Mind the return of the global income gap – WaPost editorial
“Over the past quarter-century, the world has seen the deepest, most consequential decline in income inequality since the Industrial Revolution. And yet that progress is coming to an end, probably before many Americans had even realized it was occurring…
“The progress was gradual but significant. Branko Milanovic, an economist at the Graduate Center at City University of New York, estimates that in 1988, only 4.5 percent of people in countries of the underdeveloped ‘periphery’ had an income above $4,660, the median income in Portugal, the poorest rich country at the time, after adjusting for exchange rates. By 2018, 13.8 percent of people in peripheral nations made more than the median of $8,898 in Greece, which had taken Portugal’s place. But the positive trend halted after 2018 and even went slightly into reverse when covid-19 struck in 2020. Milanovic warns: ‘One cannot exclude the future reversal of the decline.’…
“It doesn’t help that the United States’ protectionist turn — tariffs and local content rules; rejecting trade agreements — has put at risk the expansion of international trade that had helped poorer countries grow…
“Asia’s growth, with China leading the way, accounted for much of the shrinking global income gap. In 1988, no Chinese citizen made more than the median Portuguese citizen. In 2018, a quarter of them made more than the median in Greece. Ironically, though, global inequality has stopped shrinking now partly because China is so much better off that its continued growth would actually increase global inequality, rather than reduce it. If there is to be further reduction in inequality between rich and poor countries, much of it must happen in poorer big countries — such as India, Bangladesh or, notably, African heavyweights such as Ethiopia or Nigeria.”
Global Income Gaps and International Trade – St. Louis Fed
Measuring Income Inequality: A Primer On The Debate – Tax Policy Center