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From Global Research, October 30, 2013
Mass Poverty and Social Inequality in India: The Devastating Impacts of the Neoliberal Economic Development Model
Colin Todhunter
Back in 2008, Indian finance minister P. Chidambaram claimed that his government’s policies were
pro growth and pro equity (1). He blamed an inept system of administering benefits to the poor
for the low rate of ‘inclusive growth’. He also talked of the goal of alleviating poverty
‘in our lifetime’. What’s more, that the type of development being pursued was deemed to
be more or less correct and adverse effects were mainly due to lax application of laws,
public officials dragging their feet over changes and misplaced fear about policies
causing poverty, not alleviating it.
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Next Big Spenders:
India's new middle class
BusinessWeek
By Diana Farrell and Eric Beinhocker
May 19, 2007
May 28, 2007 issue - Throughout India's history, the vast majority of
its people have lived in desperate poverty. As recently as 1985, more
than 90 percent of Indians lived on less than a dollar a day. Yet India
is poised to undergo a remarkable transformation. New research from the
McKinsey Global Institute (MGI) shows that within a generation, the
country will become a nation of upwardly mobile middle-class
households, consuming goods ranging from high-end cars to designer
clothing. In two decades the country will surpass Germany as the
world's fifth largest consumer market.
This text is based on a report published by
McKinsey Global Institute (
"The Bird of Gold: the rise of India's consumer market") on May 2007. Full
text
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From
International Labour Organization
World of Work Report 2008
Income Inequality in the age of Financial Globalization
The ongoing global economic slowdown is affecting low-income groups
disproportionately. This development comes after a long expansionary
phase where income inequality was already on the rise in the majority
of countries.
● The recent period of economic expansion was accompanied by
substantial employment growth across most regions. Between the early
1990s and 2007, world employment grew by around 30 per cent. However,
there was considerable variation in labour market performance between
countries. In addition, not all individuals shared equally in the
employment gains. In a number of regions, women continued to represent
a disproportionate share of non-employed persons – reaching nearly 80
per cent in the Middle East, North Africa and Asia and the Pacific.
● Employment growth has also occurred alongside a redistribution of
income away from labour. In 51 out of 73 countries for which data are
available, the share of wages in total income declined over the past
two decades. Th e largest decline in the share of wages in GDP took
place in Latin America and the Caribbean (-13 points), followed by Asia
and the Pacific (-10 points) and the Advanced Economies (-9 points).
● Between 1990 and 2005, approximately two thirds of the countries
experienced an increase in income inequality (as measured by changes in
the Gini index). In other words, the incomes of richer households have
increased relative to those of poorer households. Likewise, during the
same period, the income gap between the top and bottom 10 per cent of
wage earners increased in 70 per cent of the countries for which data
are available.
● The gap in income inequality is also widening – at an increasing pace
– between the firms’ executives and the average employee. For example,
in the United States in 2007, the chief executive offi cers (CEOs) of
the 15 largest companies earned 500 times more than the average worker.
Th is is up from 360 times more in 2003. Even in Hong Kong (China) and
South Africa where executives are paid much less than their United
States’ counterparts, CEO pay still represents 160 and 104 times,
respectively, the wages of the average worker.
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Background
papers prepared for World Development Report 2006: equity
and development
-
Rao, Vijayendra. 2004
Symbolic Public Goods and the
Coordination of Collective Action: A Comparison of Local Development in
India and Indonesia.
Most economists think of common property as physical – a plot of land,
a body of water, a forest
– and as bounded within geographic space. In this paper, building on
work in social theory, I
argue that common property can also be social – defined within symbolic
space.2 People can be
bound by well defined social circles, creating agglomerations that have
characteristics similar to
common property. I call these circles and agglomerations “symbolic
public goods” and make the
case that such constructs are central to understanding collective
action...
The following papers were prepared in collaboration
with the U. K. Department for International Development (DfID) and the
World Bank's Social Development Department (see the November 15, 2004
Seminar on Promoting Equity in Development, under Consultations).
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Barrientos, Armando. 2004
Cash
Transfers for Older People Reduce Poverty and Inequality.
The paper discusses the poverty and inequality reduction properties of
non-contributory pension in Brazil, South Africa and Bangladesh. It
examines the development of non-contributory pension programmes in the
countries involved, and the institutional factors behind their
extension and current sustainability. It also examines the incidence of
non-contributory pension programmes on poverty and inequality.
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Black, Richard, Claudia Natali and Jessica Skinner, 2005
Migration
and Inequality.
Introduction
International migration is a powerful symbol of global inequality,
whether in terms of wages, labour market opportunities, or lifestyles.
Millions of workers and their families move each year across borders
and across continents, seeking to reduce what they see as the gap
between their own position and that of people in other, wealthier,
places. In turn, there is a growing consensus in the development field
that migration represents an important livelihood diversification
strategy for many in the world’s poorest nations. This includes not
only international migration, but also permanent, temporary and
seasonal migrations within poorer countries, a phenomenon of
considerable importance across much of Africa, Asia and Latin America.
Yet it is also clear that migration - and perhaps especially
international migration - is an activity that carries significant risks
and costs. As such, although migration is certainly rooted, at least in
part, in income and wealth inequalities between sending and receiving
areas, it does not necessarily reduce inequality in the way intended by
many migrants. Much depends on the distribution of these costs and
benefits, both within and between sending and receiving countries and
regions. Also important in terms of the aggregate impact of migration
on sending societies is the selectivity of migration itself. Clearly if
most migrants were to come from the poorest sections of society, and
they were to achieve net gains from migration, this would act to reduce
economic inequality at least, all other things being equal. But
migrants are not always the poorest, they do not always gain, and other
factors are not equal.
-
de Haan, Arjan. 2004
Disparities
within India's Poorest Regions: Why Do the Same Institutions Work
Differently in Different Places?
Orissa, now India’s poorest state, is marked by surprising high levels
of disparities. Regional disparities in poverty levels are marked, with
signs of divergence over the last two decades; human development
indicators (health, education, knowledge and voice) are equally
unequally distributed, though with some signs of convergence. Social
group disparities are large too, on all indicators, and again few signs
that such disparities are being reduced, with adivasis more that two
times more likely to be in poverty than non-deprived groups (which
underestimates disparities between extremes), usually suffering
disproportionally from land alienation and displacement. Gender
disparities are marked, with high MMR, gaps in education, worsening sex
ratios, and cases of loss of livelihood opportunities. Significantly,
the various forms of disparities overlap and mutually reinforce each
other, with the tribal-upland vs. coastal-elite forming the extreme
ends of a range of disparities, possibly creating poverty traps or
‘log-jams of disadvantage’.
This ‘overdetermination’ of disparities has long historical and deep
institutional roots. The late and in a sense still on-going
colonisation from the coast into Orissa’s hinterland, combined with the
relatively recent formation of Orissa’ elite form the background
against which recent developments need to be understood. The
disparities are closely linked to at least three sectoral or
institutional developments: forest policies that have traditionally
prioritised state revenue generation, and recent progressive reforms
have been unable to break through vested interests that disadvantage
poor people particularly women; land policies which have undergone
dramatic transformation on paper but lacked the teeth to provide secure
access for poor people; and finally development-induced displacement
with a very patchy record of resettlement and rehabilitation.
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Deshpande, Ashwini. 2005.
Affirmative
Action in India and the United States.
Caste in India and race in the USA are often compared for their
institutional similarities, and also because these categories form the
social basis on which the affirmative action program in the two
countries is based. While disadvantage and discrimination produce
similar outcomes for certain groups within caste- or race-divided
societies, it is important to understand the differences between the
two systems. If race is a system of ascriptive or color-based
disparities, caste can be called a system non-ascriptive or non-color
based disparities. (For a detailed discussion of the lack of a clear
link between skin color and caste, see Deshpande and Darity, 2003). The
caste system is prevalent primarily in the Indian subcontinent, but
there are several other examples of non- color-based disparities in
large parts of Asia, Africa and Europe.
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United
Nations Department of Economic and Social Affairs
Report on the World Social Situation 2005:
The
Inequality Predicament
Focusing exclusively
on economic growth and income generation as a development strategy is
perilous as it leads to the accumulation of wealth by a few and deepens
the poverty of many.
The global commitment to overcoming inequality, or redressing the
imbalance
between the wealthy and the poor, as clearly outlined at the 1995
World Summit for Social Development in Copenhagen and endorsed in the
United Nations Millennium Declaration, is fading. Eighty per cent of
the
world’s gross domestic product belongs to the 1 billion people living
in the
developed world; the remaining 20 per cent is shared by the 5 billion
people
living in developing countries. Failure to address this inequality
predicament
will ensure that social justice and better living conditions for all
people
remain elusive, and that communities, countries and regions remain
vulnerable
to social, political and economic upheaval.
The present Report on the World Social Situation traces trends and
patterns
in economic and non-economic aspects of inequality and examines
their causes and consequences. It focuses on the traditional aspects of
inequality,
such as the distribution of income and wealth, as well as inequalities
in health, education, and opportunities for social and political
participation.
The Report also analyses the impact of structural adjustment, market
reforms, globalization and privatization on economic and social
indicators.
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From
Finance and Development - December 2005
The
inequality trap
F.H.G.
Ferreira and M. Walton
Market failures, inequalities, and investment
inefficiency. In a world in which markets worked perfectly,
investment decisions would have little to do with the income, wealth,
or social status of the decision maker. However, for various
reasons—mainly economic, but also political—markets are not perfect.
A girl born to a lower-caste family of nine in the slums of Dhaka has
vastly different opportunities from a boy born to well-educated and
affluent parents in the well-heeled neighborhoods. An AIDS orphan in
rural Zimbabwe is almost certain to have fewer chances and choices in
life than a compatriot born to healthy and well-educated parents in
Harare. Those differences are even greater across borders: an average
Swiss, American, or Japanese child born at the same instant as one in a
poor, rural area of South Africa will have incomparably superior life
chances.
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From The
Institute for the Study of Labor, Bonn
Continental
and sub-continental income inequality
A. Heshmati,
August 2004
The regions
based on available studies include Eastern Europe and former USSR,
Scandinavian,
Western Europe, OECD countries, small and medium sized developing
countries, sub-
Saharan Africa, Latin America, East Asia, South Asia, South-East Asia
and Pacific.
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From The
Institute for the Study of Labor, Bonn
Regional
income inequality in selected large countries
A Heshmati,
September 2004
The countries considered here cover transition (China
and Russia), developing (India) and industrialised (USA) countries.
Empirical results
from the literature is further complemented and compared with those
obtained from the
WIID data covering post 1950s.
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H.
Rapoport and F. Docquier
The
Economics of
Migrants’ Remittances
From The
Institute for the Study of Labor, Bonn - 2005
This chapter reviews the recent theoretical and empirical economic
literature on migrants'
remittances. It is divided between a microeconomic section on the
determinants of
remittances and a macroeconomic section on their growth effects. At the
micro level we first
present in a fully harmonized framework the various motivations to
remit described so far in
the literature. We show that models based on different motives share
many common
predictions, making it difficult to implement truly discriminative
tests in the absence of
sufficiently detailed data on migrants and receiving households'
characteristics and on the
timing of remittances. The results from selected empirical studies show
that a mixture of
individualistic and familial motives explains the likelihood and size
of remittances. At the
macro level we first briefly review the standard (Keynesian) and the
trade-theoretic literature
on the short-run impact of remittances. We then use an endogenous
growth framework to
describe the growth potential of remittances and present the evidence
for different growth
channels. We then explore the relationship between remittances and
inequality. This
relationship appears to be non-monotonic. This is consistent with
different theoretical
arguments regarding the role of migration networks and/or the dynamics
of wealth
transmission between successive generations.
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H. Jeong
Assessment
of Relationship between Growth and Inequality:
Micro Evidence from Thailand
University of
Southern California - 2005 |
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Moses Shayo
Nation,
Class and Redistribution:
Applying Social Identity Research to Political Economy.
Princeton
University - 2005
People often conceive themselves, and behave, as members of social
groups.
Drawing on a vast empirical literature, this paper offers a definition
of social identification and an equilibrium concept where social
identities are endogenously determined. We apply this framework to the
political economy of redistribution in democracies, focusing on class
and national identities. We present new empirical evidence that
supports the main implications of the model, namely: (a) that
identifying with ones nation is more likely among the poor than among
the rich; (b) that controlling for income, national identification
reduces support for redistribution; and (c) that across democracies
there is a strong negative relationship between the prevalence of
national identification and an equilibrium concept where social
identities are endogenously
determined. We apply this framework to the political economy of
redistribution
in democracies, focusing on class and national identities. We present
new empirical evidence that supports the main implications
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———. 2005c.
Wealth for the Few,
Poverty for the Many: The Resource Curse—Examples of Poor
Governance/Corporate Mismanagement Wasting Natural Resource Wealth.
The Grasberg mine – Irian Jaya
U.S company Freeport McMoran hit the headlines in the mid 1990s accused
of serious human rights and
environmental violations in its Grasberg mine in Irian Jaya. In its
annual report, Freeport acknowledges
responsibility for dumping over 125,000 tons of potentially toxic
tailings into the rivers of Irian Jaya every
day. The mine was the world’s largest gold mine and the third largest
copper mine in the world valued
between $50 and %60 billion. According to reports by the BBC the mine
has been responsible for the deaths
of hundreds of people since the mine began operations in 1972 turning a
blind eye while the Indonesian
military killed and tortured dozens of native people in the area around
the mining concession.
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United
Nations University
WIDER Conference on
Spatial
Inequality in Asia
UNU Tokyo,
28-29 March 2003
Themes
addressed by the conference:
- Spatial
inequality in China
- Inequality and conflict
- Poverty and inequality in India
- Poverty in Asia
- Location and Migration
- Trade and inequality
- Spatial inequality in Asia
- Spatial inequalities in Former Soviet Union
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United
Nations University
World Institute for
Development Economic Research:
DP2003/28
Giovanni Andrea Cornia and Tony Addison with Sampsa Kiiski:
Income
Distribution Changes and their Impact in the Post-World War II Period
This paper analyses the trends in within-country
inequality during the post-World War II
period, with particular attention to the last 20 years. This is done on
the basis of a review
of the relevant literature and of an econometric analysis of inequality
trends in
73 countries, which account for 80 per cent of the world’s population
and 91 per cent of
world GDP-PPP. The paper suggests that the last two decades have been
characterized by
a surge in within-country inequality in about two-thirds of the
developing, developed and
transitional nations analysed. It also suggests that in those countries
where the upsurge in
inequality was sizeable or where inequality rose from already high
levels, growth and
poverty alleviation slowed down perceptibly. While this trend towards
higher inequality
differs substantially across countries in its extent, timing and
specific causes, it marks a
clear departure from the pattern observed during the first 30 years of
the post-World War
II period during which a widespread move towards greater egalitarianism
was noted in the
majority of the socialist, developing and industrialized economies,
with the exception of
Latin America and parts of Sub-Saharan Africa.
DP2003/52
Chris Elbers, Peter Lanjouw, Johan Mistiaen, Berk Özler and Ken Simler:
Are
Neighbours Equal? Estimating Local Inequality in Three Developing
Countries (PDF 340KB)
DP2003/57
Jed Friedman:
How
Responsive is Poverty to Growth? A Regional Analysis of Poverty,
Inequality, and
Growth in Indonesia, 1984-99 (PDF 655KB)
DP2003/67
Ruslan Yemtsov:
Quo Vadis? Inequality
and Poverty Dynamics across Russian Regions (PDF
439KB)
DP2003/65
Michael F?er, David Jesuit and Timothy Smeeding:
Regional
Poverty and Income Inequality in Central and Eastern Europe: Evidence
from the
Luxembourg Income Study
(PDF 251KB)
DP2003/74
Stanislav Kolenikov and Anthony Shorrocks:
A Decomposition
Analysis of Regional Poverty in Russia (PDF
326KB)
RP2004/43
S. Mansoob Murshed and Scott Gates: Spatial
Horizontal Inequality and the Maoist Insurgency in Nepal
(PDF
212KB)
RP2004/40
Oleksiy Ivaschenko: Longevity
in Russia’s Regions: Do Poverty and Low Public Health Spending Kill?
(PDF 630KB)
RP2004/36
Kathryn Anderson and Richard Pomfret: Spatial
Inequality and Development in Central Asia (PDF
311KB)
RP2004/35
Henning Tarp Jensen and Finn Tarp: Trade
Liberalization and Spatial Inequality: A Methodological Innovation in
Vietnamese
Perspective
(PDF 231KB)
RP2004/34
Arsenio M. Balisacan and Nobuhiko Fuwa: Changes
in Spatial Income Inequality in the Philippines: An Exploratory Analysis
(PDF
289KB)
RP2004/53
Shatakshee Dhongde: Decomposing
Spatial Differences in Poverty in India (PDF
109KB)
RP2004/49
Somik V. Lall and Sanjoy Chakravorty: Industrial
Location and Spatial Inequality: Theory and Evidence from India
(PDF343
KB)
RP2004/48
Tomoki Fujii: Commune-Level
Estimation of Poverty Measures and its Application in Cambodia
(PDF
305KB)
DP2006/04
George Rapsomanikis and Alexander Sarris: The
Impact of Domestic and International Commodity Price Volatility on
Agricultural
Income Instability: Ghana, Vietnam and Peru
(PDF
152KB)
The extent to which commodity price volatility affects the income of
producing households
and their vulnerability to poverty and food insecurity depends on
household diversification
patterns and the degree of their exposure to markets. This article
focuses on estimating
agricultural income uncertainties for a number of different household
types in Ghana,
Vietnam and Peru. We develop explicit formulae for household income
variance, and we
combine information from household datasets and commodity price
time-series in order to
estimate the income uncertainty that emanates from price and production
volatility under
different scenarios of exposure to international and domestic markets
shocks. Our results
indicate that market and nonmarket uncertainties significantly affect
the variability of
agricultural income of households in these countries, and especially
households that are
specialized in a few commodities. However, it turns out that, under
current policies, almost
all of their income variability is due to domestic factors, with
international prices not
contributing much, at least in the short run. Wider exposure to
international markets would
increase the income variability of producers who have been subjected to
domestic market
stabilization policies in Ghana and Vietnam, while it would decrease it
in the case of Peru.
DP2006/03
Basudeb Guha-Khasnobis and Gautam Hazarika:
Women’s Status and Children’s Food Security in Pakistan
(PDF
168KB)
RP2006/56
Nanak Kakwani and Hyun H. Son: Pro-Poor
Growth: The Asian Experience (PDF
121KB)
RP2006/64
Lars Osberg and Kuan Xu:
How
Should We Measure Global Poverty in a Changing World?
(PDF
246KB)
Before effective anti-poverty policy can be designed and implemented,
the extent, trend
and distribution of poverty must be identified. In this sense, poverty
measurement is a
crucial intermediate step in public policymaking and development
planning. This paper
asks whether the estimated proportion of the world’s population with
income below
US$1 (adjusted according to purchasing power parity) per day is a good
measure of
trends in global poverty. We argue that the answer depends on two
important issues in
the measurement of poverty—the definition of the poverty line, and how
best to
summarize the level of poverty In this paper, we survey the literature
on poverty
measurement, demonstrate the importance of considering poverty
incidence, depth and
inequality jointly, present a simple but powerful graphical
representation of the Sen and
SST indices of poverty intensity (the poverty box) which is the FGT
index of order 1
and extend our empirical work to China using the commonly accepted
international
poverty line definition of one half median equivalent income.
RP2006/58
Yasuyuki Sawada and Jonna P. Estudillo:
Trade, Migration, and Poverty Reduction in the Globalizing Economy: The
Case of
the Philippines (PDF 298KB)
RP2006/59
Terutomo Ozawa:
Asia’s
Labour-Driven Economic Development, Flying-Geese Style: An
Unprecedented
Opportunity for the Poor to Rise?
The notion of ‘shared growth’ was introduced by the World Bank in
recognition of East Asia’s
rapid growth accompanied by poverty reduction. It emphasizes the
criticality of pro-poor
policies and institutional setups in the fast-developing East Asian
economies. The efforts of
these individual countries are, however, a necessary but not sufficient
condition (explanation).
There is a more essential, underlying region-wide mechanism that
simultaneously promotes
regionalized growth and specifically favours Asia’s working mass of
unskilled labour. Such an
efficacious mechanism is posited in the ‘flying-geese paradigm of
comparative advantage
recycling in labour-intensive goods’. The paper argues that a number of
favourable factors have
fortuitously coalesced to engender a considerably favourable condition
for Asia’s rapid catch-up
growth in which unskilled labour (the poor) can participate as their
countries’ most vital input in
labour-driven development.
RP2006/46
Machiko Nissanke and Erik Thorbecke:
A Quest for Pro-Poor
Globalization
While the opportunities offered by globalization can be large, the
question is often raised
whether the actual distribution of gains is fair and, in particular,
whether the poor benefit
proportionately less from globalization and could under some
circumstances actually be
hurt by it. The paper discusses channels and transmission mechanisms
through which the
process of globalization affects different aspects and dimensions of
poverty in the
developing world. It examines how these numerous channels interact, as
the net effects on
poverty depend on the relative strength of the positive and negative
forces of globalization.
On the basis of our analysis of these transmission mechanisms from
globalization to the
world’s poor, the paper discusses what may constitute a policy
framework for encouraging
globalization to be pro-poor.
RP2006/45
M. S. Qureshi: Trade
Liberalization, Environment and Poverty: A Developing Country
Perspective (PDF 369KB)
RP2006/44
Yujiro Hayami: Globalization
and Rural Poverty: A Perspective from a Social Observatory in the
Philippines (PDF 197KB)
RP2006/41
N.R. Bhanumurthy
and Arup Mitra: Globalization, Growth and Poverty in India
(PDF
244KB)
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-On
Capitalist Economic and Political Terrorism
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