Winners and losers Apr 26th 2001 From The Economist print edition

The global distribution of income is becoming ever more unequal. That should be a matter of greater concern than it is, argues Robert Wade

ANYBODY interested in the wealth and poverty of nations must be interested in what is happening to the global distribution of income, one would suppose. A lot turns on the question. If the world's income distribution has become more equal in the past few decades, this would be powerful evidence that globalisation works to the benefit of all. It would give developing countries good reason to integrate their economies closely into the world economy, as the IMF and the World Bankand their mostly rich-country shareholdersurge them to do. It would answer some of the fears of the anti-globalisation protesters. And it would help to settle a crucial and long-standing disagreement in economic theory, between the orthodox view that economic growth naturally delivers 'convergence' of rich and poor countries, and alternative theories which, for one reason or another, say the opposite.

Despite its importance, this issue has received rather little attention within the fields of development studies, international relations and (until very recently) international economics. Neither the World Bank nor the IMF has devoted significant resources to studying it. Many analysts apparently take it for granted that global inequality is falling. Others think it sufficient to focus on poverty, and ignore inequality as such. Both these views need to be challenged. New evidence suggests that global inequality is worsening rapidly. There are good reasons to worry about that trend, quite apart from what it implies about the extent of world poverty.

Distributing the spoils

What exactly does 'world income distribution' mean? This article is concerned with distribution among the planet's 6.2 billion people, regardless of country or region. World income distribution can be thought of as the combination of (a) the internal income distributions for all the countries and (b) the distribution of average incomes across countries. Most of the inequality in world incomes reflects inequality in country averages rather than inequality within countries.

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