poverty and inequality: shooting at the right target
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Poverty and inequality: shooting at the right target. Alan Freeman. [email protected]. Inequality under globalisation. 1962. 1982. 2002. Population of the rich countries. Income of the rich countries. 14. 16. 21. Inequality Index. Without China. 13. 13. 20. With China. - PowerPoint PPT PresentationTRANSCRIPT
Poverty and inequality: shooting at the right target
Alan Freeman
Inequality under globalisation
1962 1982 2002
Population of the rich countries
Income of the rich countries
Inequality Index
78%
22%
82%
18%
85%
15%
20%
80%
23%
77%
21%
79%
Index: ratio of income per head in the rich and poor countries
14 16 21Without China
With China 13 13 20
What happened under globalisation?
In 1982, the income of the advanced countries was 13 times larger, in proportion to their population, than the rest of the world.
By 2002 this ratio had hence risen to 20. The average rate of growth in real world income
per capita fell from 5% in the 1960s to 2.5% in the 1990s
The limits of internal redistribution Let us suppose a redistributionist God
Who will raise the income of as many people as possible in the poor countries to the average income of the rich countries
But will take no income at all away from the rich countries
How many people could this God make richer?
Total income of South in 2002 = $6,762 bn (avge $5/day)
Average income of North = $27,122
Number of people which $6,762 bn could sustain at $27,122 = $6,762,000,000,000/$27,122 = 249,000,000
= 5 per cent of the population of the South
In this extreme case, everyone else would get nothing at all
The basic problem
There are only two possible ways to raise the living standards of the general population of the world
Redistribute income away from the North, to the South
Raise the general growth rate of the world
Of course, some combination would work, eg Raise the general growth rate of the South so that it is higher
than that of the North But what happened under globalisation (1982-2002) was the
opposite Global stagnation + global divergence
Real income has not risen
0%
1%
2%
3%
4%
5%
6%
7%
19
61
19
63
19
65
19
67
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
Gro
wth
on
pre
vio
us
yea
r o
f w
orl
d G
DP
in c
on
sta
nt
yea
r 2
00
0 U
S d
olla
rs
World real GDP (constant year 2000 $)
Inequality has nearly doubled
10
12
14
16
18
20
22
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Inequality index: ratio of GDP per capita of rich countries to that of the poor countries
And growth is diverging
-14.5-19.835.4Rest
-8.425.4122.0Euro Area
19.968.1128.9SE Asia
20.924.824.6North America
1990-20001980-901970-80
Growth of GDP per capita
The US ‘performs’ only relatively
GDP per head of the advanced countries relative to the world
0
1
2
3
4
5
6
7
8
19
60
19
61
19
62
19
63
19
64
19
65
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66
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68
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75
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19
77
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19
79
19
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19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
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19
89
19
90
19
91
19
92
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97
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19
99
20
00
20
01
20
02
20
03
20
04
05
06
(fo
reca
st)
Advanced South-East AsiaEuro AreaNorth America
Whilst entire continents sink
GDP per head relative to world GDP per head
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002 05
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7AfricaAsiaMiddle East (left scale)Western Hemisphere (left scale)China
Data after 1980: World Economic OutlookData before 1980: World Bank World Development Indicators
What does ‘poverty’ mean?
Poverty targets such as $2 or $1 a day are ‘self-fulfilling’ as long as there is at least some growth, but don’t inform us about Escape from the poverty trap which requires above-
average growth, that is a reduction in inequality The crisis of governance
Human development is minimal and, under ‘globalisation’, went into reverse
Problems unsolved by PPP-based poverty targeting The social problem – a larger and larger number of
people are completely excluded from society The sustainability problem – larger and larger parts of
the planet are excluded from economic growth The political problem – ‘global’ elites cannot govern. They are alienated from the population They are shackled to policies which defend their private
interest at the expense of development
Measures of poverty based on need
CEPAL ‘Poverty’ = unable to purchase a basic basket
of goods ‘Indigence’ = unable to eat every day
Percentage of poor peopleNACIONAL América Latina 1980 2000 2002 2003 Pobreza 40.5 42.5 44 44.3 Indigencia 18.6 18.1 19.4 19.2TOTAL ÁREA URBANA
América Latina 1980 2000 2002 2003 Pobreza 29.8 35.9 38.4 38.9 Indigencia 10.6 11.7 13.5 13.7
NacionalVenezuela (República Bolivariana de)
1981 1994 1999 ... Pobreza 19.5 47.1 53 ... Indigencia 5.5 17.1 …TOTAL AREA URBANA
1981 1994 1999 Pobreza 25 48.7 49.4 ... Indigencia 8.6 19.2 21.7 ...
Global distance - the number of people in Latin America living under: $1 per day (UN target 1): 9,470,000,000 $3 per day: 37,620,000 £5 per hour (UK minimum wage): 90,000,000
Venezuela 1981: 90% average $241 Venezuela 2001: 97% average $147
http://iresearch.worldbank.org/PovcalNet/jsp/index.jsp
The minimum wage in Latin AmericaPaís 1980 1990 2000Argentina 131.7 28.3 100Bolivia ... 40.6 100Brasil 104.7 75.6 100Chile 66 57.7 100Colombia 93.5 100.4 100Costa Rica 75.3 91.1 100Ecuador 247.9 86 100El Salvador 291.9 101.6 100Guatemala 396.5 191.1 100Haití 306.6 225.1 100Honduras 126.3 107.4 100México 311.8 144.5 100Nicaragua ... ... 100Panamá 83.1 82.4 100Paraguay 82.7 108.2 100Perú 313.5 73.3 100República Dominicana 98.6 74.9 100Uruguay 241.3 166.4 100Venezuela (República Bolivariana de) 216.2 103.4 100