Synthesis and Policy Implications

Abstract

Within a stable macroeconomic framework, there is a need to change how the economy works for all of its citizens. Economics justifies the need to crack down on crony capitalism and rent-seeking, and break up monopolies and oligopolies. This would reduce income and wealth concentration at the top and increase growth by fostering stronger competition and equal access to economic opportunities. These policies are likely to reduce within-country inequality and between-country inequality as well, since they would have their most dramatic impact in poor countries. At a global level, the policy toolbox also includes foreign aid policies designed to attack between-country inequality. International trade policies have been and will continue to be key to give poor countries opportunities to develop faster, linking up with the obvious need for effective domestic and international agricultural and industrial policies in a context of increasing concern with socially and environmentally sustainable development.

Poverty and Prejudice

“…Especially the rapid growth in bigger economies, such as China and, to a lesser extent, India, has greatly influenced this trend. As China's mean income converges toward the global average, the living conditions of hundreds of millions of people are improving (Gradín et al 2021). However, since between-country inequality captures the difference in average incomes, it tells little about how these incomes are distributed within countries, and whether poorer or richer parts of society benefitted the most from periods of economic growth.…”

“…Within countries, on average, the bottom 40 per cent of the population have a lower share in national income today than in the 1990s (UNU-WIDER 2021), and the richest people hold unprecedented levels of wealth. These within-country gaps are what 'ultimately frames people's lives and perceptions' and constitute the focus of most national policies that address inequality (Gradín et al 2021).…”

Income Inequality and Economic Freedom Revisited: Are Freedom and Equality Conflicting Values? Evidence from the twenty-first Century

“…Trends in income inequality reveal that absolute differences are increasing. There is a stagnation of the income of the poor (showing a decrease in the share of the income distribution), while there has been considerable growth in the share of the richest (Gradín et al, 2021).…”