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“Discuss the cause and consequences of the uneven distribution of global income and wealth” Introduction

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Refer to stimulus Generalized statement to the extent of inequality

Causes:
GLOBAL: a) trade system a. Agricultural Protection i. high agricultural protection OECD farming support 2010 $250 billion ii. Subsidies in Japan 50% of farmers incomes and 20% in Europe iii. 31% of EU budget goes to agricultural policy b. Expanding regional trade blocs i. EU, NAFTA excludes other nations ii. If Africa, East and South Asia and Latin American could increased share of world exports by 1% 128 million would be lifted out of poverty c. WTO i. High cost of arrangements and appeals exclude developing nations 1. Dispute resolution only works for smaller nations ii. Failure to implement Doha round as high income nations resisted concessions on agriculture 1. World bank estimated that if implemented would have increased economic activity by $520 billion and lift >140 million people out of poverty by 2015 b) financial architecture a. FDI traditionally favored developed economies. Now almost 50% goes to emerging economies (BRICs) but 2011 world’s 48 least developed economies received only 1% of total FDI b. TNC massive growth (now ~104,000) employ 69 million and account of >25% of GWP i. Positive in terms of offering employment ii. Negative in terms of where the profits go, labour, environmental standards etc c. Financial architecture has lead to volatility which has a greater impact on developing nations i. Asian financial crisis 1998 ii. Latin America early 2000s d. Loopholes exploited by high income economies i. US $9.8 trillion in Cayman islands (populations 92,000) ii. Tax Justice Network report: tax havens have total $ equivalent to US GDP e. IMF criticism

3% since 1970s. Technology absorbed at a greater rate in economies with better infrastructure c. Political and economic institutions generally corrupt and instable in low income economies. Access to capital and technology major structural weakness in low income economies (low income = low savings = no funds for I) i. 2010 developing countries external debt $3.i. 58% short fall b.7 trillion c) Aid and assistance a.5 b.oil b. Does not encourage investment i. Natural resources – each country does not have an equal distribution of i. decreased government spending etc…) often damages recipient economy f. Somalia index 1. ‘phantom aid’ aid given that doesn’t help the poor i. Entrepreneurial culture depends on history. Labour supply and quality better in high income countries i. Australia – minerals Middle east . Economic policies in low income economies generally favor economic growth rather than economic development . Reflects strategic and military considerations rather than needs i. labour saving etc…low income countries generally have no problem with labour supply and need medical technology to assist curing common curable diseases DOMESTIC a) Economic Resources a. Foreign debt burdens i. Singapore highly educated. Often too expensive for developing economies to produce many products leading to ‘digital divide i. 5% aid admin costs iii. 17% aid ‘technical cooperation’ (consultants of high income countries) ii. ‘tied aid’ conditional aid c. Loans given on basis of structural readjustment (increased taxes. social institutions. High income countries promised 0.0 on corruption perception index New Zealand 9. work ethic etc b) institutional factors a. Intellectual property rights b. highly skilled labour force c. Since 2002 50% of US $178 billion aid from wealthy countries given to Iraq and Afghanistan d) technology Flows a. Some help through micro finance schemes d. Voting rights based on contributions (therefore high income has majority) ii.7% GDP only gave 0. Focuses on need of high income countries such as aging population.

Average number of years of school attendance by 25 year olds iv. Focus on manufacturing and exports c. Industrialization iv. credible and capable governments Consequences: a) categories of economies a. market system to allocate resources. Expected years at school for school age children b. Heavily reliant on agriculture and foreign aid v. GNI per capita ii.276 pa ii. Y levels vary ii.SUMMARY Gittens accounts global inequality to five main causes: import ideas. Developing i. Slow growth recently iii. Focus on services and ETMs b. high savings and investment. Low: DPR Congo 0. High corruption b) HDI a. Emerging: i.929 #2 c. Low productivity vii. High income inequality vi.4 = bad) c) millennium development goals a. technology and knowledge. Very high: Australia 0. set in 2000 by the UN b. Gini coefficient (China increase to 0. Fast growth iii. Goal 1: eradicate extreme poverty and hunger by halving number of people living on less that US $1. Medium: Sri Lanka 0. Advanced: i. Human development index encompassing i. High population growth iv. eg. Life expectancy at birth iii.25 a day by 2015. 1990-2008 proportion has fallen from 48% to 22% and global poverty expected to fall to 16% by 2015 . Low Y levels (48 least developed GNI per capita <U$905 pa) ii. Weak political and economic institutions ix. GNI per capita > U$12.286 #187 e. committed. But doesn’t take into account income inequality i.691 #97 d. Moderate growth iii. Low technology innovation viii.