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Overarching Concerns Programme Paper 6: Approaches to Globalization and Inequality Within the International System

11 Nov 2005

  • Author(s): Roy Culpeper

Global poverty reduction is being taken a lot more seriously in the early decades of the twenty-first century, thanks partly to the consensus forged in the United Nations over the Millennium Development Goals, which aim at a 50 per cent reduction in poverty levels by the year 2015. Even if this ambitious challenge is not met in many countries - and this author argues that it will not be, particularly in Africa - he expects that the principal equity issue will be growing inequality within countries rather than “absolute poverty”.

Whether the issue will generate enough concern to stimulate an effective policy response remains to be seen, however. Culpeper suggests that the weight of evidence is on the side of those who assert that inequalities are actually increasing. Moreover, he writes, revisionist thinking that has led to the finding that lower inequality is good for growth, overturns the conventional wisdom that there is a trade-off between equity and efficiency, thereby giving greater scope for initiatives to reduce income and asset inequality. Finally, he finds growing evidence, albeit in the face of considerable debate, that policies of economic liberalization and openness to facilitate globalization are exacerbating inequalities.

At the same time, it is also true that globalization, defined as increased international economic integration, could provide substantial benefits in the form of growing income and employment opportunities. The trick, particularly for developing countries, is to capture the benefits available from trade, capital flows and migration, while avoiding or mitigating the costs, as well as the strong possibility that the benefits will be biased against the poor.

Culpeper writes that a major hindrance to any initiatives to tackle growing inequality is the prevailing policy consensus favouring market-friendly policies. Furthermore, he writes, over time the international mobility of capital and skilled labour, along with other developments made possible by technology and globalization - such as e-commerce and offshore financial centres - is likely to undercut the revenue-raising capacities that nation-states need in order to undertake such initiatives - whether they involve reallocation of funding to education, health and social expenditures, redistribution of assets such as land, or simply using income taxation.

These considerations lead the author to suggest that achieving “equity in one country” through redistributive measures at the national level will be difficult and inadequate, unless they are complemented by commensurate changes in the current policy consensus, dominated by the international financial institutions and the leading industrial powers. The challenge, he writes, is to convince the “policy establishment” to support these changes and help pave the way to policies, both at the global and national levels, compatible with the pursuit of more equitable development.

Roy Culpeper is President of The North-South Institute, Ottawa, Canada.

Order UOC PP 6 from UNRISD, 26 pages, 2005; US$ 12 for readers in industrialized countries and US$ 6 for readers in developing and transitional countries and for students.