November 1, 2007
Punch and Judy and inequality
My friend Robert Wade censures me in this note (posted with his permission) about my column of a couple of weeks ago on globalisation and inequality.
I hate to spoil your fun as you throw bricks at "critics of globalisation", but some of your empirical statements are open to challenge. You say (repeating the IMF’s International Economic Outlook) that trade barriers inhibit growth and worsen inequality, in rich countries and poor countries. Many independent analysts cannot confirm this finding.
To give just one example, a study of the whole literature on the relationship between globalisation, poverty and inequality concludes, "any claims regarding growth and poverty, or trade liberalization (even globalisation) and poverty, should be interpreted with extreme caution…. If we achieve no more than to convince readers to interpret cross-country evidence on inequality, growth and poverty with extreme caution and to eschew generalisations based on such evidence, we would be content." (Mbabzi, Morissey, and Milner, 2003, "The fragility of empirical links between inequality, trade liberalization, growth and poverty," in Rolph van der Hoeven and Anthony Shorrocks (eds.) "Perspectives on Growth and Poverty". United Nations Press.)
Likewise, you say that global income inequality in the "one world" sense "is almost certainly falling". In fact, studies which attempt to measure income distribution among all the world’s people show widely varying results, depending on the measure of inequality, country sample, time period, and data source. But several careful studies find that inequality increased over their time period, within the past two to three decades.
Your Punch and Judy show–good pro-globalisers against bad anti-globalisers–makes for entertaining reading, but it does not advance the cause of understanding.
My unguarded reaction is that "extreme caution" is a lot to ask of a commentator, but I don’t deny that advancing the cause of understanding is my larger purpose. Robert sent me galleys of a chapter he has written for the forthcoming second edition of "Global Political Economy" edited by John Ravenhill. Moving with extreme caution, I will read those for his latest thinking on this subject before saying any more.
“inequality, growth and poverty”
Which two go together? Growth and the reduction of poverty are related, as is trade liberalization and growth.
Inequality is not related to these, in fact the faster growing economies often have higher ginis.
Seems some people would prefer everyone to be poor rather than some to do well while some do really well.
Posted by: Tom | November 1st, 2007 at 6:24 pm | Report this comment