Globalisation may not have increased income inequality, after all
Globalisation may not have increased income inequality, after all The Economist
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Globalisation and Income Inequality: A Report on the True Global Middle Class
Introduction
This report examines the impact of globalisation on income inequality and the emergence of a true global middle class. It challenges the prevailing notion that globalisation has led to a rise in inequality within countries, and instead suggests that poverty has fallen faster than previously thought.
The Sustainable Development Goals (SDGs)
- Eradicating poverty
- Reducing inequality
- Promoting sustainable economic growth
Key Findings
- Household surveys consistently found a decrease in the number of people living in poverty before the covid-19 pandemic.
- The World Bank reported a decline in the number of individuals living on less than $2.15 a day from around 2 billion in 1990 to 659 million in 2019.
- However, this progress came at a cost, as a global “precariat” emerged, with the top 1% experiencing faster wealth accumulation.
- The World Inequality Database suggests that while inequality between countries has decreased, inequality within countries may have risen.
- Chinese and Indian elites have experienced the greatest relative wealth growth, while American and European plutocrats have also seen significant gains.
- A new study by economists at Columbia University and the New York branch of the Federal Reserve challenges this narrative.
- The study finds that as the poor become richer, they are more likely to understate their income, leading to an underestimation of poverty reduction and a potential decrease in inequality within countries.
- The researchers analyze the difference between income estimates from regional household surveys and gross domestic product, finding that the richer an area, the larger the gap tends to be.
- This suggests that as individuals transition from subsistence farming to small business ownership or market trading, they have more incentive to mislead tax authorities.
- If these findings hold true, it would indicate the emergence of a true global middle class that is less vulnerable to financial crises and pandemics.
Conclusion
While this study challenges prevailing beliefs about global income inequality, it is important to note that economists have been debating this issue for years. The quality of data and assumptions underlying such research are subject to scrutiny and further investigation. Nevertheless, understanding the impact of globalisation on income distribution is crucial for achieving the Sustainable Development Goals and promoting a more equitable world.
SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 1: No Poverty | 1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day | Number of people living on less than $1.25 a day |
| SDG 10: Reduced Inequalities | 10.1 By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average | Growth rate of income for the bottom 40% of the population |
1. Which SDGs are addressed or connected to the issues highlighted in the article?
SDG 1: No Poverty
The article discusses the fall in the number of people living in poverty before the COVID-19 pandemic. It mentions that household surveys consistently found a decrease in poverty rates. This aligns with SDG 1, which aims to eradicate extreme poverty for all people everywhere.
SDG 10: Reduced Inequalities
The article explores the topic of income inequality within countries. It mentions that within countries, inequality may have risen, but a new study challenges this by suggesting that poverty has fallen faster than previously thought. This relates to SDG 10, which focuses on reducing inequalities within and among countries.
2. What specific targets under those SDGs can be identified based on the article’s content?
Target 1.1: By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day
The article mentions that the World Bank counted 659 million people living on less than $2.15 a day in 2019, down from around 2 billion in 1990. This indicates progress towards eradicating extreme poverty.
Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average
The article discusses income inequality within countries and how it may have risen. However, the new study challenges this by suggesting that poverty has fallen faster than previously thought. This implies progress towards achieving income growth for the bottom 40% of the population.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
The article does not explicitly mention specific indicators to measure progress towards the identified targets. However, it provides information on the number of people living on less than $2.15 a day, which can be used as an indicator for Target 1.1. Additionally, the discussion on income inequality within countries implies the need for indicators related to income growth for the bottom 40% of the population, which can be used to measure progress towards Target 10.1.
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: economist.com
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