Rising Inequality in the New Global Economy

World Institute for Development Economics Research

No. 2/2005

2005 WIDER Annual Lecture across countries was about 9 to 1 at the dawn of the 20th century. Rapid growth in India and Rising Inequality in the New China, two of the world’s biggest and poorest countries, means inequality across the world’s Global Economy people is beginning to decline. But the decline is from astonishingly high leels. Differences in by Nancy Birdsall personal income (comparing the richest 10 per cent of Americans to the poorest 10 per cent of

Matti Remes Ethiopians for example) are well above 10,000 to 1, not 100 to 1.

Why Inequality Matters

Consider why high inequality matters, both within and across countries. It matters especially within developing countries, where people are more likely (and justifi ably) to see in it signs of injustice, insider privilege, and unequal opportunity. They are often right. In developing countries inequality is usually economically Rising Inequality: the Development challenge of the 21st Century destructive; it interacts with underdeveloped markets and ineffective government programs to slow growth – which in turn slows progress he world is becoming ‘fl at’ says Thomas Friedman, in reducing poverty. Economic theory suggests a New York Times columnist, in his new bestseller why: weak credit markets and inadequate TThe World Is Flat: A Brief History of the Twenty- public education mean only the rich can exploit fi rst Century. A globophile (an enthusiast of globalization), investment opportunities. Middle income and Friedman is urging the US to take note of China and India’s poor households cannot borrow and miss out ability to compete on a new, Web-enabled global playing on potentially high returns on their own farms fi eld. The US needs to adjust to the new, fl at world, one and small business ventures for example – often in which its longstanding technological and economic higher returns than the rich are getting on their dominance is ending. capital. The most able children of the less rich miss out on the education and skills that would True: In the new global economy, the US may no longer maximize their own economic prospects and their easily dominate. But the world is not, in fact, fl at. Some countries’ own growth. entire countries and many people in many countries are stuck in deep craters that mar the global landscape. Latin America is an unfortunate example – Those of us on the top, with the right education and in the where historic high concentration of land and right countries, can easily overlook the injustice and the the concentration of income associated with frustrations they endure, and the problems they pose for exploiting mineral wealth have left a legacy the endurance and prosperity of the ‘fl at’ world. of limited educational opportunities, a small and state-dependent middle class and a large The craters are real and deep. Global inequality across majority of poor and near-poor households. countries is high and rising. The US, Europe and Japan are East Asia, in comparison, had the good luck now 100 times richer on average than Ethiopia, Haiti and to inherit after the Second World War an equal Nepal, basically because the former have been growing for distribution of land and the political impulse the last 100 years and the latter have not. That difference (for lack of natural resources, perhaps, and for

United Nations University 1.7 fear of Communist movements in Higher education relative to primary neighbouring countries) to invest 1.6 heavily in education and health – producing a growing middle class 1.5 based on increasing productivity Higher education relative to secondary in smallholder agriculture and 1.4 technology-savvy job-intensive 1.3 manufacturing. Relative log wage 1.2

In settings where inequality has taken Secondary education relative to primary hold (much of sub-Saharan Africa, 1.1 Eastern Europe and China in the last 1 decade), there is also the risk that 1990 1991 1992 1993 1994 1995 1996 1997 1998 the institutions of government will, in a vicious circle, fail to respond to Figure 1 Relative returns to different levels of education in Latin America Source: Behrman, citizens’ basic needs. It is the middle Birdsall and Szekely (2003). ‘Economic Policy and Wage Differentials in Latin America.’ class in Western democracies that demands and commands accountable government. Most developing Globalization and Inequality enrollments). That increases countries have very few households inequality within countries – China that could be called middle class – and India are good examples. It and the more unequal their income A fundamental challenge posed can also increase inequality across distributions the smaller their middle by the increasing reach of global countries by encouraging emigration class. (In Brazil the 20 per cent of markets (‘globalization’) is that of highly skilled citizens, who households in the middle of the global markets are inherently dis- naturally are most likely to leave income distribution capture less than equalizing, making rising inequality the poorest countries where they 10 per cent of Brazil’s total income, in developing countries more rather are least able to deploy their skills and at about $1700 per capita per than less likely. There are at least productively. year are well short of ‘middle class’. three reasons. In Sweden their comfortably well- As with individuals, some countries off counterparts are about 15 times First, the tremendous economic too entered the era of globalization richer and capture 18 per cent of total gains associated with deeper and with the wrong asset. Countries income.) Without a solid middle more effi cient global markets are such as Mali, Uganda and Venezuela class, even the most responsible not equally shared. Markets, after are highly dependent on primary government leaders are caught all, reward those who have the right commodity exports – whether oil, between the temptations of populism assets – financial capital, human coffee, or cotton. They have not and protectionism on the one hand – capital, entrepreneurial skills. In fact resisted globalization – indeed using infl ationary fi nancing to quell in the global economy, it turns out their trade ratios (exports plus the insecurities and frustrations that the ‘right’ asset for individuals imports over their GDP) were of the insecure majority – and the is higher education. The returns to higher two decades ago than those reluctance of the rich to fi nance the higher education have been rising of the today’s most successful tax burden associated with long- all over the world, especially since ‘globalizer’, China, and remain term productive investments in the early 1990s – increasing rapidly comparable or higher than those of education and infrastructure. One the salary premium enjoyed by China and India today. They have result: In countries where inequality university graduates. also reduced their tariffs against is high – Brazil and Nigeria – recent imports to rates comparable to their progress in increasing educational Figure 1 shows the average relative developing country counterparts. opportunities still leaves the children rate of return to education for 18 But the world price of their exports of the poor with just three to fi ve Latin American countries – with has declined dramatically relative to years of education, while their rich returns to higher education growing manufacturing prices, and they have counterparts have 10 and more much faster than the returns to lower lost out, failing to grow. Without the years. Income and wealth inequality levels of education. More integrated political and economic institutions in one generation can too easily trade markets, capital flows, and (nor the middle class) necessary undermine the best governments’ global technology, including the to generate stable and credible political capacity to guarantee more internet, are increasing the worldwide policy, they have been unable to equal opportunity in the next. demand for skills more rapidly attract private investment that would than the supply (despite increasing have enabled them to diversify. As

2 education is the ‘right’ asset for migration, and intellectual property brings, and be more creative about individuals in the global economy, regimes at the global level naturally increasing the representation of sound and stable institutions can refl ect the greater market power of poor countries and poor people in be said to be the right asset for the rich. Today’s battle to reduce global fora – the IMF, the World countries. rich country agricultural subsidies Bank, the UN Security Council, and tariffs that discriminate against the Basel Committee on Banking A second reason why globalization poor countries is a good example. Regulation, the G-8, and so on. We is dis-equalizing is that global The problem arises not because of need renewed efforts to complete markets are far from perfect. They any conspiracy but because domestic the Doha multilateral trade round as fail in many domains. The classic politics in Europe, the US and Japan, indeed a ‘development’ round and example of a market failure is that as perverse as they are, matter more a willingness to contemplate new of pollution, where the polluter at the negotiating table than unequal global institutions to manage new captures the benefi ts of polluting market opportunities for cotton global challenges – for example a without paying the full costs. At the farmers in West Africa. What is UN-based International Migration global level, high greenhouse gas true of the design of multilateral Authority. emissions of the US are imposing rules is also true of implementation. costs on poor countries. Similarly Developing countries recently We need, in short, creative thinking with global financial crises; the won the right to issue compulsory about the reality that we have a fi nancial crises of the 1990s that licenses to produce locally cheap vibrant and potentially powerful affected Mexico, Thailand, Korea, medicines. But some have hesitated instrument to increase wealth and Russian, Brazil and Argentina were to invoke their right because of welfare: the global economy. But in part due to policy errors in those implicit pressure from the US to to complement and support that countries. But a healthy portion limit their access to the US market economy we have an inadequate can be blamed on the panic that in other ways. and fragile global polity. A major periodically plagues all financial challenge of the 21st century will markets. The result tends to be dis- A Global Polity be to strengthen and reform the equalizing over the long run within institutions, rules and customs by countries. In Korea, Mexico and which nations and peoples manage Thailand, fi nancial crises reduced What can be done about the resulting the fundamentally political challenge the income shares of the bottom 80 challenge to global security, of complementing the benefi ts of per cent of households compared stability, shared prosperity, and the global market with collective to the top 20 per cent. In Mexico, most fundamentally to global social management of the problems, the accompanying recession in justice? Because global markets including persistent and unjust 1995 led the poor to take their work better for the already rich (be inequality that global markets alone children out of school – and many it with education or for countries will not resolve. never returned. In developing with stable and sound institutions), countries, the bank bailouts that we need something closer to a follow crises generate high public global social contract to address debt (amounting to 10 to 40 per unequal endowments – to increase cent of annual GDP compared to educational opportunities for the poor Samuli Siirala 2-3 per cent on average in advanced and vulnerable, and to help countries economies). High public debt keeps build sound institutions. That is domestic interest rates high, stifl ing what the Millennium Development investment, growth and job creation Goals are of course about. Because – all bad for the poor – and increases global markets are imperfect, we the pressure on emerging market need global regulatory arrangements economies to generate primary fi scal and rules to manage the global surpluses, in the long run reducing environment (Kyoto and beyond), Nancy Birdsall is the their ability to fi nance sound broad- help emerging markets cope with founding President of based investments in health and global fi nancial risks (the IMF and the Center for Global education – and their ability to beyond), and ways to discourage Development. She delivered spend more on the unemployment corruption and other anti-competitive the 2005 WIDER Annual and other safety net programs that processes (a global anti-trust agency Lecture on ‘Why Inequality protect the poor in bad times. for example). And because global Matters in a Globalizing rules tend to reflect the interests World’ , 26 October 2005, Finally, global markets tend to of the rich, we need to strengthen Helsinki. be dis-equalizing because trade, the disciplines that multilateralism

3 Global Inequality in Historical Perspective by Richard Jolly

uring the 18th and 19th origin, for your progenitors were ‘…if the tendency of legislation centuries, political Thieves…When they had committed had been to favour the diffusion, Deconomists wrote about the robbery, they endeavoured to instead of the concentration of inequality as a central issue of their lose the disgrace of it, by sinking wealth – to encourage the sub- time, important as a mechanism of their real names under fi ctious ones, division of the large masses instead development and for its links with which they called Titles. It is ever of striving to keep them together; poverty and social harmony. Adam the practice of Felons to act in this the principle of individual property Smith declared manner.’ would have been found to have no necessary connexion with the ‘Wherever there is great property, By the mid 19th century, physical and social evils which there is great inequality. For one industrialization had advanced and almost all Socialist writers assume very rich man there must be at least poverty had deepened, especially in to be inseparable from it.’ fi ve hundred poor, and the affl uence the towns in the United Kingdom. of the few supposes the indigence of The statistics suggest that in terms We need to jump ahead to the time the many.’ of income distribution little had of the United Nations to recover changed. The average income of the some of the blunt and colourful Smith emphasized the way such richest fi ve per cent was still some language of the early and mid 19th inequality led on to the need for 80 times estimated income per head. century economists. The 1951 UN government to maintain law and By this time, John Stuart Mill and report on Measures for the Economic order. Marx had taken up the cudgels. Mill, Development of Underdeveloped though considering the acquisition Countries made much of the need ‘The affl uence of the rich excites of individual property through one’s for land reform – and re-introduced the indignation of the poor, who own labour as just, wrote damning some of the early outspokenness. are often both driven by want, and indictments of the origins of the The UN expert committee (including prompted by envy, to invade his actual distribution of property in two subsequent Nobel prize-winning possessions. It is only under the Europe at the time. economists, Arthur Lewis and T.W. shelter of the civil magistrate that the Schultz) shifted the emphasis from owner of that valuable property… ‘The social arrangements of how the land was acquired to how can sleep at night in security… The modern Europe commenced from it was owned and how it was used – acquisition of valuable and extensive a distribution of property which with the focus on landlord- peasant property, therefore, necessarily was the result... of conquest and relationships. requires the establishment of civil violence: …the system still retains government.’ many and large traces of its origins. ‘In many under-developed countries, The laws of property have never the cultivators of the soil are Smith though blunt, was measured. yet conformed to the principles on exploited mercilessly by a landlord Thomas Paine writing two decades which the justification of private class, which perform no useful social later presented his analysis with pre- property rests. They have made function. This class strives to secure Marxian vitriol. He focused on land property of things which never itself the major part of any increase as the source of inequality. ought to be property, and absolute in agricultural yields, and is thus a property where only a qualified millstone around the necks of the ‘It is very well known that in England property ought to exist. They have peasants, discouraging them from (and the same will be found in not held the balance fairly between making improvements in agriculture other countries) the great landed human beings, but have heaped and, in any case, leaving them too estates, now held in descent, were impediments upon some, to give little income from which they might plundered from the quiet inhabitants advantage to others; they have save to invest in the land. In such at the conquest. The possibility did purposely fostered inequalities, and countries, land reform abolishing not exist of acquiring such estates prevented all from starting fair in the landlord class is an urgent pre- honestly… That they were not the race.’ requisite of agricultural progress.’ acquired by trade, by commerce, by manufactures, by agriculture or by Mill analyzed the role of law in this In the 1970s, income distribution any reputable employment is cetain. process, which seems to have its own emerged again in the context of How then were they acquired? parallels today. the ILO’s World Employment Blush, aristocracy, to hear your Programme. The ILO country

4 mission to Columbia in 1970 made He entirely agreed with the Conclusions inequality of income distribution the representatives of those countries centre of its analysis. Within two that national and international action Some of the greatest economists and years, redistribution from growth must be taken to secure a greater philosophers of one or two centuries became the integrating core of the equality in living standards in the ago were bold and outspoken about ILO mission to Kenya which in 1974 world. It was believed in the United the injustices of extreme inequalities led to the IDS/World Bank Study States that the existing disparities then existing nationally and on Redistribution with Growth, in national income must be reduced internationally. Their words stand in generalizing strategies for linking by an expansion of the world’s sharp contrast to the more measured growth with redistribution and total income, an increasing share descriptions of analysts today. Yet providing case studies of experience of that expanding income going to by almost every standard, global in India, Cuba, Tanzania, Sri Lanka, underdeveloped areas. The problem income inequalities have grown South Korea and Taiwan. must be viewed dynamically in substantially since that period – just terms of increasing the world’s as national inequality has grown and It is noteworthy that until the last volume of goods and services and in appears to be growing over the last few years, the World Bank gave little raising general well-being’. two or three decades. There is a case attention to income distribution, today for more outspokenness, both as shown in its history, The World The Brazilian delegate put the point about the situation, the underlying Bank: its ﬁ rst half century. The major with fewer qualiﬁ cations: causes, the links with development exception was during the Presidency and what can be done to mitigate of Robert McNamara, from 1968- ‘The problems was not to restore the extremes. There is also a case 81. McNamara highlighted ‘Latin the old balance, but rather to create for giving more attention to the America’s scandalous income and a new equilibrium by which the way today’s inequalities reflect wealth disparities’ in a major speech disparities of income and wealth and embody some of the extreme in 1972. But after this, the emphasis throughout the world would be international injustices of the past. was shifted away from equity and eliminated…’. towards ‘the absolute poor’. Thus

the work of the Bank on income Concerns with global income Zeynep Turan distribution over the last ten years distribution returned in the 1970s is noteworthy as is its latest World with the North South debate on Development Report, 2006 on Equity the need for a New International and Development. Economic Order. This need had been brought into sharp relief by In the first few years, the UN’s the massive increases in oil prices, own work on national income which had shifted the equivalent of raised concerns among delegates about 2 per cent of global income about income distribution, within in favour of the oil producing and between countries. In 1951 in countries. But debate on NIEO ECOSOC, for instance, the Indian met with strong opposition from delegate noted that ‘65 per cent of the industrial countries and was the world’s population which lived effectively terminated by the end of Richard Jolly is a co-director in Africa, Asia and Latin America the 1970s. It took until 1988 before of the UN Intellectual received only about 15 per cent of the General Assembly again came History Project at the City the world’s income’. out strongly on global inequality. University of New York. Before this, he was for This led to some surprising reactions. ‘Mindful that the existing inequalities over 18 years an Assistant The delegate of the USSR made a and imbalances between the Secretary General of the UN, strong attack on internal income international economic system are ﬁ rst as Deputy Executive distribution within the United States. widening the gap between developed Director of UNICEF for This was followed by the American and developing countries and thereby Programmes and for the last delegate about the need to tackle constitute of major obstacle to the ﬁ ve as Principal Coordinator global inequalities. development of the developing countries and adversely international of UNDP’s Human ‘Everyone would agree’ he said, relations and the promotion of world Development Report. In ‘that it was desirable to reduce and in peace and security.’ the 1970s, he was Director of IDS at the University of due course to eliminate the existence All references are in the paper prepared for of such large discrepancies...’. the WIDER Jubilee conference. Sussex.

5 Personal Assets from a Global Perspective by Jim Davies

uch attention has recently compare with income inequality?’. and fi nancial companies like Merrill- been focused on estimates The largest and most prosperous Lynch estimate the number and Mof the world distribution of OECD countries all have good holdings of US$ millionaires. In income by World Bank researchers wealth data based on household short, there is now a surprising and others. The global distribution surveys, tax data and national amount of information on household of income is very unequal and the balance sheets. Household wealth wealth holdings available. WIDER inequality has not been falling over surveys are also now available in the has concluded that the time has time. In some regions poverty and largest developing countries – China, therefore come to estimate the world inequality have become much worse. India and Indonesia. Household distribution of wealth. WIDER researchers have long been interested in Lehtikuva / AP / Vincent Yu An idea of what we may the picture for related learn from this project can measures of economic be gained by looking at some status or well-being. One preliminary numbers. So far of the most important we have collected estimates of these measures is of the mean level and household wealth, the composition of household net value of personal assets worth in the year 2000 from net of debts. 21 countries. Amounts have been converted to US dollars, Wealth is important using PPP exchange rates. We since it confers stability, see large differences in wealth. independence, and a kind The US is the richest country, of self-insurance against with mean wealth estimated negative income, fi nancial at $148,675 per person in and other shocks. It often 2000, followed closely by also confers social and the UK at $124,415. At the economic influence or opposite extreme we have power. Across countries India, Indonesia and South and regions, and across Africa, with mean wealth age groups, genders and of just $6,248, $8,061 and other groups, wealth varies $9,627 respectively. Some independently of income. developed countries that one Old people sometimes would expect to rank very have very low incomes high in the distribution, like but significant wealth, New Zealand and Sweden and poor people often lag appear to have less than half further behind in assets Booming stock markets are one reason that personal assets have the household wealth per risen quickly in China and other emerging market countries in than they do in income or recent years. capita of the US In such cases expenditure. This means careful investigation of how that to get an accurate idea the data are constructed is of economic status or well-being it is income and expenditure surveys in required, to ensure that the apparent very important to take into account a large number of other developing differences are real. On the other assets as well as income. and transition countries provide hand, there is strong clustering of partial information on assets in the about ten OECD countries in the The development of wealth data has form of housing and other durables, $80,000-$120,000 range, in line with historically lagged behind that of and make possible some inferences their fairly similar living standards. income data. However, the quality about holdings of fi nancial assets. of wealth data has now reached the At the top end, Forbes magazine Turning to the distribution of wealth, point where one can reasonably ask enumerates the world’s US$ we have so far studied data from questions like ‘What is the world billionaires and their holdings. 12 countries clustered in the period distribution of household wealth?’ More detailed lists are provided 1998-2002. In general levels of and ‘How does wealth inequality regionally by other publications, concentration are high. The median

6 value for the Gini coeffi cient is 0.70, a team of about 20 researchers from A fi nal important contribution of this for example, which is much higher around the globe. A core group is project will be to provide guideposts than typical levels of the Gini for assembling data on national balance and suggestions for developing income, which are in the range of sheets and official estimates of better data on personal asset-holding about 0.35-0.45. The mid value wealth distribution. Meanwhile a around the globe. The importance of for the share of the top 10 per cent number of researchers are focusing introducing household wealth surveys of wealth-holders is 52 per cent, their efforts on important categories in the many countries where they are again much higher than comparable of assets – housing, fi nancial assets, currently lacking, raising response numbers for income. Near the top and informal sector wealth – while rates and reporting accuracy, and end of the scale is the US with a Gini other are examining gender aspects developing national balance sheets Wealth is important since it confers stability, independence, and a kind of self-insurance against negative income, fi nancial and other shocks of 0.83. At the opposite extreme of wealth-holding and the historical as part of the activities of statistical is China, where although wealth evolution of wealth distributions. agencies and central banks, will inequality has been rising for the Still others are doing in-depth all be highlighted. The technical last 15 years, the estimated Gini regional studies – for Eastern problems and other challenges in stood at just 0.55 in 2002. That this Europe, China, India, Africa, and developing this essential database is not representative for developing Latin America. The researchers on a global scale will be carefully countries is suggested by a Gini will meet at a conference in Helsinki examined, in the hope that this of 0.76 for Indonesia. Western 4–6 May 2006, and their efforts will project will provide but the fi rst of European countries tend to be in the be recorded in research volumes to many productive examinations of the middle between these extremes, with be published later in 2006. global distribution and composition Germany and the UK, at 0.68 and of wealth. 0.71 respectively, very close to the In addition to documenting the degree average Gini for our sample. of wealth inequality this project will focus on important structural issues One contribution of our project will such as the age and gender profi les be to provide a fi rst estimate of the of wealth holding in countries at world distribution of wealth. In different stages of development and order to generate this estimate we in different regions. It will also study need suitable numbers on the level of differences household portfolio household wealth in a large sample of structure, examining to what extent developing, transition, and developed the less developed countries, for countries. We also need estimates of example, fall short in fi nancial assets wealth inequality within a range of and borrowing. Researchers will different types of countries. While analyze the problems that hold back good data is available for many the growth of household fi nancial developed countries and for the assets in developing and transition largest developing countries, it will countries – ranging from factors like be necessary to make imputations lagging development of financial for others. This is being done on institutions through insecure property the basis of careful analysis of the rights and corruption. Prospects for determinants of wealth levels and the growth of personal financial inequality in the countries where assets in developing and transition Jim Davies is a Professor, data are available. countries will be assessed. This is and the RBC Financial Group very important both because growth Fellow, in the Department of An enormous amount of work of fi nancial assets in these countries Economics at the University remains to be done. The data we can be expected to go hand-in- of Western Ontario, have generated so far give us a hand with faster economic growth, where has been a faculty tantalizing glimpse of where we and because it will lead to a rise in member since 1977. He is are headed, but the bulk of the wealth-income ratios that may allow the director of the WIDER work lies ahead. WIDER’s project well-being to rise in these countries on Personal Assets from a Global more quickly than GDP or other project on Personal Assets Perspective involves the efforts of measures of aggregate income. from a Global Perspective.

7 The International Mobility of Talent: Determinants and Development Impact by Andrés Solimano

here is a growing recognition of in both the host country and in the development impact: the importance for economic home country. These are people who Tgrowth and development of are uniquely positioned to serve as (i) The mobility of entrepreneurs, ‘intangibles’ such as technology, bridges between Asian and American technical talent, technology innovators ideas, creativity and innovation. markets given their contacts, access and business creators. Behind these intangibles there is to technology, capital and knowledge (ii) The mobility of scientific and ‘human talent’, say an inner capacity on how to operate successfully in academic talent and international of individuals to develop ideas and both societies. In the Latin American students. objects, some of them with a high context, Chilean, Mexican, Bolivian economic value. Clearly, the ‘human entrepreneurs and others are making (iii) The mobility of health professionals and cultural workers. factor’ (paraphrasing the title of the successful inroads in biotechnology famous Graham Greene’s novel) is and cellular phones companies in The literature on the economic critical for adding value to goods, North America; they are also starting determinants of talent mobility services and other activities. The to bring ‘return investment’ to their stresses the importance of topic of the international mobility home nations. This phenomenon is international differences in wage of talent is reviving now after being not only restricted to the business levels and earning opportunities in largely dormant for a few decades. sector. International celebrities in driving people from one country/ In the 1960s and 1970s there was the world of literature and painting region to another. This is particularly an interesting polemics among such as Isabel Allende, Mario Vargas relevant for entrepreneurs, for liberal economists between the ‘nationalists’ Llosa, Fernando Botero and others professions and others. Still our (represented by Don Patinkin) and are succeeding in America and research shows that pay differentials the ‘internationalists’ (represented Europe, likewise famous soccer may not be the only prime motivation by Harry Johnson) that also affected players from Africa. However, not to move internationally for all types the views of policy makers at the all talent mobility is as glamorous of talent. A scientist may have time. The internationalist view as these examples could suggest. also an over-riding interest in the stressed that the mobility of talent A dramatic case is the massive and quality of the research centers and was the result of better economic persistent emigration of medical universities at home and abroad, and professional opportunities found doctors, nurses and other workers in their research facilities and budgets abroad than in the home country the health sector from poor nations and the quality of peer interaction. and that this mobility leads to clear in sub-Saharan African countries to Engineers and innovators living in gains for those who move and also the UK, US, Canada or Australia. technologically advanced economies for the world economy as human The exodus of health professionals is derive high personal satisfaction from resources went from places with weakening of the health sector in the contributing to the technological lower productivity to places with source countries. This is particularly development of their home country higher productivity, thereby rising serious in the case Africa already and, in passing, internalizing the world income and global welfare. suffering AIDS epidemics, malaria corresponding monetary rewards The nationalist school, in turn, and other diseases that impair associated with that transfer. In the questioned the practical meaning their development potential and political realm, the case of former of the concept of ‘world welfare’ causes many losses of human lives. Prime Minister of Israel, Golda and pointed out the asymmetric Moreover, the Caribbean is also a Meier is telling. As described in distribution of gains and costs of that region with a high proportion of one of the chapters of this project, mobility between receiving (core) health professionals abroad. when interviewed long ago on her and sending (periphery) countries. motivations to move, stated that she At the start of the 21st century, the Types of Talent and Motives could not miss what was going on problem of brain drain certainly to Move in Israel, even at the cost of leaving exists although we now tend to also behind the comfort and security of underscore the process of ‘brain The WIDER-ECLAC project on their home to engage in a tumultuous circulation’. The story now is of international mobility of talent process of nation-building abroad. bright Indian and Chinese nationals identified three broad types of An apparently opposite case, in that after graduating in the US talent mobility with similarities and terms of motivation to emigrate became successful entrepreneurs differences in their motivation and is the case of health professionals

8 leaving their home countries at the social interests of the health sector. Chile) in which top-class scientists time of serious shortages of medical (vi) The USA and Canada are the larger have been attracted and retained after personnel or downright health crises recipients of international students, these centers were created; other in their home nations. scientists and other professionals. examples exist in other developing However, the evidence shows large countries as well. Similar initiatives Main Findings cross country variation in the return could be developed also for cultural rates to their home countries for PhDs talent. The main fi ndings of our project can graduated in the USA, high for countries be briefl y summarized as follows: such as Indonesia, Korea, Brazil and Nowhere policies are most urgent Chile and low for Chinese and Indian than in tackling the exodus of PhDs who tend to stay in the USA after health professionals from poor (i) Large differences in per capita income graduation. and living standards across countries countries with de-capitalized health besides economic globalization, lower (vii) Cultural workers are a segment of sectors. Ethical standards for transport and communication costs, have signifi cant international mobility. This recruitment in receiving countries lead, in recent years, to an increase in the is a heterogeneous group that ranges and compensation schemes are mobility of qualifi ed human resources from high-pay, winners-takes- all artists possible tools to deal with this from developing countries to artisans, across countries. phenomenon. Also wage structures, hand-crafters and other lower earnings (ii) There is a considerable concentration cultural workers. and career possibilities in the health of the world stock of qualifi ed human sector in the home countries must be resources measured as people with Policy Issues reviewed and adjusted. Interestingly, tertiary education, in a few high per some developing countries with a capita income countries, chiefl y the US Currently, the benefi ts of mobility high proportion of medical doctors followed by the UK, Australia, Canada of qualified human resources to the home population (i.e. Cuba) and other OECD nations. Many of this are often biased in favor of send medical doctors to other talent come from developing and former socialist countries such as IT experts, destination countries given the developing countries to counteract health professionals, scientists, students high concentration of world talent this defi cit. A main challenge of this and others. in developed countries, a trend that era of globalization is how to align can aggravate global inequalities. the greater mobility of qualified (iii) An interesting phenomenon is the Policies that promote return mobility human resources seeking better emergence of north-south (reverse) of ‘technology entrepreneurs’ and incomes and more opportunities mobility of ‘technology entrepreneurs’ in which successful expatriate entrepreneurs other innovators can have a high in rich countries with the needs of in the north (the typical case being pay off for national development. equitable international and national entrepreneurs in Silicon Valley but there Talent, to be economically and development at home. are more) expand their business reach to developmentally effective, comes their home countries (typically China and in packages; usually along with India and also Latin America) bringing technology, capital, contacts and along with them capital, technology and market connections. Countries market knowledge. interested in attracting and retaining (iv) Increasingly, informal organizations entrepreneurial talent should ensure such as search networks, open migration good physical infrastructure and chains and professional, scientifi c and appropriate institutions that cut entrepreneurial Diasporas serve as bureaucracy and promote wealth useful mechanisms for transmitting creation to channel productively that information about opportunities in type of talent. Nations that seek to the home countries. Source country attract and retain scientifi c talent and governments are starting dialogues to outstanding students should revise connect with their Diaspora communities the salary structures in university Andrés Solimano is Regional to mobilize talent abroad for economic development at home. and research centers and the career Advisor, UN ECLAC, former possibilities for scientists at home. Country Director at the (v) The export of health professionals This must be a political priority. World Bank and Executive such as medical doctors and nurses from Moreover, the creation of fi nancially poor and low- middle income countries Director on the Board of the sustainable ‘Centers of Excellence’ often have the effect of weakening the IADB. He is the Director of for the advancement of science and human resource base in the health sector ECLAC-WIDER project on technology in the source countries of the source countries. Public policies in the International Mobility source countries are faced with a serious can be a worthy initiative in this of Talent. problem in which the private interests direction. Some experiences of this of health professionals collide with the nature exist in Latin America (e.g in

9 Rising Inequality in Post Reform China by Guanghua Wan

Introduction Gini coefﬁ cient would produce a Clearly, the urban-rural segregation similar picture. contributes a very large proportion nequality in income and to the overall inequality. Some consumption has been increasing The diagram also shows that 70-80 per cent of total inequality Idramatically in China since mid- inequality among rural regions is explained by the rural-urban 1980s. In particular, China’s regional is always higher than that among gap while only about twenty per inequality has attracted considerable the urban regions, reflecting the cent of the total is explainable by attention. In the past 20 years or so, egalitarian nature of wage setting inequalities within the rural and the costal areas have experienced in pre-reform urban China. Income within the urban regions. phenomenal growth while the inland and consumption of rural residents has lagged behind. Meanwhile, the were and are still largely dependent We can also decompose the urban biases that existed before the on local resources, which explain the Theil-index along the east-central- reform era seem to have become high inter-region inequality. What west dimension. The decomposition more serious. Policymakers are is interesting is the faster growth results are presented in the third increasingly concerned about the of rural inter-region inequality than diagram on the next page. regional divide and the rural-urban the urban counterpart, possibly gap, which could undermine social attributable to the transfer payments It is worth noting that the east- security and political stability, and which tend to equalize living standard central-west disparity has received adversely affect long run economic among the urban households. The much more attention than the urban- growth in China. transfer payments are not relevant rural gaps. This is best demonstrated and the welfare system is absent in by the historical launch of the A considerable literature exists rural China. ‘Western Development Program’ focusing on China’s regional in 1999. However, a contrast of the inequality. Earlier attempts were Decomposition of Regional above two diagrams reveals that mostly focused on measurement of Inequality the latter is much more important regional inequality. This is followed than the former. To be more precise, by inequality decompositions, To identify causes of regional China’s regional inequality will drop aiming at gauging the broad inequality, we can decompose the by 20-30 per cent if the east-central- compositions of regional inequality. Theil-index along two dimensions. west disparities are eliminated. More recently, efforts are being The ﬁ rst is to assess the contribution On the other hand, eliminating devoted to identifying fundamental of urban-rural divide to the the rural-urban gap will lead to a sources of regional inequality. These overall regional inequality. This drop of 70-80 per cent of China’s research efforts certainly help enrich decomposition is presented in the regional inequality. Viewing from our understanding of the increasing second diagram on the next page. this contrast, we believe it is more trend in regional inequality in China. However, many unknowns still remain. In what follows, we will 0.14 0.139 summarize major findings from 0.127 the WIDER project on Poverty and 0.123 0.12 0.117 0.117 Inequality in China. China Urban 0.115 0.106 0.103 0.10 Rural 0.099 0.097 0.096

Regional Inequality on the 0.087 Rise since mid-1980s 0.08 0.079 0.072

E0 0.065 0.063 It is widely accepted that regional 0.06 inequality declined in the early years of economic reform and has 0.04 been increasing since mid-1980s. 0.02 As shown in the ﬁ rst diagram, the rise is quite signiﬁ cant. Although 0.00 the Theil index is used here, other 1987 1989 1991 1993 1995 1997 1999 2001 2003 inequality indicators such as the Year

10 discriminations against small farmers and rural activities. Finally, changes are needed in the collection and allocation of fi scal resources which so far have favoured the developed regions. An equalization in fi scal support would lead to an almost 15 per cent drop in regional inequality and a progressive fi scal scheme would result in a much larger impact. Adding together, these three variables contribute over half of the total regional inequality in China. effective to target the rural areas are devoted to promote trade in and in the poor western and central FDI fl ows to west and central China. China. Policy biases which prompted trade and FDI but are gradually phasing Factor Contributions to the out in coastal China should be Regional Inequality implemented in other parts of China. Market potential and location For policymakers, it is vital to estimate how much fundamental variables contribute to the regional inequality although the rural-urban and east-central-west breakdowns are useful. Such estimates could not be obtained until the emergence of the regression-based decomposition framework. Applying this new technique to China produced a number of interesting findings. First, globalization as represented by FDI and trade constitutes a positive and substantial share of China’s regional inequality and the share rises over time. Second, capital is consideration place the poor regions one of the largest and increasingly in a disadvantageous position in important contributors to regional attracting FDI and promoting trade. inequality. Third, economic reform However, a converging trend in characterized by privatization exerts FDI and trade is encouraging. More a significant impact on regional important is the domestic capital; inequality. Finally, the relative equalization of which across regions contributions of education, location, will cut regional inequality by 20 per urbanization and dependency ratio cent. To narrow down gaps in capital to regional inequality have been possession, it is necessary though declining. diffi cult to break the vicious circle existing in capital formation. This Policy Measures to Contain the calls for development of fi nancial Rising Regional Inequality market in China, especially in poor rural areas. Again, policy support Gwanghua Wan is a Senior A number of policy implications are for investment in the poor regions Research Fellow at WIDER readily derivable from the WIDER is needed in terms of tax concession and Co-Director of the project. Further globalization will and bank lending. In particular, lead to higher regional inequality continued financial reforms are project on Rising Income in China unless concerted efforts necessary in order to eliminate Inequality in Asia.

11 Managing Globalization: Development Questions and Challenges for Africa by Amelia U. Santos-Paulino

rade and financial trade liberalisation under structural objectives as a central constituent; liberalisation have been a adjustment programmes. improvements in the trade regime Tfeature of the world economy to reduce international constraints in recent decades. Multilateral tariffs But the WTO’s credentials in on development; and increases in reductions under the auspices of the addressing development-related the volume of resources for building General Agreement on Tariffs and problems have been condemned. production and trade capacities. Trade, and since 1995 the World That is why the future of the Trade Organization (WTO), are at globalization effort largely depends Globalization in Africa the heart of these developments. But on the WTO and its member International Monetary Fund (IMF) countries successfully confronting African economies have engaged and World Bank conditionality and its critics. In this regard, the state in serious policy reforming. This Structural Adjustment Programmes of market access in manufacturing has been so in spite of problems of (SAPs) have also played a prominent and agriculture, subsidy reform in implementation and disruptions. role in this process. The outcome the OECD members, preferential As a result, from the early 1990s from this drive to more open trade trading arrangements, and export- many countries in the region have regimes is encouraging: world trade promotion in developing countries displayed profound changes in their has grown nearly fi ve times faster are some of the most pressing national policy environment. And than world output, and the GDP of concerns. These issues are discussed these policy changes have translated most countries has been remarkable in WIDER’s volume The WTO, into many African countries being by historical standards. Developing Countries and the Doha classified as possessing low-to- Development Agenda: Prospects and moderate trade policy regimes, The resulting greater economic Challenges for Trade-led Growth, according to their tariff and non- integration, generally known as Edited by Basudeb Guha-Khasnobis tariff barriers. globalization, mostly arises from (Palgrave McMillan, 2004). innovation and technological Likewise, government’s progress. Importantly, this process International trade is also vital participation in the economy has affects the movement of people for poverty reduction. But the been enhanced across Africa. This and knowledge across the world. In links between trade expansion has been achieved by restructuring this context, cultural, political, and and poverty reduction are neither and privatising state enterprises, environmental concerns forcefully straightforward nor automatic. A and by undertaking fi scal reforms. come into play. major policy challenge is addressing Also, public spending has been the disparity between the strong role improved and reoriented towards At least in theory, globalization which international trade can play in public investment and spending on entails benefits for all countries. poverty reduction on the one hand, vital social services, specially health Accessing world markets should and the ambiguous or depleting and public education. allow countries to fully benefit trade effects which are occurring from their comparative advantages. in too many poor countries on the Regional integration is a Likewise, trade openness implies other hand. further important indicator of more options in terms of low-cost the globalization efforts in the inputs, access to fi nal consumption The central policy issue facing the continent. African countries are goods, or better technologies. developing world and their advanced taking concrete steps towards partners is how to promote poverty integrating their economies by However, globalization also implies reduction in national economies. building regional communities substantial adjustment costs for Therefore, in order to be an effective and increasing intra-regional trade. individuals, communities, and development tool trade should be There are now 14 regional economic societies as a whole. And this process mainstreamed into the poverty entities, regarded as the building can have important distributional reduction strategies. The main areas blocks of the African Economic impacts within and between discussed in several multilateral Community. Particularly important countries. This is one of many issues economic forums include: the design is the New Partnership for Africa’s that are critical in WTO-sponsored of better national development Development, a strategic framework multilateral trade negotiations, and policies that integrate trade of the African Union designed to

12 meet its development objectives. Moreover, several protocols have Box 1: Global Trade Trends in Output and Production been signed to foster transportation and telecommunications links, and 160 for allowing the free movement 140 of workers and capital between 120 countries. 100

Special international support 60 measures are also important if Index (1995=100) 40 trade is to serve as a more effective mechanism for poverty reduction. 20 Nevertheless, current special 0 measures, including both market 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 access preferences and special Total Exports Agriculture [X] Manufacturing [X] GDP and differential treatment for the least developed countries written into WTO provisions have various transactions tax, global environment more openness to trade; and the limitations. So, there is considerable taxes such as carbon tax, a global connotations for human capital. scope for strengthening these lottery, and facilitating remittances schemes. by migrants. These alternative sources of external finance are Private sector development is explored in WIDER’s study New another critical issue in managing Sources of Development Finance, globalization. Limited access to edited by Anthony Atkinson, Oxford financial resources continues to University Press (2004). impede the diversifi cation of African economies and their fi ght against Increased and effective international poverty. To tackle this problem, assistance for building productive several innovative proposals to capacity and reducing supply increase private fl ows and to improve constraints at the national level will access to finance for small and contribute to trade expansion and medium enterprises have been put poverty reduction. This should help on the table. to improve the trade–poverty linkage, and contribute to competitiveness. Aid Trade capacity building is central to these processes. Although developing and least developed countries, mostly What is the Way Forward? African ones, have shown important commitments towards economic Developing countries, including reforms, the poorer countries still African ones, have made a need to be supported by adequate considerable effort in restructuring concessional financing. A larger their economies and opening volume of external fi nance is widely up to world trade. Yet there are seen as vital for African development, further challenges to be tackled. in general, and in achieving the The full impact of economic Millennium Development Goals liberalisation cannot be assessed (MDGs), in particular. without considering the adjustment implications for specifi c factors or To this end several proposals have groups. Crucial issues related to Amelia U. Santos-Paulino is been put forward, such as the globalization include the changes a Research Fellow at WIDER. United Kingdom’s International in wages and profi ts; international She has been a consultant Finance Facility (IFF). Alternative labour and capital mobility and for the World Bank and suggestions include a development- related changes in global markets UNCTAD on trade and oriented allocation of the IMF’s and power structures; the nature of development Issues. Special Drawing Rights, a currency technical progress resulting from

13 Development Agendas and Insights 20 Years of UNU-WIDER Research

he United Nations in Helsinki. world economy, including structural University (UNU) is ‘an issues, and assisting in producing Tinternational community of Speaking at the signing ceremony, new responses to existing and future scholars, engaged in research, post- Foreign Minister Väyrynen said problems graduate training and dissemination that ‘a research institute of this kind of knowledge in furtherance of can play a catalytic role … . It can • providing a forum for professional the purposes and principles of the provide the international community interaction and for the advocacy of Charter of the United Nations’. The with impartial facts and unbiased policies for robust, equitable, gender- World Institute for Development advice on the options governments balanced, and environmentally Economics Research (WIDER) was have when they try to solve pressing sustainable growth the fi rst research and training centre economic problems.’ to be established by UNU, and as • supporting basic analytical research an integral part of the University The unique status and position on underlying theories, concepts, enjoys considerable autonomy and of WIDER has become evident and measurement academic freedom within the overall in the two decades since it began framework of UNU activities. its activities in Helsinki in 1985. • promoting capacity building and During that time, WIDER has training for scholars and policymakers WIDER’s creation was prompted by established a reputation as one of the in economic and social development, increasing concern about the state world’s leading research institutes and encouraging the search for new of the global economy and about on development economics. As modes of international economic co- the limitations of existing economic Eric Hobsbawm wrote in his Age operation and management. and social perspectives on global of Extremes (1994: x), ‘reading the problems. Following consultation papers, listening to the discussions In attempting to meet these goals, with prominent public fi gures and and generally keeping my ears open WIDER benefi ts greatly from UNU’s scholars, UNU convened a special during the conferences organized on strategic position at the intersection meeting of 24 world experts at the various macro-economic problems of the academic community and London School of Economics and at UNU-WIDER in Helsinki [as] the United Nations system. It Political Science (LSE) in 1982 it was transformed into a major is consequently well-placed to to consider the proposal to set up international centre of research and address the need of policymakers WIDER. The meeting, chaired by discussion under the direction of Dr for new and original insights into the the Director of LSE, Professor Ralf Lal Jayawardena … the summers I economic and social development Dahrendorf, strongly endorsed the was able to spend at that admirable of the poorest nations. WIDER also importance and global need for such institution as a McDonnell Douglas benefi ts from having considerable an Institute. visiting scholar were invaluable to autonomy and academic freedom, me’. secured in part by the distinguished In November 1983 the government academics and other members of of Finland offered to host WIDER, Research at WIDER has the governing bodies who provide providing premises for the Institute particular interest in: advice on a range of issues. and an endowment fund of US$25 million. This offer was accepted by the • providing original analysis of The research programme at WIDER Council of UNU in December 1983, emerging topics and policy advice is planned and managed by a small and the Host Country Agreement aimed at the sustainable economic team of Helsinki-based staff: about and Memorandum of Understanding and social development of the 10 full-time researchers, including were signed on 4 February 1984 by poorest nations the Director and Deputy Director, the Foreign Minister of Finland, assisted by 13 support staff. This Paavo Väyrynen, and the Rector • helping to identify and meet the team is complemented annually by of UNU, Soedjatmoko. Following need for policy-orientated socio- about 20 visiting fellows and PhD approval by the Finnish parliament, economic research on pressing interns, and an external network of the Agreement came into force global and development problems, over 300 researchers worldwide. on 20 June 1984. WIDER’s common domestic problems, and The network includes scholars inaugural director Lal Jayawardena their interaction working in universities and research was appointed on 1 March 1985, institutes togeter with specialists and the institute was established • analyzing the problems of the from the United Nations, World

14 Bank, International Monetary Fund, research, WIDER hopes to continue in furtherance of its stated mandate, and other international organizations, this tradition. has chosen to pursue. By drawing on who conduct research and participate the expertise and commitment of a in the programme activities. Over the WIDER Thinking Ahead truly international profi le of research past twenty years, seven winners of effort, WIDER has endeavoured to the Nobel Prize in Economics have The twenty years since the World come to grips with the reality of the contributed to the work of WIDER: Institute for Development Economics world’s problems, to understand Joseph Stiglitz, awarded the prize Research (UNU-WIDER) began the nature of processes at work, to in 2001, Amartya Sen 1998, James work in 1985 have seen major describe and evaluate the vicissitudes Mirrlees 1996, John Harsanyi 1994, changes in the world economy of global development, to provide Robert Fogel and Douglass North with profound implications for sound empirical and conceptual 1993, and Robert Solow 1987. the developing world and for bases to assessment and redress, development economics. In June and to hold out informed hope for Topics in the research programme 2005, leading researchers and improvement and mitigation in are chosen with several criteria in policymakers met in Helsinki to respect of problems which it might mind. The projects should relate mark WIDER’s jubilee anniversary, have been tempting to regard as to themes emerging from current to reflect upon current thinking fundamentally intractable. It would debate and address issues of central in development economics and be legitimate to hold that, in the importance to the work of the UN. what the next two decades might process, WIDER has presided over Preference is also given to topics hold. The conference sought to a body of research of which some in which WIDER has traditionally highlight new and emerging issues part at least has been of a genuinely had a research interest. Finally, in development, how research can seminal, ‘ahead of the curve’, and whenever possible, WIDER projects best address these questions, and the path-breaking character. should provide opportunities to promising methodologies that can involve researchers from developing push the frontiers of research and The fi rst twenty years of WIDER’s and transition countries. practice forward. existence give cause for satisfaction regarding the goals it set out for Specific proposals for projects The world as we know it—and itself and the degree to which these typically evolve in-house through have known it for long—is one goals have been achieved. It is hoped consultation with the various in which there is a great deal of that the next twenty years will see a constituencies with which WIDER deprivation, disparity, and strife. continuation of both the vision and has close contact, including sister Globalization has shrunk distances the success of WIDER. organizations in the UNU, UN among the countries of the world, partners, and policymakers from but sometimes at the cost of both the North and the South. deepening unequal trade and power Subsequently, advice and evaluation relations. The ability of the poorer is provided by the WIDER Board countries to cope with and benefi t which comprises economists, social from globalization has been impeded scientists, and policymakers from by dwindling international aid fl ows, different regions of the world. volatile private capital movements, Guidance is also provided by the a lack of attention to the causes of UNU Council, which annually confl ict and to human security, as evaluates the research programme well as the social costs of market and other activities of WIDER, and liberalization. The deep poverty in addition determines the overall that is still widespread, especially principles and policies of the United in Africa, is a stark reminder that Nations University. all is not well with the world even if parts of it have witnessed continuing Development Agendas Reviewing twenty years of WIDER improvements to their level of and Insights – 20 Years research into economic development, prosperity. of UNU-WIDER Research many of the issues—such as poverty, is copublished by UNU- fi nance and confl ict—are as relevant Pessimism, resignation, indifference, WIDER, United Nations today as they were two decades ago. or recourse to looking the other Publications (ISBN 92-1- Through its analysis and insights, way, are all possible responses to 101108-6), and ADECO– WIDER has profoundly infl uenced the state of the global order. But the way in which these issues are engagement is also on the menu, Van Dierman Editions now considered. Through its future and it is this option which WIDER, (ISBN 2-88283-420-9).

15 WIDER Special Events and Book Launches

Nanna Saarhelo President of Finland Ms Tarja Halonen visited WIDER on 26 August 2005. Professor Tony Shorrocks, Director of WIDER welcomes the president and her staff at WIDER’s premises.

Nanna Saarhelo Former President of Finland Mr Martti Ahtisaari gave the opening speech at the WIDER 20th Anniversary Jubilee Conference 17-18 June 2005 in Helsinki with Professor Deepak Nayyar, keynote speaker of the conference, Chairperson, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, and Chairperson of the WIDER Board.

A new WIDER study on Rising Spatial Disparities was presented on 3 October 2005 at DFID in London by Professors Ravi Kanbur and Tony Venables. Professor Tony Shorrocks chaired the session and Professor Alan Winters was discussant. The event was attended by over 80 participants from DFID and a wider local development community. A co-author of the WIDER Spatial Disparities project, Dr Guanghua Wan also participated at the launch.

16 17 WIDER Publications New Titles Policy Briefs World Economic Papers Journal of International Development Rising Spatial Disparities and Development Ravi Kanbur and Anthony J. Venables UNU Policy Brief No. 3, 2005

What can the European Central Bank learn from Africa? David Fielding UNU Policy Brief No. 4, 2005

Zone franc : l’expérience africaine peut-elle inspirer la Banque centrale européenne ? David Fielding UNU Note d’orientation No. 1, 2005 Number 3, Issue 166 (June 2005) Journals Special Issue to mark UNU-WIDER’s 20th Anniversary Volume 17 Number 8 The Review of Income and Wealth (in Chinese) China Center (November 2005) for Economic Studies, Fudan Special issue on Aid to Africa University Edited by Tony Addison, George Mavrotas and Mark McGillivray The Round Table The World Economy

Series 51, Number 2 (June 2005) Special Issue: Inequality and The Commonwealth Journal of Multidimentional Well-being International Affairs Issue 381 Volume 29, Number 1 Guest Editors: Mark McGillivray (September 2005) (January 2006) and Anthony Shorrocks Special Issue: Conﬂ ict and Special Issue: FDI to Developing Peace-building: Interactions Countries between Politics and Economics Edited by Tony Addison, Guest Editor: Tony Addison Basudeb Guha-Khasnobis and George Mavrotas

18 Books and institutions, trade and New in paperback globalization, inequality, conﬂ ict, Development Agendas and growth and employment—this Inequality, Growth and Poverty Insights: 20 Years of volume offers insights into the role in an Era of Liberalization and UNU-WIDER Research of economic, political and social Globalization factors and outlines the design of effective structures and institutions Edited by Giovanni Andrea Cornia to improve the well-being of the (paperback 0-19-928410-5) world’s poor. July 2005 UNU-WIDER Studies in Macroeconomic Policy in the Development Economics Franc Zone Oxford University Press

‘…a timely and valuable contribution to current thinking on development issues, since it underscores both the complexity of the challenges that lie ahead as well as the opportunities created by the process of globalization.’

UNU-WIDER December 2005 —Enrique V. Iglesias, President, United Nations 92-1-101108-6 Inter-American Development Adeco-Van Diermen Editions Bank, Washington DC 2-88283-420-9 Spatial Disparities in Human Wider Perspectives on Development: Perspectives Global Development from Asia

Edited by David Fielding (hardback 1403949522) September 2005 Studies in Development Economics and Policy Palgrave Macmillan

‘a good start for a critical examination of the theoretical and empirical underpinnings of monetary policies in the Franc Zone and areas of their complementarities with ﬁ scal policies. The rigorous scrutiny of UEMOA’s and BCEAO’s policymaking is a healthy endeavour that should concern UNU-WIDER more local academicians and Edited by Ravi Kanbur, (hardback 1403996261 and professional economists.’ Anthony J. Venables, paperback 1403996318) and Guanghua Wan September 2005 —Jacques Pégatiénan Hiey, (paperback 92-808-1122-3) Studies in Development Direction Générale de l’Economie, January 2006 Economics and Policy Ministère d’Etat, Ministère de United Nations University Press Palgrave Macmillan l’Economie et des Finances, Côte d’Ivoire ‘make[s] an important contribution Addressing core issues in global … that discusses not only development—governance methodological issues in

19 measuring regional disparities but also empirical evidence from small and large countries of Asia. Of interest are the varied explanations of what causes these inequalities that will no doubt be useful for policymakers and practitioners dealing with development issues.

—Brinda Viswanathan, Associate Professor, Institute for Social and Economic Change, Bangalore, India

Forthcoming books WIDER was established by UNU as its ﬁ rst research and training centre and started Inequality, Poverty and Well-being work in Helsinki, Finland, in 1985. Through Edited by Mark McGillivray (hardback 1403987521) July 2006 its research and related activities, WIDER Studies in Development Economics and Policy, Palgrave Macmillan seeks to raise unconventional and frontier A mix of conceptual and empirical analyses that constitute new and issues and to provide insights and policy innovative contributions to the research literature advice aimed at improving the economic and social development of the poorest Human Well-being Concept and Measurement nations. Edited by Mark McGillivray (hardback 0230004989) September 2006 Studies in Development Economics and Policy, Palgrave Macmillan WIDER Angle is the newsletter of UNU- WIDER. Published twice a year, the Important insights into how human well-being might be better newsletter focuses on the Institute’s conceptualized and measured. research activities. It is distributed free of Linking the Formal and Informal Economy: Concepts and Policies charge. The newsletter is also available on Edited by Basudeb Guha-Khasnobis, Ravi Kanbur, and Elinor Ostrom our Web site at: www.wider.unu.edu. (hardback 9780199204762) September 2006 Editorial contents, design and layout by UNU-WIDER Studies in Development Economics Ara Kazandjian (e-mail: [email protected]. Oxford University Press edu),and Basudeb Guha-Khasnobis (e-mail: [email protected]). Informal Labour Markets and Development Edited by Basudeb Guha-Khasnobis and Ravi Kanbur Research and Training Centres and (hardback 1403987556) Studies in Development Economics Programmes of the United Nations and Policy, Palgrave Macmillan University www.unu.edu While highlighting the role of informal labour markets in facilitating • UNU World Institute for Development Economics Research (UNU–WIDER) globalization in developing countries these books also raise some • UNU Institute for New Technologies (UNU–INTECH) key difﬁ culties associated with the expansion of such markets and • UNU Institute for Natural Resources in Africa economies. (UNU–INRA) • UNU International Institute for Software Technology (UNU–IIST) Publications on CD-Rom • UNU Institute of Advanced Studies (UNU–IAS) • UNU International Leadership Institute (UNU–ILI) • UNU International Network on Water, Environment and Health (UNU–INWEH) Library of publications, 2001-2005 • UNU Programme for Comparative Regional Integration Studies (UNU–CRIS) • UNU Institute for Environment and Human Containing every Research Paper, Discussion Paper, Policy Brief and Security (UNU–EHS) WIDER Annual Lecture in full text searchable format. Available free • UNU Programme for Biotechnology for Latin America and the Caribbean (UNU–BIOLAC) upon request. See ordering WIDER publications. • UNU Food and Nutrition Programme for Human and Social Development (UNU–FNP) • UNU Geothermal Training Programme (UNU–GTP) • UNU Fisheries Training Programme (UNU–FTP)

Ordering WIDER publications WIDER The WIDER Discussion Paper and Research Paper series are Katajanokanlaituri 6 B available to download from www.wider.unu.edu 00160 Helsinki, Finland Tel. (+358-9) 6159911 Books are available from good bookshops or direct from the Fax (+358-9) 61599333 E-mail [email protected] publishers, www.oup.co.uk, www.palgrave.com, Web site www.wider.unu.edu and www.unu.edu/unupress/. For further information on the Institute’s activities, please contact: For other inquiries and orders please contact WIDER Publications, Mr Ara Kazandjian, tel. (+358-9) 61599210, Mr Adam Swallow, Katajanokanlaituri 6 B, FIN-00160 Helsinki, e-mail: [email protected] Finland, e-mail: [email protected]. Printed by Forssa Printing House Finland, 2005, ISSN 1238-9544