February 14, 2001

A Hint of Light at the End of the Tunnel of World Development

The World's Income Distribution: Turning the Corner?

Twenty five years ago you could indeed powerfully argue that on a fundamental level the world economy was not working. It was generating better technology and more output, yes, but was it making good use of that output to advance social welfare? It seemed as though the answer was no, at least not for the poorer half of the people on the globe. As time passed the world was becoming richer, but it also became a massively more unequal place. The difference in living standards, productivity levels, and life chances between rich and poor parts of the world was greater in 1975 than it had been in 1925, and vastly greater in 1975 than it had been in 1800.

Since 1975, however, we have turned a very important corner. As Yale economist T. Paul Schultz was the first (to my knowledge) to point out, since 1975 global inequality in personal incomes has not been rising but falling. Since 1975 the world has not only become a richer place, but the world's poor have seen their incomes grow faster than the world's rich. From this perspective, therefore, the world economy has been performing a lot better in the last quarter century than in the previous two hundred years...

Posted by DeLong at February 14, 2001 05:05 PM | TrackBack

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