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World Income Distribution and Asian Economic Development: 1820-2003. The International Development Economics Associates (IDEAs) ’ workshop on "Development Experiences and Policy Options for a Changing World ” 3-5 th June, 2007 Tsinghua University, Beijing, China Ikemoto Yukio

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World income distribution and asian economic development 1820 2003

World Income Distribution and Asian Economic Development: 1820-2003

The International Development Economics Associates (IDEAs)’ workshop on

"Development Experiences and Policy Options

for a Changing World”

3-5th June, 2007

Tsinghua University, Beijing, China

Ikemoto Yukio

Institute of Oriental Culture

The University of Tokyo


Contents
Contents 1820-2003

  • World income distribution: 1820 – 1990

  • World income distribution: 1990 – 2003

  • Interpretation


World income distribution 1820 1996
World Income Distribution 1820-20031820-1996

KOKUBUN Keisuke, IKEMOTO Yukio and HAMASHIMA Atsuhiro, "Asian Economic Development in World Income Distribution: 1820-1996," The Memoirs of The Institute of Oriental Culture no.149, 2006.3, pp. 33-56.

http://repository.dl.itc.u-tokyo.ac.jp/ dspace/bitstream/2261/2314/1/ioc14909.pdf


Assumption
Assumption 1820-2003

  • Income inequality within country is neglected. This does not make any significant differences so long as only its trend matters.

  • National income is expressed in terms of PPP (purchasing power parity).


Catch up process
Catch-up Process 1820-2003


Kuznets inverted u shape
Kuznets 1820-2003’ Inverted U-shape






Theil by region
Theil by region 1820-2003


Decomposition of theil index
Decomposition of Theil Index 1820-2003

Theil Index = Between-region component

+ within-region component

Between-region component = Inequality which ignores inequality within each region

Within-region component = Sum of weighted regional inequality




Two effects of asian growth
Two effects of Asian growth 1820-2003

(1) Asian economies were catching up the Western countries, which decreased world income inequality.

(2) The catching-up process in Asia increased inequality in Asia.


Conclusion 1820 1990
Conclusion: 1820 - 1990 1820-2003

  • World income inequality changed as Kuznets’ hypothesis predicted.

  • World income inequality decreased after the 1980s.

  • This was brought about by the catching-up process of Asian countries.

  • However, this, on the other hand, increased inequality among Asian countries.


World income distribution 1990 2003
World Income Distribution 1820-20031990-2003

This part is based on

Kurata Masamitsu, “Economic Analysis of Inequality: Reconsideration of Concepts and Estimation of World Income Inequality” March 2007.



World income inequality
World Income Inequality 1820-2003

  • World income inequality decreased after 1990, mainly due to the rapid economic growth of China.






Income inequality in asia
Income Inequality in Asia 1820-2003

  • Income inequality in Asia also decreased mainly due to the rapid economic growth of China.

  • This means the Asian economies entered the equalizing phase of Kuznets’ inverted U-shape hypothesis.


Conclusion 1990 2003
Conclusion: 1990 - 2003 1820-2003

  • World income inequality decreased very rapidly after 1990s.

  • This was brought about by the catching-up of Asian countries, especially China.

  • In this period, inequality within Asia also decreased very rapidly due to the rapid growth of China.


So what
So what? 1820-2003

  • Is the equalization of income distribution among countries good?

  • This does not tell us how people’s life changed. It just suggest the life may improved.

  • We need to know more about the life of people.


Interpretation marxist view
Interpretation: Marxist view 1820-2003

Japanese exploited Asian people ….?




Japanese should work harder
Japanese should work harder? 1820-2003

  • Now Japan is no longer the biggest economy in Asia in terms of PPP.

  • A student commented, “Japanese should work harder to recover the No.1 position.”

  • I ask her “What does it mean for Japanese people’s life?”

  • We are not working for our country to be No.1.


Neo classical view
Neo-classical view 1820-2003

  • Japanese are rich because they are more productive.

  • Some people misunderstand this as if it shows “superiority” of Japanese people.

  • This is “Rational Fool” (Amartya Sen) who cannot distinguish between different concepts; richness and superiority.

  • Japan has its own problems.




Happiness
Happiness 1820-2003


Evaluation of inequality
Evaluation of Inequality 1820-2003

  • Income may not be a good indicator of people’s life.

  • Income inequality may not indicate inequality of life.

  • Quality of Life (QOL)

  • Human Development Indicator (UNDP)

  • Capability Approach by Amartya Sen


References
References 1820-2003

(1) Amartya Sen, Inequality Reexamined, 1992.

This book insists to consider inequality in terms of capability rather than income because income is an inappropriate indicator of human well-being. This applies to poverty.

(2) Wilkinson, The Impact of Inequality, 2006.

This book analyzes the impact of inequality on health. In more unequal society, people suffer health problems more.


Thank you
Thank you! 1820-2003


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