Global inequality has not been this low since the late 19th century. While the global Gini index is still very high, it is the lowest it has been in 125 years. It has gone from 70 to 60 in the last 20 years. At the same time, inequality has increased in large countries like the United States, India, Russia and most of Europe.
The main reason for the decline in global inequality over these two decades has been the growth of China, which has lifted hundreds of millions of people out of poverty in recent decades. But this global trend towards lower inequality is unlikely to last much longer. For many reasons:
Chinese Growth Slows;
The richer they get, the fewer Chinese are leaving the base of the global income pyramid and therefore improving their condition does not tend to reduce inequality in the world;
Inequality within China is increasing.
The average Chinese income in 1988 placed them in the bottom half of the world rankings, among the world’s poorest 45%. Today, the same average Chinese is in the richest 70%.
Global inequality has reached its lowest level in 125 years
Image: reproduction
Equally significant, the Chinese are at the top of the global income pyramid. If the country continues to grow three percentage points a year faster than the US, in two decades there will be as many Chinese millionaires as Americans. This will change the balance between consumption and behavior and have profound cultural implications.
The Gini coefficient ranges from 0 to 100. The lower the better. Zero is assigned to the scenario where everyone has the same income and 100 when a single person concentrates all income. The global index compares between countries’ incomes, while the national index considers citizens’ incomes.
during the program Message Analysisthe columnist of UOL José Roberto de Toledo also stressed that while inequality has decreased in the global context, population inequality has actually decreased in only a few Latin American countries. In Western Europe, the United States, China and Russia, inequality within the country increased. In Latin America, the decline in inequality has been driven primarily by income redistribution programs.
expectation of deceleration. After the Gini index fell by 10 points over the past 20 years, the decline is not expected to continue as China’s GDP growth moderates. The hope for this trend to continue is that India, the world’s most populous country, goes through an economic growth process similar to that of China, or that Africa emerges from the majority poverty that its people face today.
Political unrest, polarization and the rise of the far right. The change in the economic level of the Chinese population helps explain the current global context. The middle class in Europe and the United States increasingly struggled economically and ended up losing compared to other parts of the world. This explains the political unrest, polarization and rise of the extreme right in many countries.
Inequality has fallen in Brazil. Following the global trend, inequality has also declined in recent years and is now just over 50 points, below the global average of 60. While the country is still far from being an egalitarian country, this decline has been of inequality mainly due to income distribution programs such as Bolsa Família.
*The information in this text was originally published by economist Blanko Milanovic in the journal Foreign Affairs (The Great Convergence: Global Equality and Its Discontents).
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