Inequality

2. Inequality • Inconsistent with UN Charter vision • Worsened by aspects of globalization • Confounds poverty reduction efforts • Not only in developing countries • Multidimensional and compromises development, security and human rights • Frustrates achievement of MDGs

3. We cannot advance the development agenda without addressing the challenges of inequality within and between countries – the widening gap between skilled and unskilled workers, the chasm between the formal and informal economies, the growing disparities in health, education and opportunities for social and political participation. Kofi Annan, Secretary-General, UN

4. Inequality hinders growth and increases poverty Poverty Lack of economic power Lack of socio-political power • Low income • Low assets • Denial of human rights • Discrimination

5. Unequal GDP distribution

6. Per capita GDP in 20 poorest and richest countries

7. Since 1980s, inequality has risen in most countries in all world regions Income inequality trends in 73 countries for which data are available (1950s-1990s) Risen in 48 countries Relatively constant in 16 countries Declined in 9 countries Wealthiest 10% of global population increased share of global income from 51.6% to 53.4% (1980-92) Related to greater wealth concentration Income gap widened in recent years

8. Global income inequalities(Gini coefficient values)

9. Shares of Global Private Consumption

10. Hunger and Malnutrition • Since 2000, the average number of food emergencies per year has been 30, compared with 15/year in 1980s • Sustained nutrition deprivation affects 852 million people • 1 billion overweight adults globally

11. Inequality Exacerbates Poverty Income distribution Political representation Productive resources Opportunities Basic social services Markets and information

12. World 53 -8 81 20 15 70 East Europe + Central Asia 23 2 19 Middle East + North Africa 25 -3 3 Latin America + Caribbean 47 -23 -252 East Asia + Pacific 77 2 134 Sub-Saharan Africa 77 -9 106 South Asia Poverty Levels and Trends Change in proportion and number of poor people between 1981 and 2001 %millions % living on < $2/day in 2001

13. Unemployment • Remains major source of inequality • Between 1993 and 2003: • Global number of unemployed rose by 31% to 186 million • Unemployment rates decreased slightly in developed countries while increasing in most other parts of the world • Spread of jobless growth

14. The informal economy Those in informal economy typically “have-nots” in society - 60% women - 535 million earn less than $1/day • Likely to be: • Excluded from legal protections • Precluded from enjoying basic rights and benefits of formal economy • Working in hazardous conditions

15. Informal employment dominant in many regions Share of informal workers in non-agricultural workforce by region: • North Africa: 48% • Latin America & Caribbean: 51% • Asia: 65% • Sub-Saharan Africa: 78% (excl. South Africa)

16. Informal economy share of Gross National Income, 2000 • Developing countries: 41% • Transition economies: 38% • OECD Countries: 18%

17. Why Rapid Growth of Informal Economy? • Jobless growth • Labour market flexibility • Reduction in public sector jobs • De-industrialization • Economic crises • Greater “outsourcing” • Household survival strategies

18. Health Inequalities • Great differences between and within countries • Access to healthcare • Life expectancy • Under-five mortality • Intellectual Property Rights and Patent Monopolies • High drug prices • Unequal access • Compromised capacity to react to crises

19. HIV/AIDS • Highly unequal global and regional impacts • Lowers growth, increases dependencies • Worsens existing inequalities between women and men • Depletes human resources, threatening stability, security and development

20. Education, 2001Despite progress, substantial inequities exist by region

21. Financial Liberalization • Net capital flows from ‘capital poor’ to ‘capital rich’ • Increased financial volatility • Undermines use of inclusive targeted developmental credit • Slower economic growth in recent decades

22. Trade Liberalization • International terms of trade moving against developing countries • Primary commodities vs. manufactured commodities • Tropical agriculture vs. temperate agriculture • Generic products vs. those protected by intellectual property rights

23. Tariffs biased against developing countries • Imports between developed countries average 1% • Tariffs on textiles from developing countries as high as 9% • Tariffs on agricultural products from developing countries as high as 20%

24. Retreat of the state • Stabilization and structural adjustment programs • Less progressive taxation • Reduced redistributive role • Reduced role of government in many developing countries • Public education • Health • Housing • Utilities

25. High-income countries spend 2½ times more of national wealth for health, education and welfare than low income countries. Government Spending Priorities

26. Inequality and Violence • Violence often rooted in inequality • No simple causal relationship • Vicious cycle mutually reinforcing: • Poverty • (Horizontal) Inequalities • Authoritarian governance • Lack of opportunities • Armed conflict • Reduced growth and development • Links between inequalities and extreme aspects of social disintegration

27. Poor Countries More Likely to Suffer Civil War, Adversely Affects Growth Predicted probability of onset of civil war within 5 years

28. Global Economic Agenda Dominated by Issues Important to Developed Countries Free Trade Intellectual Property Rights Investment protection Financial Liberalization Capital Account Liberalisation

29. …While Issues of Importance to Developing Countries Can’t Make it to the Agenda Doha Round, IPRs, etc. Not Developmental International Economic Governance Dominated By Rich International Economic Instability Washington Consensus Not Developmental, Not Equitable Meaningful Debt Relief Capital Flight

30. Thank you