Dear Anisuzzaman,
you correctly point to a long list of political-economy obstacles which have, for long, impeded the adoption of more egalitarian reforms which would have reduced income inequality, educational and health inequality and so on.
The region where traditionally these reforms were most disattended was Latin America which - together a few Eastern/Southern African countries - detained the record of the highest inequality in the world. Inequality worsened further in the 1980s and 1990s in LA (and almost everywhere else), owing to the the sudden increase in in US interest rates in June 1981, the ensuing debt crisis and recession of the 1980s, and the negative distributional effects of 'premature/unfetterd liberalization and privatization' in developing and transitional economies. In WIDER we documented fairly accurately that in the 1980s and 1990s 73% of the countries with decent Gini data experienced a rise in inequality.
But things have started changing a bit since the beginning of the 2000s. The clearest case is Latin America (particulalrly South America), where btw 2002 and 2012 the average Gini coefficient of the distribution of disposable income per capita fell by almost 6 points, including during the turbulent years 2009-2013. In fact, inequality fell in 15 of the 18 countries of the region (Carribeans are not included). The 2014 OUP volume I edited - http://ukcatalogue.oup.com/product/9780198701804.do - (as well as other research on this topic) shows that such decline was driven to a good extent by 'progressive' policy changes in the field of macroeconomics, taxation, trade, labour market, public social expenditure (esp. in education), and social transfers. Yet, the most important point to drive home is that such changes (whose feasibility was facilitated till 2007 by a favourable global businnes cycle) were made possible by the election of 15 progressive (center-left regimes) following the disappointing results of neo-liberal policies in the region. An essential condition for the L.A. success was thus the restauration of democracy in the region - after 2 decades of authoritarian regimes, and the election of progressive regimes. Without such changes, it's unlikely LA would have enjoyed a decline in inequality. I enclose reference to a paper which tells part of this story, (http://www.disei.unifi.it/upload/sub/pubblicazioni/repec/pdf/wp14_2014.pdf) though chap. 3 in the above volume provides a detailed and convincing explanation of the change in the 'politics of policies'
The issue is therefore the nature and functioning of democracy in the different parts of the world, and the nature of (old and new) coalitions needed to support such regimes. As discussed in the above volume, political coalitions in L.A. have evolved importantly, and generally in an inclusive way, giving voice to ethnic groups (as in Peru, Bolivia and Ecuador), the organized poor (as in Argentina), and sections of the lower middle class once favorable to WC policies (as in Chile).
South East Asia. With Bruno Martorano, we did a paper for UNCTAD's TDB (http://unctad.org/en/PublicationsLibrary/osgdp20124_en.pdf) which looks - inter alia - at 4 countries part of the ESCAP region, i.e. S.Korea, Thailand, Philippines and Malaysia. There too, we found an improvement in Gini's (if smaller than in LA), which also on this case depended inter alia on the adoption of more progressive policies.
An analysis of SSA data - which is waht I am doing now - shows that inequality has declined in half of the 29 countries with acceptable data (mainly taken from WIDER's WIIDv3). We are now analyzing the possible causes of such phenomenon. It will be interesting to test if the gradual change in democratic institutions in the region made possible the adoption of more egalitarian policies, including social transfers which - as suggested by Isabel - are increasing in number and scope in many developing countries.
Finally, you may rightly object that inequality has risen during the last two decades in China and in South Asia where - at least in India - democracy is meant to work (less so in Bgds and Pakistan). This is an issue that needs to be explored, and to which I am unable to provide an answer ........ perhaps you and your colleagues can help us with this puzzle.
Best regards,
Andrea
Prof. Giovanni Andrea Cornia
Department of Economics and Management, D6-55
University of Florence
via delle Pandette 9, 50127 Firenze.
Tel: 0039 055 275 9599
Fax: 0039 055 275 9910
E-mail: [email protected]
http://www.dse.unifi.it/
http://www.dse.unifi.it/sviluppo/portale
you correctly point to a long list of political-economy obstacles which have, for long, impeded the adoption of more egalitarian reforms which would have reduced income inequality, educational and health inequality and so on.
The region where traditionally these reforms were most disattended was Latin America which - together a few Eastern/Southern African countries - detained the record of the highest inequality in the world. Inequality worsened further in the 1980s and 1990s in LA (and almost everywhere else), owing to the the sudden increase in in US interest rates in June 1981, the ensuing debt crisis and recession of the 1980s, and the negative distributional effects of 'premature/unfetterd liberalization and privatization' in developing and transitional economies. In WIDER we documented fairly accurately that in the 1980s and 1990s 73% of the countries with decent Gini data experienced a rise in inequality.
But things have started changing a bit since the beginning of the 2000s. The clearest case is Latin America (particulalrly South America), where btw 2002 and 2012 the average Gini coefficient of the distribution of disposable income per capita fell by almost 6 points, including during the turbulent years 2009-2013. In fact, inequality fell in 15 of the 18 countries of the region (Carribeans are not included). The 2014 OUP volume I edited - http://ukcatalogue.oup.com/product/9780198701804.do - (as well as other research on this topic) shows that such decline was driven to a good extent by 'progressive' policy changes in the field of macroeconomics, taxation, trade, labour market, public social expenditure (esp. in education), and social transfers. Yet, the most important point to drive home is that such changes (whose feasibility was facilitated till 2007 by a favourable global businnes cycle) were made possible by the election of 15 progressive (center-left regimes) following the disappointing results of neo-liberal policies in the region. An essential condition for the L.A. success was thus the restauration of democracy in the region - after 2 decades of authoritarian regimes, and the election of progressive regimes. Without such changes, it's unlikely LA would have enjoyed a decline in inequality. I enclose reference to a paper which tells part of this story, (http://www.disei.unifi.it/upload/sub/pubblicazioni/repec/pdf/wp14_2014.pdf) though chap. 3 in the above volume provides a detailed and convincing explanation of the change in the 'politics of policies'
The issue is therefore the nature and functioning of democracy in the different parts of the world, and the nature of (old and new) coalitions needed to support such regimes. As discussed in the above volume, political coalitions in L.A. have evolved importantly, and generally in an inclusive way, giving voice to ethnic groups (as in Peru, Bolivia and Ecuador), the organized poor (as in Argentina), and sections of the lower middle class once favorable to WC policies (as in Chile).
South East Asia. With Bruno Martorano, we did a paper for UNCTAD's TDB (http://unctad.org/en/PublicationsLibrary/osgdp20124_en.pdf) which looks - inter alia - at 4 countries part of the ESCAP region, i.e. S.Korea, Thailand, Philippines and Malaysia. There too, we found an improvement in Gini's (if smaller than in LA), which also on this case depended inter alia on the adoption of more progressive policies.
An analysis of SSA data - which is waht I am doing now - shows that inequality has declined in half of the 29 countries with acceptable data (mainly taken from WIDER's WIIDv3). We are now analyzing the possible causes of such phenomenon. It will be interesting to test if the gradual change in democratic institutions in the region made possible the adoption of more egalitarian policies, including social transfers which - as suggested by Isabel - are increasing in number and scope in many developing countries.
Finally, you may rightly object that inequality has risen during the last two decades in China and in South Asia where - at least in India - democracy is meant to work (less so in Bgds and Pakistan). This is an issue that needs to be explored, and to which I am unable to provide an answer ........ perhaps you and your colleagues can help us with this puzzle.
Best regards,
Andrea
Prof. Giovanni Andrea Cornia
Department of Economics and Management, D6-55
University of Florence
via delle Pandette 9, 50127 Firenze.
Tel: 0039 055 275 9599
Fax: 0039 055 275 9910
E-mail: [email protected]
http://www.dse.unifi.it/
http://www.dse.unifi.it/sviluppo/portale
