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Is Globalization Widerning or Narrowing the Gap Between the Rich and Poor Countries?

  • Date Submitted: 02/01/2011 06:40 AM
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barriers as the OECD economies were doing through successive GATT
rounds and in their regional and unilateral actions.6
In the third, current wave of globalisation since about 1980, the World
Bank has identified a group of 24 developing countries, home to some 3
billion people, as ’recent globalisers’. These countries are defined by
having strongly improved their trade performance. China, India,
Bangladesh, Brazil, Malaysia, the Philippines, Indonesia, and Thailand are
among these examples of how economic reforms and outward-looking
trade policies can rapidly lift hundreds of millions out of poverty. Their
progress seems closely linked to their participation in the remarkable
recent global growth of trade in manufactures (Chart 2).
However, some 2 billion people in some 49 other developing countries
have not been able to achieve comparable increases in trade and
6 Peter Lindert and Jeffrey Williamson, Does Globalization Make the World More Unequal?, NBER Working
Paper No. W 8228, April 2001. Available at: http://www.nber.org/papers/w8228.
7
investment linkages, nor in income growth. Trade shares of their GDPs
have contracted in the last two decades, and in the last decade their per
capita incomes contracted too (Chart 3).
In the May 2001 centenary edition of its Economic Roundup, Treasury
published an overview of the evidence on trends in living standards.7 We
showed that inter-country inequality appeared to have reached a peak
around the late 1960s, and seemed since to have slightly declined (with
small fluctuations). This can be pictured in Lorenz curves for the world
economy which use purchasing power parties to compare national per
capita GDPs weighted by population size, and rank countries from poorest
to richest (Chart 4). Such curves show that inter-country inequality was
still wider at the end of the 20th century than at the start, because of the
very long history of faster productivity growth compounded over centuries
in the...

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