The evolution of global inequality
In this paper, Branko Milanovic presents an interesting view of how global inequality has evolved since 1820. He shows that historically, global inequality has followed three eras:
- The first, from 1820 until 1950, was characterized by rising between country income differences and increasing within country inequalities. This is the period of Great Divergence in both economic and political and military power between the rising states and those that stagnated or declined. It coincided with the European conquest of most of Africa, the colonization of India, and the semi-colonization of China.
- The second, from 1950 to the last decade of the 20th century, was characterized by very high global and between-country inequality. This is the era of the Three Worlds, relatively well delineated in terms of their income levels and geographical spread: the First World of advanced capitalist countries, the Second World of less rich East European socialist countries and the USSR, and the Third World of poorer, and in many cases emerging from colonization, countries of Asia and Africa.
- The current one is characterized by decreasing global inequality thanks to the rise of Asian incomes, especially so Chinese. The present era has seen the emergence of the global “median” class and the greatest reshuffling in income positions between the West and China since the Industrial Revolution.
China’s role in reshuffling global incomes is not over, but its role in reducing global inequality is at or is soon coming to an end. The parts of the world whose income convergence now becomes of key importance are India and half a dozen of populous African countries, which are also the only part of the world likely to register massive population growth—which indeed makes them even more important for the matters of global inequality. Will Africa in the twenty-first century replicate Asia of the latter part of the twentieth?
The three eras of global inequality, 1820-2020 with the focus on the past thirty years
Author: Branko Milanovic
From: City University of New York
