Imagine There's No Country: Poverty, Inequality, and Growth in the Era of Globalization / Edition 1

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A new era of globalization, which began in the 1980s, brought about a significant decline in costs of transportation, communication, and production; considerably improved intercountry competitiveness; and broke down trade and cultural barriers among countries. The concept of a sovereign nation has been increasingly questioned in recent years. Some, indeed, have imagined a world without boundaries, without countries. Others who doubt the benefits of globalization have called for increased protectionism and greater regulation of economic activity.

Has globalization made the world grow faster? Has poverty declined at a faster pace during globalization? If yes, why? If not, is it because the growth rate was lower, or because inequality worsened, or both? Who has gained from globalization? Is it the elite in both the developed and developing world? What about the middle class? Who are they? How have they benefited from (or lost to) the forces of globalization?

This comprehensive study firmly debunks several popular myths such as the belief that globalization has resulted in lower overall growth rates for poor countries, increasing world inequality, and stagnating poverty levels. Through rigorous, integrated methodologies and an enhanced dataset, the author, Surjit S. Bhalla, answers some of the most pressing policy issues confronting us today.

Author Biography: Surjit Bhalla has since 1986 been Managing Director of Oxus Research and Investments, a New Delhi based asset management and emerging markets advisory firm. He was chief global strategist for emerging markets at Deutsche Bank from 1994-96, and had worked at several other prominent businesses or organization prior to that period, including Goldman Sachs, the World Bank, and the Brookings Institution. He also served as Executive Director of the Policy Group in New Delhi, India from 1986-90. His research has mainly focused on economic development, capital markets, macroeconomic policy, poverty and economic growth. He has published more than 70 articles in books and journals, in addition to some 250 columns in magazines and newspapers.

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Editorial Reviews

Foreign Affairs
This book challenges the conventional contention that the world in recent years has experienced both increased poverty and increased inequality, attributed by some to integration of nations into the world economy. After painstaking research and analysis, Bhalla convincingly demonstrates that both propositions are incorrect. On the World Bank's criterion, poverty has dropped decade by decade from 56 percent of the population of developing countries in 1950 to 9 percent in 2000. World inequality, based on people rather than countries, has also declined — especially in the last two decades, the period of most rapid globalization. Even if inequality rises in every country, world inequality may paradoxically decline if poor countries grow faster than rich countries. Fast-rising China and India, which together contain nearly 40 percent of the world's population, are a large part of the global story. To back its controversial conclusions, the book relies on much technical discussion about sources, the reliability of data, and the appropriate analytical attack. But it is written in a lively style, and its significant findings are clearly highlighted and explained.
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Product Details

  • ISBN-13: 9780881323481
  • Publisher: Peterson Institute for International Economics
  • Publication date: 11/28/2002
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 240
  • Product dimensions: 6.00 (w) x 8.90 (h) x 0.60 (d)

Table of Contents

Preface xiii
Acknowledgments xvii
I Received Wisdom on Poverty, Inequality, and Growth
1 Overview: New Results on Poverty, Inequality, and Growth in the Era of Globalization 1
The Issues 3
The Framework and the Data 5
A Bird's Eye View 6
A More Detailed Overview 7
Results on Absolute Poverty 8
Results on Propoor Growth 9
Has Globalization Worsened Inequality? 10
Has Globalization Been Good for Poor People? 11
Research and Monopolies 11
2 The Pattern of Economic Growth, 1950-2000 13
Data and Methods of Estimating Growth 14
Global Levels of Income and Growth 17
Globalization: Divergence 21
Evidence of Convergence or Divergence 23
3 Inequality as We Know It 29
Measuring Inequality 31
Measuring Intertemporal Inequality 32
Simple Inequality Mathematics 32
Inequality: Kuznets Curve and Data Requirements 34
Recent Evidence on Country Inequality 36
The Evidence Once Again 38
Tests of Inequality Change 40
Elasticity of Connection, 1960-2000 44
Country-Level Inequality 46
Toward Individual Inequality Estimates 46
Individual Inequality 47
Summing Up: The Facts as We Know Them 50
4 Poverty as We Are Told It Is 51
Defining and Measuring Absolute Poverty 53
Poverty in the United States 54
The World Bank Enters the Poverty Arena 56
First Absolute Poverty Line, Estimates, and Forecasts 57
The Search for an Absolute Absolute Measure 59
Rediscovering the $1-a-Day Poverty Line 61
The Poverty Line Reduced 63
Evolving World Bank Definitions of Poverty 67
II Discussion of Knowledge on Poverty, Inequality, and Growth and Analysis of Data and Methodologies
5 Taking Stock of the Facts 69
The Global Pie, 1960-2000 70
Inequality Trends 70
Poverty Trends 74
Not Propoor Growth 74
Is the Conventional Wisdom Correct? 75
Facts and Figures 76
The Importance of Data 77
Duck and Smell Tests to Differentiate 78
Experts Debate 78
Elasticity of the Gini with Growth 79
Poverty "Smell" Tests 82
The Need for Alternative Studies 87
6 Recounting Poor People 91
Definitions and Methods 93
Using Different PPP Exchange Rates 93
Differences between World Bank Consumption and and Official PPPs 95
All Indians Were Dead in 1950, or 1960 99
7 Surveys and National Accounts: Can a Choice Be Made? 103
What Is the Problem? 104
There Is a Problem Even in the United States 106
In Defense of Surveys 107
What Happened to the Survey/National Accounts Ratio? 109
Unintended Consequences of Moving to Survey Means 111
Do National Accounts Estimates Have Problems? 113
Choosing between Surveys and National Accounts 114
By How Much Do Rich People Understate Expenditures? 116
Estimating Undercoverage of Rich People 119
The SAP $1.50 Poverty Line 120
"Smell" Tests for Indian Poverty Estimates 121
Should Surveys or National Accounts Be Used? Or Both? 126
8 Other Methodological Considerations 129
The Individual versus Countries 129
Simple Accounting Procedure for Generating W3i 131
The Kakwani Method of Estimating a Lorenz Curve 133
Is SAP Accurate? 134
Using SAP to Identify Errors in Published Ginis 134
III New Results on Poverty, Inequality, and Growth, Based on Simple Accounting Procedure Methods
9 Poverty as It Is--and Forecasts for 2015 139
How Much Poverty Is There in the World? 140
Where Did Poverty Decline from 1960 to 2000? 141
The Evolution of World Poverty, 1820-2000 142
A Digression: How Do You Assess the Best? 146
Regional Poverty Trends 147
Time to Raise the Poverty Line 147
Forecasts for 2000 and 2015 149
10 Reinventing the Kuznets Curve: Propoor Growth 151
The Search for Propoor Growth 153
The Growth-Poverty Connection 154
Propoor Elasticity 155
Propoor Mathematics 157
Empirical Estimates of Propoor Growth 158
Estimating Propoor Elasticity 159
Has Global Growth Been Propoor? 161
Using Consistent Data 163
Is the Initial Income Distribution Important? 166
A Simple Method for Estimating Propoor Growth 167
Forecast of Poverty in 2015 168
11 Inequality as It Is 173
SAR Results for World Inequality, 1950-2000 174
Regions and Indices 175
Individual Inequality Studies Compared 177
How Accurate Are the SAP Estimates? 181
Poor People Have a High Elasticity of Connection 182
What Happened with Global Inequality? 183
The Relationship between Growth and Inequality 185
The Middle Class 186
12 Globalization: A Second Look 189
Income: Before and After 190
Convergence: New Results 190
Catch-Up with Globalization 191
Is There a Poverty-Terrorism Connection? 196
The Evolution of Living Standards, 1960-2000 196
13 Conclusion: Roads Not Taken 201
Different Forks for Different Folks 202
Answers to Often-Asked Questions 204
Appendix A The Simple Accounting Procedure Dataset 207
Appendix B Estimation of the Lorenz Curve, and Its Accuracy 211
Appendix C Basic Data for the Simple Accounting Procedure 217
References 225
Index 235
Table 1.1 Some new and different results for poverty, inequality, and growth in the era of globalization, 1980-2000
Table 2.1 Annualized per capita growth rates according to various measures of GDP
Table 2.2 GDP of global regions, 1950-2000
Table 2.3 Population of global regions, 1950-2000
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  • Anonymous

    Posted June 20, 2003

    Is Inequality Declining Worldwide?

    There is massive income inequality in the world today because the West industrialized before the rest of the world did. Income differences across countries ballooned over the 19th and early 20th Centuries as the West surged ahead economically and Asia and Africa lagged greatly behind. Surjit Bhalla argues that the period of rising inequality has peaked and that income inequality worldwide is now declining. Inequality is declining globally in large part because of rapid income growth in the world's two largest poor countries, China and India. Although Bhalla's critics will not like his 'in your face' style, his major conclusions are correct. Among those who are studying the distribution of world income, there is emerging consensus (1) that income inequality is increasing within countries, on average, (2) that inequality is declining across countries, and (3) that inequality is declining globally because most inequality in the world lies between, not within, countries. If you want to read just one book on global inequality, though, I suggest THE NEW GEOGRAPHY OF GLOBAL INCOME INEQUALITY, a study that reaches similar conclusions but is more balanced in its treatment of the data and tells a more convincing story. Readers who are technically inclined will also want to look at recent working papers by Sala-i-Martin, an economist at Columbia.

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