Saturday, February 4, 2017

Globalization and global poverty

Source: Milanovic 2016
"The poor you shall always have with you," Jesus is supposed to have said, and either way it's probably true, but the forces of globalization have altered the picture of global poverty in dramatic ways.

The chart above is the "elephant curve," as presented by economist Branko Milanovic (cited below). The two decades after 1988 saw real income growth in much of the world, distributed in non-random ways. Many individuals in the middle of the global income spectrum saw their incomes increase, often sharply. Areas of the developing world that were "dirt-poor" at the beginning of this time period, particularly in India and China, developed a middle-class. The other winners, of course, were the already super-rich, who became known in the last U.S. presidential campaign as "the 1 percent." If anything the chart under-expresses the historically unprecedented growth in their incomes: A 60 percent increase in the income of someone in the 25th global percentile is going to be life-changing but quite modest in absolute terms compared to a 60 percent increase at the 99th percentile.

The losers in this process are the extremely poor, whose situations appear impervious to global economic changes, and the lower-to-middle-income people in developed countries. Thus, while worldwide income inequality has declined--particularly if you ignore the amount going to the top--inequality within countries has increased. This has, of course, driven the surly politics throughout much of the West, personified but not limited to U.S. President Donald J. Trump. At the same time, the wealthy countries are still wealthier, so remain magnets to immigration from poorer countries. The world isn't quite flat, and so immigration also is a prickly subject.

Global development was the target of a United Nations effort begun in 2000 called the Millennium Development Goals. A Brookings working paper assembles what data can be gathered to assess the effort, with mixed results (McArthur and Rasmussen). (I thought of writing "predictably mixed results," but mixed is a lot better than the despair we've become accustomed to hearing on this subject.) Even leaving out China and India, who are large enough and recently grown enough to skew the results, the authors identify

  • substantial progress in the developed world on child mortality, maternal mortality, AIDS treatment, primary school completion and gender parity
  • some progress on undernourishment
  • little or no progress on access to water, sanitation, biodiversity, forest cover and protected land area
  • insufficient data on extreme income poverty, but particular improvements notable in India
They estimate implementation of the Millennium Development Goals saved 21.0-29.7 million lives, but are agnostic about causes. Economic growth? Improved commodity prices? Development assistance? All happened, but don't account for the pattern of progress. A new round of goals, the Sustainable Development Goals, are set for the next 15 years.

So with mixed and uneven improvement in the last quarter-century, what trends in global poverty can we anticipate for the next quarter-century? You should probably ask an economist, an anthropologist, or a political scientist who can give you a definitive answer. In part it depends on how much globalization changes the composition of the world's poor (fewer Asians? more North Americans?). In general poor people in general are more vulnerable to systemic shocks than the non-poor, because they have fewer reserves to get them through the tough times. So more severe droughts, exacerbated by climate change and/or population growth, are likely to roll back what progress we have made, and to increase conflicts and refugee flows. A search for quick answers to economic stagnation in the West might trip off a cycle of protectionism, which would hit the most vulnerable the hardest, without necessarily helping national constituencies if it causes global productivity to contract. Energy shortages would be interesting, since the West uses much more energy per capita than does the developing world.

My hunch about communities in America is that they'd all be better off by promoting local businesses and sustainable living, with less dependence on big box franchises and federal grants. So it's what I'd like to see happen in Pakistan and Nigeria as well. Is that possible, or is globalization too far along?


Miles Corak, “Worlds of Inequality,” American Prospect, 18 May 2016 [review of Global Inequality: A New Approach for the Age of Globalization by Branko Milanovic (Belknap/Harvard, 2016)]

Nicholas Kristof, “As Donald Trump Denies Climate Change, These Kids Die of It,” New York Times, 6 January 2017 [includes link to BAMS article attributing reduced rainfalls in southern and eastern Africa to human activity and resulting in “substantial food crises]

John McArthur and Krista Rasmussen, “Change of Pace: Accelerations and Advances during the Millennium Development Goal Era,” Brookings Working Papers, 11 January 2017

Miroslav Nincic and Matthew Weiss, "The Future of Transboundary Water Conflicts," Political Science Quarterly 131:4 (Winter 2016-17), 717-748 

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