It’s well known by now that income and wealth inequality in most rich countries, especially the United States, have soared in recent decades and, tragically, worsened even more since the Great Recession. But what about the rest of the world? Is the gap between countries narrowing, as rising economic powers like China and India have lifted hundreds of millions of people from poverty? And within poor and middle-income countries, is inequality getting worse or better? Are we moving toward a more fair world, or a more unjust one?
These are complex questions, and new research by a World Bank economist named Branko Milanovic, along with other scholars, points the way to some answers.
Starting in the 18th century, the industrial revolution produced giant wealth for Europe and North America. Of course, inequality within these countries was appalling — think of the textile mills of Liverpool and Manchester, England, in the 1820s, and the tenements of the Lower East Side of Manhattan and the South Side of Chicago in the 1890s — but the gap between the rich and the rest, as a global phenomenon, widened even more, right up through about World War II. To this day, inequality between countries is far greater than inequality within countries.
But starting around the fall of Communism in the late 1980s, economic globalization accelerated and the gap between nations began to shrink. The period from 1988 to 2008 “might have witnessed the first decline in global inequality between world citizens since the Industrial Revolution,” Mr. Milanovic, who was born in the former Yugoslavia and is the author of “The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality,” wrote in a paper published last November. While the gap between some regions has markedly narrowed — namely, between Asia and the advanced economies of the West — huge gaps remain. Average global incomes, by country, have moved closer together over the last several decades, particularly on the strength of the growth of China and India. But overall equality across humanity, considered as individuals, has improved very little. (The Gini coefficient, a measurement of inequality, improved by just 1.4 points from 2002 to 2008.)