Box 2.7
Globalization is a two edged sword. A number of countries in East Asia are success stories of export-led development - combining rapid growth with low inequality and high human development. By contrast, many countries in Sub-Saharan Africa have become increasingly marginalized by global forces. There are also winners and losers within countries. Income inequality is clearly on the rise in many countries that have opened their economies.
In 1970 income inequality was fairly low in Sri Lanka: the Gini coefficient was 0.35. (This coefficient ranges for 0 to 1, with 0 being perfect and equality and 1 complete inequality.) When the country began to liberalize is economy in the late 1970s, inequality rose dramatically. By 1991 the Gini index was 0.51 - an increas of almost half.
In the late 1970s China began to unleash market forces, privatize its economy and rapidly open up to international trade and finance. In 1979 its Gini coefficient was 0/33 - lower than in any other East Asian country. By 1988 it had risin to 0.38 - surpassing those of Indonesia and the Republic of Korea. And inequality continues to rise, especially along the coast, which is most directly tied to the world economy,
Income inequality has also increased in Mexico, which liberalized its economy rapidly beginning in the mid-1980s. In 1984, before the reforms, its Gini coeffiecient was 0.43, but by 1992 it had risin to 0.48. And in Chile one of the most open countries in Latin America, income inequality has been rising markedly since the 1970s. In 1970 its Gini coefficient was 0.45, but by 1990 it had increased 27 % to 0.57.
Source:
Berry, Albert. 1995. "The Social Challenge of the of the New Economic Era in Latin America." FOCAL/CIS Discussion Paper. Toronto: Centre for International Studies.
Tabatabai, Hamid. 1995. "Poverty and Inequality in Developing Countries: A Review of Evidence." In Gerry Rogers and Rolph van der Hoeven, eds., The Poverty Agenda: Trends and Policy Options. Geneva: ILO.
Human Development Report 1996, Box 2.7, UNDP.
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