World income distribution and asian economic development 1820 2003
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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

  • World income distribution: 1820 – 1990

  • World income distribution: 1990 – 2003

  • Interpretation


World income distribution 1820 1996

World Income Distribution 1820-1996

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

  • 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


Kuznets inverted u shape

Kuznets’ Inverted U-shape


Income inequality in the world income distribution

Income Inequality in the World Income Distribution


Gini coefficient 1820 1990

Gini coefficient, 1820 - 1990


Catching up western countries

Catching-up: Western countries


Catching up asian countries

Catching-up: Asian countries


Theil by region

Theil by region


Decomposition of theil index

Decomposition of Theil Index

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


Decomposition of theil table

Decomposition of Theil: table


Decomposition of theil graph

Decomposition of Theil: graph


Two effects of asian growth

Two effects of Asian growth

(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

  • 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 Distribution1990-2003

This part is based on

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


World income distribution ppp 1990 and 2003

World income distribution, PPP, 1990 and 2003


World income inequality

World Income Inequality

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


Changes in gini coefficient

Changes in Gini coefficient


World income distribution 2003

World Income Distribution, 2003


Gini coefficient by region

Gini coefficient by region


Income distribution in asia

Income distribution in Asia


Income inequality in asia

Income Inequality in Asia

  • 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

  • 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?

  • 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

Japanese exploited Asian people ….?


Per capita income in asia

Per capita income in Asia


Income distribution in asia1

Income distribution in Asia


Japanese should work harder

Japanese should work harder?

  • 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

  • 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.


Increasing income inequality in japan

Increasing Income Inequality in Japan


Increasing suicide rate in japan

Increasing Suicide Rate in Japan


Happiness

Happiness


Evaluation of inequality

Evaluation of Inequality

  • 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

(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!


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