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"Wherever there is great property, there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many".
(Adam Smith, An Inquiry into the Nature and  Causes of the Wealth of Nations, (Book 5, Ch. 1, Part II p.580)

On planning for development: Inequality and social exclusion - Economic inequality, poverty and corruption in Africa - Asia - Latin America - China - United States

Economic inequality, poverty, corruption and social exclusion in Asia
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.

Next Big Spenders: India's new middle class
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

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.

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).

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.
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.
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.
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.
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.
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.
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.
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.
H. Jeong
Assessment of Relationship between Growth and Inequality: Micro Evidence from Thailand
University of Southern California - 2005
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

———. 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.
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
United Nations University
World Institute for Development Economic Research:

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.

Chris Elbers, Peter Lanjouw, Johan Mistiaen, Berk Özler and Ken Simler:
Are Neighbours Equal? Estimating Local Inequality in Three Developing Countries (PDF 340KB)

Jed Friedman:
How Responsive is Poverty to Growth? A Regional Analysis of Poverty, Inequality, and Growth in Indonesia, 1984-99 (PDF 655KB)

Ruslan Yemtsov:
Quo Vadis? Inequality and Poverty Dynamics across Russian Regions (PDF 439KB)

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)

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)

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)

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.

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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