Thursday, January 31, 2013

Global Inequality: By The Numbers

This is an old blog post from the World Bank – I’m catching up on my reading – but still very relevant. Branko Milanovic is an acknowledged expert on global inequality (his “The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality” is a great, non-technical introduction to the subject), and this post takes a fresh look at the issue (excerpt):

The Real Winners and Losers of Globalization

It is generally thought that two groups are the big winners of the past two decades of globalization: the very rich, and the middle classes of emerging market economies…

…However, thanks to a database of household surveys put together recently by the World Bank, we can actually find out for the first time, from a single and consistent data source, who the real winners and losers of globalization are. The results give us a much more finely grained picture of the effects of the two recent decades of globalization…

…What parts of the global income distribution registered the largest gains between 1988 and 2008? As figure below shows, it is indeed among the very top of the income distribution and among the emerging global middle class, which includes more than a third of the world’s population, that we find most significant increases in per capita income…

…The top 1% has seen its real income rise by more than 60% over those two decades. (All the amounts are expressed in 2005 international dollars.)

An even greater increase was realized by those parts of the global income distribution that lie around the median: almost 80% real increase at the median itself, and some 70% around it.

It is there, between the 50th and 60th percentile of global income distribution (which in 2008, includes people with annual after-tax per capita incomes or consumption between 1,100 and 1,600 international dollars) that we find some 270 million Chinese, 40 million Indians, 35 million Indonesians, and about 20 million people each from Brazil, Egypt and Mexico.

The surprise is also that those at the bottom third of the global income distribution have also made significant gains, with real incomes rising between more than 40% and up to 60%. The only exception is the poorest 5% of the population whose real incomes have increased by 16% only…

…The biggest “non-winner” (other than the very poorest 5%) of globalization were those between the 80th and 90th percentile of the global income distribution whose real income gains were in single digits. These people, who can be called a global upper-middle class, include many from former Communist countries and Latin America, as well as citizens of rich countries with stagnant real incomes.

…Very interesting developments happened among the top quartile: the top 1%, and somewhat less so the top 5%, gained significantly, while the next 20% in the global income distribution either gained very little or faced almost stagnant real incomes…

There’s not much I can add to that except to wish that the database was online – you can look at the chart of income gains through the link provided above. The whole blog post is worth the read.


  1. Thanks, Nurhisham.