The globalisation of inequality

Abstract

There has been an apparently contradictory trend in the global inequality in living standards over the past quarter-century. On the one hand, global inequality between countries has decreased significantly, while on the other hand, inequality within many countries has increased, particularly in the developed economies. Both of these developments represent an historical shift. What explains these changes? To a great extent, globalisation is behind both trends. It explains in part the extraordinary South-North catch-up process, and the uneven effects of fundamental structural change in the economies of both North and South. But other factors are also at play. This paper examines these various factors, the future developments in inequality in the world and the means available to governments to contain national inequalities while still benefitting from the potential economic efficiencies of globalisation.