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CATCH UP AND EMERGING DIVERGENCES:
Can it Reduce Inequality?
Deepak Nayyar
Institute of Social Studies
The Hague
8th October 2015
AN OVERVIEW
•
Catching Up: Developing Countries in the World
Economy
•
Unequal Outcomes: Exclusion of Geographical Spaces
•
Divergences: Old and New: Exclusion of People
•
Catch Up and Inequality: The Past and the Future
Slide 2
I. CATCHING UP
Developing Countries in the World Economy
•Output, growth and income
•Catch up in industrialization
•Engagement with the world economy
Slide 3
II. UNEQUAL OUTCOMES
Exclusion of Geographical Spaces
•Across continents: Asia, Africa and Latin America
•Between country-groups: Next-14, of which BRICS, and
LDCs
•Regional disparities within countries: Next-14 and
elsewhere
Slide 4
III. DIVERGENCES: OLD AND NEW
Exclusion of People
Income distribution in the world
• Inter-country
• Inter-personal
Emerging divergences in the developing world
• Between country-groups: LDCs, Next-14, BRICS and others
• Divergence and convergence: incomes per capita
Falling yet persistent poverty
• Significant reduction in absolute poverty: perennial poor
• Persistent, and increased, relative poverty: vulnerable poor
The underlying factors
• Rising inequality within countries: particularly Next-14
• Markets and globalization: growing inequality everywhere
Slide 5
Table 1
Divergence and Convergence in GDP per capita between LDCs, the Next-14, BRICS,
Developing Countries, Industrialized Countries and the World Economy: 1980-2013
(US dollars in current prices at market exchange rates)
1980
1990
2000
2010
2013
Least Developed
Countries
283
301
282
743
928
The Next-14
648
966
1597
4368
5549
Of which BRICS
416
561
959
3613
4790
Other Developing
Countries
1645
1373
1827
4197
5067
Developing Countries
791
964
1465
3787
4731
Industrialized
Countries
9609
19329
25599
38683
40944
WORLD
2728
4191
5426
9237
10513
Source: United Nations, UN National Accounts Statistics and Population Statistics
Slide 6
% of GDP per capita in World Economy
Figure A
GDP per capita in LDCs, the Next-14, BRICS and Developing Countries as a percentage of
GDP per capita in the World: 1980-2013
70
60
50
40
30
20
10
0
1980
1990
2000
Least Developed Countries
The Next 14
Developing Countries
BRICS
2010
2013
Other Developing Countries
Source: United Nations, UN National Accounts Statistics and Population Statistics
Slide 7
Table 2
Income Distribution Changes in the Next-14: 1980 – 2010
(Gini Coefficients)
(US dollars in current prices at market exchange rates)
Country
1980
1990
2000
2005
2010
Latest Data
Argentina
41.6
43.1
48.0
47.0
42
41 (2011)
Brazil
57.4
60.5
58.8
53.7
52 (2009)
Chile
53.2
55.7
54.0
50.9
50.1 (2011)
China
32.0
34.6
39.0
46.9
45 (2012)
Egypt
34.0
31.9
37.8
32.1
31
India
31.4
29.6
31.7
36.8
36.8
Indonesia
35.6
32.8
31.0
39.4
38
39 (2012)
South Korea
38.6
34.9
37.2
32.6
31
31.1 (2012)
Malaysia
50.6
44.2
44.3
40.3
Mexico
51.6
53.1
55.6
49.0
South Africa
49.0
63.0
57.8
67.4
Taiwan
27.7
31.2
31.2
30.0
Thailand
44.1
42.9
43.1
42.4
Turkey
52.0
46.5
46.0
44.8
Source: UNU-WIDER World Income Inequality Database (WIID)
40.1 (2014)
46.6
69.4 (2011)
31.8
40.8 (2009)
40.2
40 (2013)
Slide 8
IV. CATCH UP AND INEQUALITY
The Past and the Future
• Two propositions
• Growth matters: necessary but not sufficient
• Growth, inequality and poverty: a triangular
relationship
• Two hypotheses
• Catch up: essential for reducing inequality
• Catch up: unsustainable without reducing
inequality
Slide 9