Does Globalization Make the World More Unequal
TL;DR: The authors argue that the likely impact of globalization on world inequality has been very different from what these simple correlations suggest, and that the nations that gained the most from globalization are those poor ones that changed their policies to exploit it, while the ones that gain the least did not, or were too isolated to do so.
Abstract: The world economy has become more unequal over the last two centuries. Since within- country inequality exhibits no ubiquitous trend, it follows that virtually all of the observed rise in world income inequality has been driven by widening gaps between nations, while almost none of it has driven by widening gaps within nations. Meanwhile, the world economy has become much more globally integrated over the past two centuries. If correlation meant causation, these facts would imply that globalization has raised inequality between nations, but that it has had no clear effect on inequality within nations. This paper argues that the likely impact of globalization on world inequality has been very different from what these simple correlations suggest. Globalization probably mitigated rising inequality between participating nations. The nations that gained the most from globalization are those poor ones that changed their policies to exploit it, while the ones that gained the least did not, or were too isolated to do so. The effect of globalization on inequality within nations has gone both ways, but here too those who have lost the most from globalization typically have been the excluded non-participants. In any case far too small to explain the observed long run rise in world inequality.
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TL;DR: In this article, the use of agricultural endowments as an instrument for inequality is used as an approach to problems of measurement and endogeneity of inequality, and the authors find that high inequality is a large and statistically significant barrier to prosperity, good quality institutions, and high schooling.
735 citations
TL;DR: Rudi was born and grew up in Krefeld, Germany and completed his Ph.D. at the University of Chicago in 1971, which is where we met as mentioned in this paper, and was a student of Robert Mundell, and both the subject matter and the elegance and insights of his early work reflected Mundell's influence.
Abstract: Rudi was born and grew up in Krefeld, Germany. He was an undergraduate at the University of Geneva, and completed his Ph.D. at the University of Chicago in 1971, which is where we met. He was a student of Robert Mundell, and both the subject matter – the development of the Mundell-Fleming model – and the elegance and insights of his early work reflected Mundell’s influence. He taught at the University of Rochester and at the University of Chicago before accepting an offer from MIT in 1975.
660 citations
TL;DR: The authors provide an update of research on the patterns and causes of economic inequality in the United States, including inequality of earnings, wealth, and opportunity, and explore the social and political consequences of inequality, particularly in the areas of health, education, crime, social capital and political power.
Abstract: The increase in economic disparities over the past 30 years has prompted extensive research on the causes and consequences of inequality both in the United States and, more recently, globally. This review provides an update of research on the patterns and causes of economic inequality in the United States, including inequality of earnings, wealth, and opportunity. We also explore the social and political consequences of inequality, particularly in the areas of health, education, crime, social capital, and political power. Finally, we spotlight an emerging literature on world inequality, which examines inequality trends within as well as across nations. Sociologists can advance research on inequality by bringing discipline-based expertise to bear on the organization and political economy of firms and labor markets, the pathways through which inequality has an effect, and the social, political, and cultural contingencies that might modify this effect.
409 citations
Book•
23 Oct 2006TL;DR: The role of natural resources in development and economic diversification is discussed in this paper, which brings together a variety of analytical perspectives, ranging from econometric analyses of economic growth to historical studies of successful development experiences in countries with abundant natural resources.
Abstract: This volume studies the role of natural resources in development and economic diversification. It brings together a variety of analytical perspectives, ranging from econometric analyses of economic growth to historical studies of successful development experiences in countries with abundant natural resources. This book addresses two key questions for policy makers in natural resource-rich regions such as Latin America: First, is natural resource wealth an asset or a liability for development and, if potentially the former, how can its contribution be enhanced? And second, can countries rich in natural resources efficiently diversify toward manufacturing or service-sector exports?
402 citations
TL;DR: This paper examined if the KOF Index of Globalization and the Economic Freedom Index of the Fraser Institute are related to within-country income inequality using panel data covering around 80 countries 1970-2005.
382 citations
References
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01 Jan 1995
TL;DR: The World Trade Organization (WTO) was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible as mentioned in this paper, and the agreement included a codification of basic principles governing trade in goods and services.
Abstract: WHEN T H E BROOKINGS Panel on Economic Activity began in 1970, the world economy roughly accorded with the idea of three distinct economic systems: a capitalist first world, a socialist second world, and a developing third world which aimed for a middle way between the first two. The third world was characterized not only by its low levels of per capita GDP, but also by a distinctive economic system that assigned the state sector the predominant role in industrialization, although not the monopoly on industrial ownership as in the socialist economies. The years between 1970 and 1995, and especially the last decade, have witnessed the most remarkable institutional harmonization and economic integration among nations in world history. While economic integration was increasing throughout the 1970s and 1980s, the extent of integration has come sharply into focus only since the collapse of communism in 1989. In 1995 one dominant global economic system is emerging. The common set of institutions is exemplified by the new World Trade Organization (WTO), which was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible. Part of the new trade agreement involves a codification of basic principles governing trade in goods and services. Similarly, the International Monetary Fund (IMF) now boasts nearly universal membership, with member countries pledged to basic principles of currency convertibility. Most programs of economic reform now underway in the developing world and in the post-communist world have as their strategic aim the
4,840 citations
"Does Globalization Make the World M..." refers background in this paper
...…terms of trade variables to empirical growth models in the tradition of Robert Barro, Jeffrey Sachs and many others (Barro and Sala-i-Martin 1995; Sachs and Warner 1995), and estimating for a panel of 19 countries between 1870 and 1940, yields the result that an improving terms of trade…...
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...Feenstra and Hanson (1999) argue that skill-saving technological bias within the United States is a byproduct of the global communications revolution that allows better monitoring of foreign production and justin-time inventory delivery from abroad....
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Posted Content•
TL;DR: Dollar and Kraay as mentioned in this paper found that the share of income accruing to the bottom quintile does not vary systematically with the average income, and that when average incomes rise, the average incomes of the poorest fifth of society rise proportionately.
Abstract: When average incomes rise, the average incomes of the poorest fifth of society rise proportionately. This holds across regions, periods, income levels, and growth rates. But relatively little is known about the broad forces that account for the variations across countries and across time in the share of income accruing to the poorest fifth. When average incomes rise, the average incomes of the poorest fifth of society rise proportionately. This is a consequence of the strong empirical regularity that the share of income accruing to the bottom quintile does not vary systematically with average income. Dollar and Kraay document this empirical regularity in a sample of 92 countries spanning the past four decades and show that it holds across regions, periods, income levels, and growth rates. Dollar and Kraay next ask whether the factors that explain cross-country differences in the growth rates of average incomes have differential effects on the poorest fifth of society. They find that several determinants of growth - such as good rule of law, openness to international trade, and developed financial markets - have little systematic effect on the share of income that accrues to the bottom quintile. Consequently, these factors benefit the poorest fifth of society as much as everyone else. There is some weak evidence that stabilization from high inflation and reductions in the overall size of government not only increase growth but also increase the income share of the poorest fifth in society. Finally, Dollar and Kraay examine several factors commonly thought to disproportionately benefit the poorest in society, but find little evidence of their effects. The absence of robust findings emphasizes that relatively little is known about the broad forces that account for the cross-country and intertemporal variation in the share of income accruing to the poorest fifth of society. This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to study growth and poverty reduction. The authors may be contacted at ddollar@worldbank.org or akraay@worldbank.org.
3,407 citations
"Does Globalization Make the World M..." refers background in this paper
...The number of national experiences analyzed statistically now numbers in the hundreds (Edwards 1992, 1993; Dollar 1992; Dollar and Kraay 2000a, 2000b.) Even with several other variables held constant, those studies show that freer trade policies tend to have a positive effect on growth, though one…...
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Book•
01 Jan 1997
TL;DR: The most serious challenge for the world economy in the years ahead lies in making globalization compatible with domestic social and political stability, or to put it even more directly, in ensuring that international economic integration does not contribute to domestic social disintegration.
Abstract: The process that has come to be called "globalization" is exposing a deep fault line between groups who have the skills and mobility to flourish in global markets and those who either don't have these advantages or perceive the expansion of unregulated markets as inimical to social stability and deeply held norms. The result is severe tension between the market and social groups such as workers, pensioners, and environmentalists, with governments stuck in the middle. The most serious challenge for the world economy in the years ahead lies in making globalization compatible with domestic social and political stability—or to put it even more directly, in ensuring that international economic integration does not contribute to domestic social disintegration.
2,284 citations
Posted Content•
TL;DR: In this paper, a rotary spinning ring is provided with upper and lower outwardly tapered body portions, each of which has its surface provided with inclined grooves, a ring holder for receiving the rotary body therein, a sliding flange positioned between the holder and the body and having some play therein, and dust caps mounted on the upper-and lower portions of the rotating body.
Abstract: A rotary spinning ring construction is provided wherein the rotary ring body is provided with upper and lower outwardly tapered body portions, each of which has its surface provided with inclined grooves, a ring holder for receiving the rotary body therein, a sliding flange positioned between the holder and the body and having some play therein, and dust caps mounted on the upper and lower portions of the rotary body to seal the upper and lower areas of play between the holder and the rotary body. This arrangement results in a spinning ring construction that will dust automatically.
2,141 citations
TL;DR: This paper investigated the shift in demand away from unskilled and toward skilled labor in U.S. manufacturing over the 1980s and concluded that increased use of nonproduction workers is strongly correlated with investment in computers and in R&D.
Abstract: This paper investigates the shift in demand away from unskilled and toward skilled labor in U. S. manufacturing over the 1980s. Production labor-saving technological change is the chief explanation for this shift. That conclusion is based on three facts: (1) the shift is due mostly to increased use of skilled workers within the 450 industries in U. S. manufacturing rather than to a reallocation of employment between industries, as would be implied by a shift in product demand due to trade or to a defense buildup; (2) trade- and defense-demand are associated with only small employment reallocation effects; (3) increased use of nonproduction workers is strongly correlated with investment in computers and in R&D.
2,010 citations