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Inequality. Inconsistent with UN Charter vision Worsened by aspects of globalization Confounds poverty reduction efforts Not only in developing countries Multidimensional and compromises development, security and human rights Frustrates achievement of MDGs .

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inequality
Inequality
  • Inconsistent with UN Charter vision
  • Worsened by aspects of globalization
  • Confounds poverty reduction efforts
  • Not only in developing countries
  • Multidimensional and compromises development, security and human rights
  • Frustrates achievement of MDGs
slide3

We cannot advance the development agenda without addressing the challenges of inequality within and between countries – the widening gap between skilled and unskilled workers, the chasm between the formal and informal economies, the growing disparities in health, education and opportunities for social and political participation.

Kofi Annan, Secretary-General, UN

slide4

Inequality hinders growth

and increases poverty

Poverty

Lack of economic power

Lack of socio-political power

  • Low income
  • Low assets
  • Denial of human rights
  • Discrimination
income gap widened in recent years
Since 1980s, inequality has risen in most countries in all world regions

Income inequality trends in 73 countries for which data are available (1950s-1990s)

Risen in 48 countries

Relatively constant in 16 countries

Declined in 9 countries

Wealthiest 10% of global population increased share of global income from 51.6% to 53.4% (1980-92)

Related to greater wealth concentration

Income gap widened in recent years
hunger and malnutrition
Hunger and Malnutrition
  • Since 2000, the average number of food emergencies per year has been 30, compared with 15/year in 1980s
  • Sustained nutrition deprivation affects 852 million people
  • 1 billion overweight adults globally
slide11

Inequality Exacerbates Poverty

Income distribution

Political

representation

Productive resources

Opportunities

Basic social

services

Markets and

information

slide12

World

53

-8

81

20

15

70

East Europe + Central Asia

23

2

19

Middle East + North Africa

25

-3

3

Latin America + Caribbean

47

-23

-252

East Asia + Pacific

77

2

134

Sub-Saharan Africa

77

-9

106

South Asia

Poverty

Levels and Trends

Change in proportion and number of poor people between 1981 and 2001

%millions

% living on

< $2/day in 2001

unemployment
Unemployment
  • Remains major source of inequality
  • Between 1993 and 2003:
    • Global number of unemployed rose by 31% to 186 million
    • Unemployment rates decreased slightly in developed countries while increasing in most other parts of the world
    • Spread of jobless growth
the informal economy

The informal economy

Those in informal economy typically “have-nots” in society

- 60% women

- 535 million earn less than $1/day

  • Likely to be:
  • Excluded from legal protections
  • Precluded from enjoying basic rights and benefits of formal economy
  • Working in hazardous conditions
informal employment dominant in many regions
Informal employment dominant in many regions

Share of informal workers in non-agricultural workforce by region:

  • North Africa: 48%
  • Latin America & Caribbean: 51%
  • Asia: 65%
  • Sub-Saharan Africa: 78%

(excl. South Africa)

informal economy share of gross national income 2000
Informal economy share of Gross National Income, 2000
  • Developing countries: 41%
  • Transition economies: 38%
  • OECD Countries: 18%
slide17

Why Rapid Growth of Informal Economy?

  • Jobless growth
  • Labour market flexibility
  • Reduction in public sector jobs
  • De-industrialization
  • Economic crises
  • Greater “outsourcing”
  • Household survival strategies
health inequalities
Health Inequalities
  • Great differences between and within countries
    • Access to healthcare
    • Life expectancy
    • Under-five mortality
  • Intellectual Property Rights and Patent Monopolies
    • High drug prices
    • Unequal access
    • Compromised capacity to react to crises
hiv aids
HIV/AIDS
  • Highly unequal global and regional impacts
  • Lowers growth, increases dependencies
  • Worsens existing inequalities between women and men
  • Depletes human resources, threatening stability, security and development
financial liberalization
Financial Liberalization
  • Net capital flows from ‘capital poor’ to ‘capital rich’
  • Increased financial volatility
  • Undermines use of inclusive targeted developmental credit
  • Slower economic growth in recent decades
trade liberalization
Trade Liberalization
  • International terms of trade moving against developing countries
    • Primary commodities vs. manufactured commodities
    • Tropical agriculture vs. temperate agriculture
    • Generic products vs. those protected by intellectual property rights
tariffs biased against developing countries
Tariffs biased against developing countries
  • Imports between developed countries average 1%
  • Tariffs on textiles from developing countries as high as 9%
  • Tariffs on agricultural products from developing countries as high as 20%
retreat of the state
Retreat of the state
  • Stabilization and structural adjustment programs
  • Less progressive taxation
  • Reduced redistributive role
  • Reduced role of government in many developing countries
    • Public education
    • Health
    • Housing
    • Utilities
government spending priorities
High-income countries spend 2½ times more of national wealth for health, education and welfare than low income countries.Government Spending Priorities
inequality and violence
Inequality and Violence
  • Violence often rooted in inequality
    • No simple causal relationship
  • Vicious cycle mutually reinforcing:
    • Poverty
    • (Horizontal) Inequalities
    • Authoritarian governance
    • Lack of opportunities
    • Armed conflict
    • Reduced growth and development
  • Links between inequalities and extreme aspects of social disintegration
slide27

Poor Countries More Likely to Suffer Civil War, Adversely Affects Growth

Predicted probability of onset of civil war within 5 years

slide28

Global Economic Agenda Dominated by Issues Important to Developed Countries

Free Trade

Intellectual

Property Rights

Investment

protection

Financial

Liberalization

Capital Account

Liberalisation

slide29

…While Issues of Importance to Developing Countries

Can’t Make it to the Agenda

Doha Round,

IPRs, etc. Not

Developmental

International

Economic

Governance

Dominated

By Rich

International

Economic

Instability

Washington

Consensus

Not Developmental,

Not Equitable

Meaningful

Debt Relief

Capital Flight

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