be read as putting forward an account of “partial convergence”—globalization has narrowed the gap between some rich and poor countries, thanks to economic growth in the latter.