Why Reducing Inequality Must Be a Global Effort
By: José Antonio Ocampo – October 31, 2017
International Politics and Society
Although inequality has come to the top of the global agenda over the past decade, it is not always recognized that high inequality between countries – rather than domestic inequality within countries – is the major determinant of the world’s inequalities. This is basically the result of growing inequalities from the 19th through the first part of the 20th centuries. However, by the 1980s, rising inequality within countries became the major adverse global trend up until the present. This is in sharp contrast to the period between the 1920s and 1960s, when inequality fell, particularly in developed countries, thanks to a large extent to the rise of the welfare state and progressive taxation. Falling inequality between countries served to moderate this trend in the last decade of the 20th century and, particularly, the first decade of the 21st. By now, however, this moderating factor is probably no longer relevant, since it was partly a result of the super-cycle of commodity prices that fueled positive income trends in Africa, Latin America, and the Middle East during that period.
Reducing the high level of inequality between countries has been on the international agenda since the end of the Second World War, and high inequality within countries was also a subject of major concern in the early post-war decades. However, this was then largely ignored by the rise of free-market policies since the late 1970s. Over the past decade, rising inequality within countries has once again come to the forefront of global political discussions, as ‘excluded’ voters have caused political earthquakes in several countries.
In 2015, after several years of negotiations between member states and consultations with civil society, the United Nations agreed on a set of Sustainable Development Goals (SDGs) to guide the multilateral agenda and national development plans until 2030. One of the objectives in the 2030 Agenda for Sustainable Development (SDG 10) is to ‘reduce inequality within and among countries.’ This acknowledges that global inequality is a mix of both tendencies, and our strategy must therefore be to address both domestic and international inequality, as well as their inter-relationship. SDG 10 includes a specific target to increase the income growth of the poorest 40 per cent of households in all countries, which is also the core target of the objective of ‘shared prosperity’ previously adopted by the World Bank Group (WBG). Both goals are also linked to the poverty targets, summed up in the 2030 Agenda in its stated aim to ‘end poverty in all its forms everywhere’ (SDG 1) and the WBG’s objective of eliminating extreme poverty within a generation.