CATCH UP AND EMERGING DIVERGENCES: Can it Reduce Inequality? Deepak Nayyar Institute of Social Studies The Hague 8th October 2015

AN OVERVIEW Catching Up: Developing Countries in the World Economy Unequal Outcomes: Exclusion of Geographical Spaces Divergences: Old and New: Exclusion of People Catch Up and Inequality: The Past and the Future Slide 2

I. CATCHING UP Developing Countries in the World Economy Output, growth and income Catch up in industrialization Engagement with the world economy Slide 3

II. UNEQUAL OUTCOMES Exclusion of Geographical Spaces Across continents: Asia, Africa and Latin America Between country-groups: Next-14, of which BRICS, and LDCs Regional disparities within countries: Next-14 and elsewhere Slide 4

Slide 5 III. DIVERGENCES: OLD AND NEW Exclusion of People Income distribution in the world Inter-country Inter-personal Emerging divergences in the developing world Between country-groups: LDCs, Next-14, BRICS and others Divergence and convergence: incomes per capita Falling yet persistent poverty Significant reduction in absolute poverty: perennial poor Persistent, and increased, relative poverty: vulnerable poor The underlying factors Rising inequality within countries: particularly Next-14 Markets and globalization: growing inequality everywhere

Slide 6 (US dollars in current prices at market exchange rates) Least Developed Countries The Next Of which BRICS Other Developing Countries Developing Countries Industrialized Countries WORLD Table 1 Divergence and Convergence in GDP per capita between LDCs, the Next-14, BRICS, Developing Countries, Industrialized Countries and the World Economy: Source: United Nations, UN National Accounts Statistics and Population Statistics

Slide 7 Figure A GDP per capita in LDCs, the Next-14, BRICS and Developing Countries as a percentage of GDP per capita in the World: Source: United Nations, UN National Accounts Statistics and Population Statistics

Slide 8 Table 2 Income Distribution Changes in the Next-14: 1980 – 2010 (Gini Coefficients) Source: UNU-WIDER World Income Inequality Database (WIID) (US dollars in current prices at market exchange rates) Country Latest Data Argentina (2011) Brazil (2009) Chile (2011) China (2012) Egypt India Indonesia (2012) South Korea (2012) Malaysia (2014) Mexico South Africa (2011) Taiwan Thailand (2009) Turkey (2013)

Slide 9 IV. CATCH UP AND INEQUALITY The Past and the Future Two propositions Growth matters: necessary but not sufficient Growth, inequality and poverty: a triangular relationship Two hypotheses Catch up: essential for reducing inequality Catch up: unsustainable without reducing inequality Transforming growth into development Possibilities, alternatives and choices Learning and unlearning from development