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I promised to revisit Robert Wade’s comments about my column on inequality. My article was mainly concerned with the causes of rising inequality within and between countries, drawing attention to recent IMF findings that liberal trade was not to blame–just the opposite in fact, liberal trade is equalising–and that the main culprit is technological change. In passing I observed that "one world" inequality–that is inequality across all the world’s people, as if there were no national boundaries–is "almost certainly" falling. Robert pointed out that this is disputed.

Unfortunately I cannot post the galleys Robert sent me of his chapter ("Globalization, Growth, Poverty, Inequality, Resentment, and Imperialism") for the forthcoming second edition of "Global Political Economy" (John Ravenhill, ed). It is good, careful, heterodox stuff (I doubt that Robert will object to the term), covering a lot of ground, but on this particular point I cannot see that the debate has advanced much from where it was when I was last paying close attention.

I’ll allow that my "almost certainly" was a little exuberant. This is a methodological maze, with patchy and unreliable statistics. According to one school of thought, one-world inequality fell during the 1980s and 1990s. According to another , looking at a shorter timespan, it has zig-zagged, rising between 1988 and 1993, falling between 1993 and 1998, and rising again to 2002. Readers who care enough to read both papers can make their own minds up. If you want a non-technical summary of the wider debate, you could read this piece (pdf) I wrote for The Economist in 2004, and this subsequent reply (pdf) (focused on poverty not inequality) by Martin Ravallion of the World Bank.

Within-country inequality is increasing in much of the world, and so is between-country inequality (because the poorest countries are growing slowly). Unlike more triumphant globalists I do not regard these trends as matters of no concern. But I take heart from the fact that the proportion of people living in extreme poverty around the world is falling fast (so far as I know, this is not disputed). And as I contemplate the economic miracles in India and China, population 2bn-plus, I continue to think it very likely, at any rate, that one-world inequality is falling too.

November 6th, 2007 in Uncategorised | Permalink