Skip to main content
SpringerLink
Log in
Book cover

Global Governance in Transformation pp 201–220Cite as

Global Versus National Income Inequalities and Their Impact on Global Governance

  • Chapter
  • First Online:

  • 980 Accesses

Abstract

The debate on the increasing income and wealth inequalities in the USA and some other advanced economies often disregards the opposite trend, i.e. decreasing income inequalities between individuals throughout the entire world. The purpose of this chapter is to examine the potential trade-off between both trends and the role of globalisation in such a trade-off. Another important question relates to the impact of this trade-off on global governance. On the one hand, catch-up growth in emerging-market economies and the resulting decrease in global inequality can help reduce the economic and social sources of political conflicts and tensions between countries and enable their cooperation on various issues such as trade, environment, climate change, health, fighting terrorism, managing migration and many others. On the other hand, growing income inequalities within advanced economies can undermine the existing global political and economic order and boost protectionism and nationalistic egoism in many areas.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   109.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   139.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   139.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    See Ferreira (1999) for a broader overview of theories of growth and distribution and Furman (2017) for discussion on whether inequalities are harmful or helpful for economic growth.

  2. 2.

    This is a substantially modified and expanded version of Dabrowski (2018).

  3. 3.

    See Grigoryev and Pavlyushina (2019) for a critique of the Gini coefficient and Slay et al. (2014) for a discussion of alternative tools for measuring.

  4. 4.

    For several countries presented in Figs. 13.1, 13.2, 13.3 and 13.4—e.g. China, France, Mexico, Nigeria and Russia—the Gini coefficients in Version 6.2 of the SWID differ substantially from Version 5.1 published in July 2016.

  5. 5.

    This is also confirmed by other studies, for example, Gordon (2016: 608–613).

  6. 6.

    This is exactly the message that one can get from Seguino et al.’s (2013) report, beginning with its title ‘Humanity Divided’. In particular, see ‘Overview’. The same applies to Alvaredo et al. (2017) and Ridao-Cano and Bodewig (2018).

  7. 7.

    Darvas (2016b) provides a comprehensive overview of the most frequently used statistical methods and tests their accuracy based on four countries (the USA, Australia, Canada and Turkey) that collect both national and subnational inequality statistics. He comes to the conclusion that the method of two-parameter distribution is the most accurate and uses it to compute global and regional Gini coefficients.

  8. 8.

    Not all EMEs grew rapidly enough to contribute to GDP per-capita convergence and diminishing global income inequalities. This applies, for example, to a substantial part of sub-Saharan Africa that has de-converged in relative terms since the early 1980s. That is, they diminished the positive contribution made by China, India and other fast-growing EMEs.

  9. 9.

    Consider the role of Silicon Valley, Wall Street or the City of London.

  10. 10.

    Michael Kremer and Eric Maskin developed a theoretical model that explains income polarisation in EMEs as a result of what they call the ‘internationalisation of the production process’, i.e. the division of labour within GVC (Maskin 2015). The same model can explain income polarisation in AEs.

  11. 11.

    The concept of ‘superstars’ was first introduced by Rosen (1981).

References

  • Alesina, A., & Perotti, R. (1996). Income distribution, political instability, and investment. European Economic Review, 40(6), 1203–1228.

    Article  Google Scholar 

  • Alvaredo, F., Chancel, L., Piketty, T., Saez, E., & Zucman, G. (2017). World inequality report 2018. World Inequality Lab.

    Google Scholar 

  • Anand, S., & Segal, P. (2008). What do we know about global income inequality? Journal of Economic Literature, 46(1), 57–94.

    Article  Google Scholar 

  • Antràs, P., et al. (2017). Globalisation, inequality and welfare. Journal of International Economics, 108, 387–412.

    Article  Google Scholar 

  • Atkinson, A. B., & Brandolini, A. (2010). On analyzing the world distribution of income. The World Bank Economic Review, 24(1), 1–37.

    Article  Google Scholar 

  • Baldwin, R. (2016). The great convergence: Information technology and the new globalisation. Cambridge: The Belknap Press of Harvard University Press.

    Book  Google Scholar 

  • Bourguignon, F. (2017). The globalisation of inequality. Princeton: Princeton University Press.

    Book  Google Scholar 

  • Bourguignon, F., & Morrisson, C. (2002). Inequality among world citizens: 1820-1992. American Economic Review, 92(4), 727–744.

    Article  Google Scholar 

  • Bruegel Dataset. (n.d.). Global and regional Gini coefficients. http://bruegel.org/publications/datasets/global-and-regional-gini-coefficients/.

  • Dabrowski, M. (2018). Examining interrelation between global and national income inequalities. Russian Journal of Economics, 4(3), 266–284.

    Article  Google Scholar 

  • Dadush, U. (2018). The economic effects of refugee return. Economics: The Open-Access, Open-Assessment E-Journal, 12(2018–33), 1–17.

    Google Scholar 

  • Darvas, Z. (2016a). Brexit vote boosts case for inclusive growth. Bruegel Blog. Accessed April 26, 2019, from http://bruegel.org/2016/07/brexit-vote-boosts-case-for-inclusive-growth/

  • Darvas, Z. (2016b). Some are more equal than others: New estimates of global and regional inequality (IEHAS Discussion Papers №. MT-DP-2016/35). Budapest: Hungarian Academy of Sciences, Institute of Economics.

    Google Scholar 

  • Darvas, Z. (2018). Global income inequality is declining—Largely thanks to China and India. Bruegel Blog. Accessed April 26, 2019, from http://bruegel.org/2018/04/global-income-inequality-is-declining-largely-thanks-to-china-and-india/

  • Darvas, Z., & Efstathiou, K. (2016). Income inequality boosted Trump vote. Bruegel Blog. Accessed April 26, 2019, from http://bruegel.org/2016/11/income-inequality-boosted-trump-vote/

  • Denk, O. (2015). Who are the top 1% earners in Europe? (OECD Economics Department Working Papers No. 1274). Paris: OECD Publishing.

    Google Scholar 

  • Dornbusch, R., & Edwards, S. (1989). Macroeconomic populism in Latin America (NBER Working Paper №. 2986).

    Google Scholar 

  • Eatwell, R., & Goodwin, M. (2018). National populism: The revolt against liberal democracy. UK: Penguin.

    Google Scholar 

  • The Economist. (2012). Income inequality: Who exactly are the 1%?. The Economist. Accessed April 25, 2019, from https://www.economist.com/united-states/2012/01/21/who-exactly-are-the-1

  • Ferreira, F. H. (1999). Inequality and economic performance: A brief overview to theories of growth and distribution. Washington, DC: World Bank.

    Google Scholar 

  • Ferreira, F. (2016, April 27). Kuznets waves and the great epistemological challenge to inequality analysis. World Bank Development Impact Blog.

    Google Scholar 

  • Frankel, J. (2018, January 2). Does trade fuel inequality? Project Syndicate.

    Google Scholar 

  • Furman, J. (2017). Should policymakers care whether inequality is helpful or harmful for growth? In Prepared for the rethinking macroeconomic policy conference. Washington, DC: Peterson Institute.

    Google Scholar 

  • Goldin, C., & Margo, R. A. (1992). The great compression: The wage structure in the United States at mid-century. The Quarterly Journal of Economics, 107(1), 1–34.

    Article  Google Scholar 

  • Gordon, R. J. (2016). The rise and fall of American growth: The US standard of living since the civil war (Vol. 70). Princeton University Press.

    Google Scholar 

  • Grigoryev, L. M., & Pavlyushina, V. A. (2019). Relative social inequality in the world: Rigidity against the economic growth, 1992–2016. Russian Journal of Economics, 5(1), 46–66.

    Article  Google Scholar 

  • IMF. (2007). Globalisation and inequality. In World economic outlook: Globalisation and inequality. Washington, DC: The International Monetary Fund.

    Google Scholar 

  • Jaumotte, F., et al. (2008). Rising income inequality: Technology, or trade and financial globalisation? In: IMF Working paper WP/08/185.

    Google Scholar 

  • Kharas, H. (2017). The unprecedented expansion of the global middle class: An update (Global Economy and Development Working Paper 100). Brookings Institution.

    Google Scholar 

  • Kharas, H., & Seidel, B. (2018). What’s happening to the world income distribution? The elephant chart revisited (Global Economy and Development Working Paper 114). Brookings Institution.

    Google Scholar 

  • Krugman, P. R. (1993). Geography and trade. Cambridge, MA: MIT Press.

    Google Scholar 

  • Kuznets, S. (1955). Economic growth and income inequality. The American Economic Review, 45, 1–28.

    Google Scholar 

  • Lakner, C., & Milanovic, B. (2013). Global income distribution: From the fall of the Berlin Wall to the Great Recession. Washington, DC: The World Bank.

    Google Scholar 

  • Lang, V. F., & Tavares, M. M. (2018). The distribution of gains from globalisation (Working Paper WP/18/54). International Monetary Fund.

    Google Scholar 

  • Lewis, W. A. (1954). Economic development with unlimited supplies of labour. The Manchester School, 22(2), 139–191.

    Article  Google Scholar 

  • Li, H., et al. (1998). Explaining international and intertemporal variations in income inequality. The Economic Journal, 108(446), 26–43.

    Article  Google Scholar 

  • Maskin, E. (2015). Why haven’t global markets reduced inequality in emerging economies? The World Bank Economic Review, 29(suppl_1), S48–S52.

    Article  Google Scholar 

  • Milanovic, B. (2012). Global income inequality by the numbers: In history and now—An overview. Washington, DC: The World Bank.

    Book  Google Scholar 

  • Milanovic, B. (2014). The return of “patrimonial capitalism”: A review of Thomas Piketty’s capital in the twenty-first century. Journal of Economic Literature, 52(2), 519–534.

    Article  Google Scholar 

  • Milanovic, B. (2016). Global inequality: A new approach for the age of globalisation. Harvard University Press.

    Google Scholar 

  • Muller, E. N. (1988). Democracy, economic development, and income inequality. American Sociological Review, 53(1), 50–68.

    Article  Google Scholar 

  • Pichelmann, K. (2015). When ‘secular stagnation’meets Piketty’s capitalism in the 21st century. Growth and inequality trends in Europe reconsidered. Directorate General Economic and Financial Affairs, European Commission.

    Google Scholar 

  • Piketty, T. (2014). Capital in the twenty-first century. Cambridge, MA: The Belknap Press of Harvard University Press.

    Book  Google Scholar 

  • Piketty, T. (2018). Brahmin left vs merchant right: Rising inequality and the changing structure of political conflict (WID. World Working Paper, 7).

    Google Scholar 

  • Ravallion, M. (2018). Inequality and globalisation: A review essay. Journal of Economic Literature, 56(2), 620–642.

    Article  Google Scholar 

  • Ridao-Cano, C., & Bodewig, C. (2018). Growing united: Upgrading Europe’s convergence machine. World Bank report on the European Union. Washington, DC: World Bank.

    Google Scholar 

  • Rodrik, D. (2011). The globalisation paradox: Democracy and the future of the world economy. New York: WW Norton.

    Google Scholar 

  • Rognlie, M. (2014). A note on Piketty and diminishing returns to capital.

    Google Scholar 

  • Rosen, S. (1981). The economics of superstars. The American Economic Review, 71(5), 845–858.

    Google Scholar 

  • Sachs, J. D. (1989). Social conflict and populist policies in Latin America (NBER Working Paper №. 2897).

    Google Scholar 

  • Sachs, J. D. (2017). America, we still have a jobs problem. CNN. Accessed April 26, 2019, from https://edition.cnn.com/2017/07/07/opinions/americas-jobs-problem-sachs/index.html

  • Sala-i-Martin, X. (2006). The world distribution of income: Falling poverty and… convergence, period. The Quarterly Journal of Economics, 121(2), 351–397.

    Article  Google Scholar 

  • Seguino, S., et al. (2013). Humanity divided: Confronting inequality in developing countries. New York, NY: UNDP.

    Google Scholar 

  • Slay, B., et al. (2014). Poverty, inequality, and vulnerability in the transition and developing economies of Europe and Central Asia. New York, NY: UNDP Regional Bureau for Europe and CIS, UNDP Bureau for Policy and Programme Support.

    Google Scholar 

  • Solt, F. (2016). The standardised world income inequality database. Social Science Quarterly, 97(5), 1267–1281.

    Article  Google Scholar 

  • Stiglitz, J. (2016). Globalisation and its new discontents. Project Syndicate, 5(8).

    Google Scholar 

  • Wolf, M. (2004). Why globalisation (worksю №3). Yale University Press.

    Google Scholar 

  • World Bank. (2016). Poverty and shared prosperity 2016: Taking on inequality. Poverty and shared prosperity series. Washington, DC: World Bank.

    Book  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. National Research University Higher School of Economics, Moscow, Russia

    Marek Dabrowski

  2. Bruegel, Brussels, Belgium

    Marek Dabrowski

  3. CASE–Center for Social and Economic Research, Warsaw, Poland

    Marek Dabrowski

Authors
  1. Marek Dabrowski
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Marek Dabrowski .

Editor information

Editors and Affiliations

  1. School of World Economy, National Research University Higher School of Economics, Moscow, Russia

    Leonid Grigoryev

  2. School of Politics and International Relations, University of Kent, Canterbury, UK

    Adrian Pabst

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Dabrowski, M. (2020). Global Versus National Income Inequalities and Their Impact on Global Governance. In: Grigoryev, L., Pabst, A. (eds) Global Governance in Transformation. Springer, Cham. https://doi.org/10.1007/978-3-030-23092-0_13

Download citation

Publish with us

Policies and ethics

Search

Navigation