Chapter 9 Global Inequality and PovertyONE PHOTO CAPTURES A SH.docx

Chapter 9 Global Inequality and Poverty
ONE PHOTO CAPTURES A SHARP CONTRAST BETWEEN
RICH AND POOR IN THE DEVELOPING WORLD. The high-
rise buildings in the background are apartments for the wealthy.
Learning Objectives
1. 9.1Examine how widening gap between rich and poor
strengthens inequality-perpetuating institutions
2. 9.2Contrast between the viewpoints of globalists and
antiglobalists on the effects of globalization
3. 9.3Examine the causes and the impact of domestic or global
inequality between nations
4. 9.4Examine the economic, social, and educational inequality
that exists within rich countries
5. 9.5Examine the inequalities that exist in different aspects of
life in poor countries
6. 9.6Review the six dimensions of poverty that can be used to
gauge poverty
7. 9.7Evaluate some of the measures for diminishing poverty
and reducing inequality
The richest eighty people in the world control as much wealth
as the poorest half of the world’s population. Thirty-five of
those eighty are Americans. The top 1 percent of the world’s
richest people control 48 percent of the world’s total wealth.
More than one billion people in the world live on less than
$1.25 a day. Inequality exists within the United States. The
richest four hundred Americans own more assets than the
poorest 150 million, or almost half the population. The bottom
15 percent, about forty-six million people, live in households
earning less than $22,000 per year. The top 5 percent of
households in Washington, D.C., make an average of more than
$500,000, while the bottom 20 percent make less than $9,500.
Conflict between rich and poor is now the greatest source of
tension in American society. Economic inequality has emerged

as a dominant global issue that has fueled massive protests and
popular uprisings. The global financial crisis and economic
recession have rekindled debates about inequality and its
consequences. Discussions about wealth and poverty and how to
achieve greater equality are as old as human society. They
demonstrate a perennial concern about the implications of
inequality for the security and well-being of communities.
Given the persistence of inequality among individuals, groups,
and nations over centuries, this debate is interminable.
Struggles to achieve equality are also endless. Issues pertaining
to global inequality and poverty permeate almost every
significant global problem, from trade to the environment, from
terrorism and criminal activities to democratization and human
rights, and from ethnic conflicts to the proliferation of weapons
of mass destruction. As we have seen, popular uprisings in the
Middle East and North Africa were strongly influenced by
widespread inequality and poverty. Consequently, as our
discussion shows, inequality and poverty are closely connected
to politics, economics, and culture.
A central question addressed in this chapter is whether
inequality matters. Human societies are inherently unequal due
to variations of abilities, opportunities, geographic location,
luck, personal characteristics, and so on. But why is it
important to address issues of inequality, something that
societies have struggled with historically? Globalization is
widely perceived as the major cause of global inequality. Yet,
as we have noted, unequal distributions of wealth existed
independent of the current wave of globalization and are present
in societies little affected by it. This chapter analyzes the
globalization and inequality debate as well as the current state
of global inequality. In addition to focusing on inequality
between rich and poor countries and inequality within both
developed and developing societies, we will examine the issue
of gender inequality. This chapter discusses the enduring issues
of global poverty, hunger and malnutrition, economic
development and poverty, and efforts to close the gap between

rich and poor and reduce the negative effects of inequality and
poverty. The chapter concludes with a case study of food
security and rising food prices.9.1: Does Inequality Matter?
1. 9.1 Examine how widening gap between rich and poor
strengthens inequality-perpetuating institutions
The existence of inequality is not automatically a major
problem, especially when the economy is growing and there are
many opportunities for upward mobility. As long as the standard
of living is improving for those on the bottom of the economic
ladder, concerns about inequality tend to diminish. The last two
decades of the twentieth century and the first decade of this
century were characterized by a widening gap between rich and
poor and the proliferation of millionaires and billionaires.
While economic disparities remained a serious problem in
developing countries, the forces of globalization created
conditions that helped widen the gap between rich and poor in
industrialized societies. When the economy deteriorates, the gap
between rich and poor tends to be narrower, but concerns about
inequality are heightened. During the global economic
recession, the wealthy lost money, but the poor lost their jobs,
houses, and health insurance. In the United States, the poverty
rate peaked at 15.1 percent in 2010, its highest level since 1993.
In 2013, the poverty rate was still high, at 15.0 percent.
Widespread demonstrations in the United States against
excessive executive compensation, especially those in
companies that received financial assistance from the
government, underscores the dangers of economic inequality.
The financial and economic crisis increased inequality and
heightened awareness of the concentration of wealth held by the
top 1 percent of Americans. That awareness led to “We are the
99 percent,” a battle cry of the Occupy Wall Street protests
against financial inequality that began in New York City and
spread around the world. The perception that economic
inequality is essentially transitory when opportunities for
economic advancement are widely available mitigates negative
effects of actual inequality.

However, persistent inequality and enduring poverty challenge
beliefs in the equality of opportunity and the possibility of
upward mobility. Eventually, the legitimacy of the economic
system and political and social institutions are challenged.
Extreme inequality is detrimental to sustainable economic
growth.
The legitimacy of the global economic system is likely to be
strengthened if a larger number of countries and individuals are
benefiting from it. Extreme inequality perpetuates poverty and
the concentration of economic and political power and reduces
economic efficiency. It strengthens inequality-perpetuating
institutions in three ways:
1. Inequality discourages the political participation of poor
people, which, in turn, diminishes their access to education,
health care, and other services that contribute to economic
growth and development.
2. Inequality often prevents the building and proper functioning
of impartial institutions and observance of the rule of law.
3. Inequality enables the wealthy to refuse to compromise
politically or economically, which further weakens poor
societies in a global society that requires relatively fast
responses to economic developments.2
These consequences of inequality combine to ensure that poor
societies will remain poor and unequal, trapping most of their
inhabitants in a destructive cycle of poverty. Growing
inequality among as well as within nations has direct and
indirect implications for globalization. Inequality could
undermine globalization by influencing countries to adopt
protectionist policies and disengage, to the extent possible,
from the global economy. But the ramifications extend beyond
economic issues to problems such as terrorism, the environment,
and the spread of infectious diseases. Inequality influences
global perceptions of America and weakens its soft power, or its
cultural attraction.
As Chapter 4 shows, the democratization process and the
effective functioning of consolidated democracy depend largely

on a significant degree of economic and social equality. The
legitimacy of any democratic system is contingent upon the
voters’ belief that they have a vested interest in its preservation.
Their allegiance to the democracy is influenced partly by the
benefits they derive from the economic system. Inequality
undermines democracy by fostering despair and alienation
among workers and corruption and the abuse of power among
the wealthy. It corrodes trust and civility among citizens.
Inequality destroys the people’s will to engage in collective
solutions to political, social, and economic problems because it
weakens their sense of unity and common interests. Massive
protests globally against governments underscore this point.
The unequal distribution of wealth is often mitigated by
government redistributive policies. Extreme inequality
sometimes results in the voters pressuring governments to enact
trade protection legislation to safeguard their employment and
livelihoods. In this case, voters exercising their democratic
rights could inadvertently undermine the economic system that
supports democracy.
Global and domestic inequalities often directly affect many
areas. Terrorism is widely linked to poverty within developing
nations. Huge inequalities often fuel resentment, which finds
expression in global crime and a general disregard for the rules
and norms of global society. Those who are extremely poor are
often excluded from participation in decisions that negatively
impact their lives. They become vulnerable to being influenced
by radical minorities who are committed to violent change.
Poverty contributes to global and regional problems by fueling
ethnic and regional conflicts, creating large numbers of
refugees, and inhibiting access to resources, such as petroleum.
Finally, global and domestic inequality is perceived as
stimulating the global drug trade. For example, poor farmers in
Bolivia regard the cultivation of coca as essential to their
survival. More than three-quarters of the heroin sold in Europe
is refined from opium grown in Afghanistan by poor farmers.
The costs of fighting the war against drugs in poor countries,

such as Colombia and Afghanistan, are extremely high.9.2: The
Globalization and Inequality Debate
1. 9.2 Contrast between the viewpoints of globalists and
antiglobalists on the effects of globalization
The impact of globalization on income distribution and living
standards is a controversial topic. Preoccupation with
globalization to the exclusion of other factors often muddles the
debate about globalization and inequality. Would less
globalization produce more equality, and would more equality
among and within nations result in an improved quality of life
for the poor? There are two dominant, but sometimes
overlapping, viewpoints on this issue. The globalists argue that
globalization has increased economic growth and decreased
global inequality and poverty. The antiglobalists generally
perceive globalization as a negative and destructive force that is
responsible for the increasing global inequality and poverty and
the declining levels of human welfare.39.2.1: Globalists Make
Their Case
From the globalists’ perspective, the basic cause of inequality
and poverty is the relatively low level of globalization in some
countries. In other words, the poorest societies are the least
integrated into the global economy. Openness to foreign trade,
investments, and technology—combined with reforms such as
the privatization of the domestic economy—will ultimately
accelerate economic growth. The Organization for Economic
Cooperation and Development (OECD) calculated that countries
that are relatively open to trade grew about twice as fast as
those that are relatively closed to trade.4 China’s rapid
economic growth is an obvious example. On the other hand,
North Korea, Myanmar (formerly Burma), and Kenya are on the
margins of globalization and remain impoverished.
Globalists also argue that globalization has contributed to the
decline of inequality. Furthermore, poverty can be reduced even
as inequality increases. David Dollar and Aart Kraay found that
“a long-term global trend toward greater inequality prevailed
for at least 200 years; it peaked around 1975. But since then, it

has stabilized and possibly even reversed.”5 The accelerated
economic growth of China and India, the world’s two most
populous countries, which is seen as directly linked to
globalization, is given as the principal reason for the change.
Much of the inequality that persists within countries is due less
to globalization and more to policies dealing with education,
taxation, and social problems. Moreover, more economic growth
in China, for example, has been accompanied by a spectacular
reduction in poverty.6
Globalists emphasize that the number of people moving out of
poverty has increased. More than 800 million people have
abandoned the ranks of absolute poverty since 1990. The
number of people living in absolute poverty remains high—
around 1.2 billion. But given rapid population growth rates in
the poorest countries, the decline in global poverty is
impressive. The world’s poor are seen as getting to be less poor
in both absolute and relative terms.7 The more globalized poor
nations become, the better off their populations are in both
absolute and relative terms. Globalization has generally helped
the poor by contributing to reductions in the cost of numerous
consumer products. Less money has higher purchasing power in
a globalized economy. Finally, by facilitating migration,
establishing small businesses that rely on the Internet, and
improving access to jobs in telecommunications and computer
technologies in countries such as India and China, globalization
improves the quality of life for the poor.9.2.2: Antiglobalists
Make Their Case
Antiglobalists believe that globalization is widening the gap
between the haves and the have-nots. Concerned with making
global capitalism more equitable, they view globalization as
primarily benefiting the rich while making life more difficult
for the poor. Antiglobalists argue that globalization is a zero-
sum game, meaning that the rich are winning at the expense of
the poor. Antiglobalists also argue that globalization benefits
rich countries, such as the United States. China is one of the
few developing countries that is generally regarded as profiting

from free trade and open markets. The United States, the
locomotive of globalization, benefits the most from open
markets worldwide. George Soros—a leading financier,
philanthropist, and critic of globalization, though not an
antiglobalist—believes that globalization drains surplus capital
from periphery or developing countries to the United States,
thereby allowing Americans to spend more than they save and
import more than they export.8 Similarly, Jack Beatty contends
that the foundation of inequality resulting from globalization is
that rich countries do not play by the rules that they made to
govern the global economic system. Basically, the United States
and other Western countries require developing countries to
open their markets without reciprocating commensurably. To
support this argument, Beatty points out that although global
rules on trade discourage governments from subsidizing
industries, rich countries continue to provide subsidies to
agriculture.9
Critics also argue that globalization is like an “economic
temptress,” promising riches but not delivering. Global
communications have heightened awareness of the vast
disparities between rich and poor within the same society and
especially between rich and poor countries. Simultaneously,
global communications spawn aspirations of escaping poverty
and enjoying the good life. Unfortunately, globalization is
unable to make these dreams real. Countries integrated into the
global economic system are the most severely affected by
downturns in the economy. For example, Southeast Asia, which
depends on exports of steel, textiles, and electronic components,
suffers significantly in global economic crises and is unable to
generate enough jobs and sufficient wages for a population with
aspirations nurtured by television programs that depict
prosperity. Although conceding that globalization is not entirely
responsible for global poverty, antiglobalists generally view
globalization as a tide that lifts a few boats while leaving the
majority mired at the bottom. Even when global companies
create jobs within societies, the race to the bottom in labor

standards and wages inevitably results in the poor in developing
countries being unable to escape poverty while, at the same
time, reducing the wages for workers in rich countries or
depriving them of employment. This development is intertwined
with the precipitous decline of private sector labor unions. Kim
Phillips-Fein argues that unions mobilize their members to vote
for government policies that help redistribute wealth and
reinforce upward mobility, which strengthen the middle class.10
Antiglobalists contend that globalization compounds existing
inequalities and creates more inequality. By giving priority to
privatization, globalization weakens governments’ commitment
to the public sector. Vito Tanzi states that “even as the forces of
globalization boost the demand for strong social safety nets to
protect the poor, these forces also erode the ability of
governments to finance and implement large-scale social
welfare policies.”11 The emphasis on integrating poor nations
into the global economy diverts resources from more urgent
development needs, such as education, public health, industrial
capacity, and social cohesion. Many trade agreements impose
tight prerequisites on developing countries in exchange for
crumbs of enhanced market access. The African Growth and
Opportunity Act is an example. It provides increased access to
the U.S. market only if African apparel manufacturers use fabric
and yarns produced in the United States, instead of using their
own or supplies from less expensive sources. In other words,
the antiglobalists perceive globalization as perpetuating
inequality by impeding development. Furthermore, they argue,
countries such as South Korea and Taiwan, that globalists
frequently held up as models for the benefits of globalization
developed under radically different conditions. These countries
were not required to pay the costs that are now an integral
component of integration into global markets. During the 1960s
and 1970s, when they were rapidly growing, Taiwan and South
Korea did not face contemporary globalization’s pressures to
privatize their economies and open their borders to capital
flows. The demands of globalization undermine efforts essential

for a comprehensive development agenda.
9.3: Global Inequality
1. 9.3 Examine the causes and the impact of domestic or global
inequality between nations
Discussions of global inequality remind us of many of the
reasons some societies created powerful and prosperous
civilizations while others did not. Western Europe emerged as
the most prosperous region of the world. Areas that are now the
United States, Canada, Australia, and New Zealand were
conquered and settled by Europeans, many of whom embodied
the characteristics that contributed to Europe’s rise to global
prominence and economic prosperity. The advantages Europeans
enjoyed have been consolidated. This, in turn, contributes to
global inequality today. Several factors combined to produce
Europe’s economic success and profound global economic
inequality. A major factor is freedom of expression. Societies
that encouraged people to have their own ideas, to be
innovative, and to interact with each other eventually surpassed
societies that were totalitarian or authoritarian. The latter
generally stifled innovation because of their preoccupation with
traditions, conformity, and respect for authority. Initiative was
often equated with heresy. Another factor encompasses social
values. Chief among these is an emphasis on economic
opportunity and social equality. In his Wealth and Poverty of
Nations, David S. Landes stresses that China’s restrictions on
women hampered its growth, whereas women in Europe, who
were less confined to the home and were free to find
employment in certain occupations, were instrumental in that
region’s industrial development and expansion. A third factor is
the functioning of a . Chinese authorities became antagonistic
toward free enterprise and eventually regulated it out of
existence. Muslim countries failed to develop institutions that
would have enabled businesses to expand. Islamic partnership
law and inheritance law worked against the growth of large
corporations. In Europe, a partner in a business could designate

heirs, thereby providing continuity in the business after the
partner’s death. Islamic law did not provide mechanisms for
partnerships to be easily reconstituted following a partner’s
death. Similarly, Islamic law prescribed in rigid detail both
immediate and extended family members who had to inherit
property. Europe, on the other hand, allowed property to be
inherited by one person, thereby minimizing the chances that a
business would disintegrate and be prevented from getting
larger. Virginia Postrel points out that “the fragmentation
produced by inheritance law, combined with the structures of
partnership law, kept Middle Eastern enterprises small. That, in
turn, limited the pressure to evolve new economic
forms.” However, increasing wealth from petroleum has
significantly strengthened many companies in the Persian Gulf
area, especially those involved in finance.
A final factor undergirding Europe’s economic success and
setting the foundation for global inequality is the separation of
the secular from the religious. Whereas Islam became
inseparable from the state, the origins of Christianity and its
spread to Rome forced it to compromise with secular authority,
a compromise encapsulated in the warning that Christians
should give to Caesar what belongs to him and give God what is
God’s. However, Muslim societies prospered when religion was
less restrictive. Muslims, commanded by the Koran to seek
knowledge, became leading scientists, physicians, artists,
mathematicians, philosophers, architects, and builders. For
more than five hundred years, Arabic was the language of
scholars and scientists. Muslims transmitted Chinese scientific
inventions, Greek and Persian texts, and their own impressive
scientific discoveries and inventions to Europe. From the tenth
to the thirteenth centuries, Europeans translated Arabic works
into Hebrew and Latin, thereby giving impetus to a rebirth of
learning that ultimately transformed Western civilization.
9.3.1: Inequality between Developed and Developing Countries
Despite rising living standards throughout most of the world,
the gap between rich and poor countries has steadily

widened. Tables9.1 and 9.2 show some of those disparities in
greater detail. Historic trends suggest that most of the richest
countries will maintain their lead over most of the poorest
countries. The gap between the richest country and the poorest
country was 3 to 1 in 1820, 11 to 1 in 1913, 35 to 1 in 1950, 44
to 1 in 1973, and 72 to 1 in 1992. By the end of the twentieth
century, the richest 20 percent of the world’s population had
eighty-six times as much income as the poorest 20 percent. At
the beginning of the twenty-first century, the average income in
the richest twenty
Table 9.1 Income Inequality among Countries, 2011 (in terms of
GDP per capita)
Adapted from UN Development Programme, Human
Development Report 2013: The Rise of the South. Human
Progress in a Diverse World (New York: UN Development
Program, 2013). GDP per capita is given in international dollars
using purchasing power parity rates (PPP).
Some Rich Countries
Qatar
77,987
Luxembourg
68,458
Singapore
53,591
Norway
46,982
Brunei Darussalam
45,507
Hong Kong, China (SAR)
43,844
United States
42,486
United Arab Emirates
42,293
Switzerland
37,979

Netherlands
37,251
Australia
34,548
Japan
30,660
Republic of Korea (South Korea)
27,541
Some Poor Countries
Ethiopia
979
Mali
964
Togo
914
Mozambique
861
Madagascar
853
Malawi
805
Sierra Leone
769
Central African Republic
716
Niger
642
Burundi
533
Eritrea
516
Liberia
506
Democratic Republic of the Congo
329

countries was thirty-seven times that in the poorest twenty
countries. As Table9.1 indicates, income disparities between
developed and developing countries are very wide. Economic
development, while dramatically improving the standard of
living in most countries, has not significantly closed the gap
because of differential growth rates between rich and poor
countries. Rich countries have experienced higher economic
growth rates than poor countries. Furthermore, per capita
income actually declined in more than one hundred of the
world’s poorest countries, many of them in Africa. Even
developing countries that have enjoyed unprecedented economic
growth, such as China and India, have failed to close the gap
between themselves and rich countries. It is estimated that it
would take China and India a hundred years of constant growth
rates higher than those now experienced by industrialized
countries just to reach current American income levels.
However, given the extraordinarily high standard of living in
the United States, both China and India would be relatively
prosperous if they achieved half the income level of Americans.
Furthermore, globalization is profoundly altering many old
assumptions. Because the income gap between rich and poor
countries has widened historically, it does not necessarily
follow that this will always be the case. Singapore and Kuwait,
two high-income countries, illustrate that poor countries can
become prosperous by implementing astute political, social, and
economic policies (in the case of Singapore) or by having
valuable natural resources (in the case of Kuwait). Economic
disparities between the developed and the developing world
have focused on the . But access to the Internet and improved
telecommunications are not automatic panaceas for solving the
problems of developing societies.
9.3.2: Causes of Inequality between Rich and Poor Countries
In this section, we will briefly discuss some causes of the
widening gap between rich and poor countries. It is important to
remember that several factors combine to contribute to
inequality: (1) geography, (2) colonialism and its legacies, (3)

the structure of the global economy, (4) population growth, (5)
government policies, (6) political instability, and (7) natural
disasters.
Geography
Countries that are poor, some argue, have certain geographic
characteristics that contribute to their economic problems. For
example, they are in tropical regions or face high transportation
costs in accessing global markets because of their location.
Apart from the prevalence of tropical diseases, which have been
controlled to a large extent by modern medicines and practices,
countries in the Southern Hemisphere also tend to suffer from
being landlocked. Countries with extensive coastlines and good
harbors tend to be better off economically than landlocked
countries that lack the physical (i.e., systems such as roads and
railroads) essential for gaining access to navigable rivers and
the sea. Landlocked countries or countries located far from
global markets are disadvantaged by high transportation costs.
Colonialism
Many argue that European colonization of Africa, Asia, and
Latin America laid the foundation for economic disparities
between rich and poor nations. Inequality breeds inequality.
Just as wealth tends to perpetuate wealth, poverty tends to
perpetuate poverty. Countries that grew rich two hundred years
ago, partly because of their colonization of the developing
world, are generally still rich today. European groups that
migrated to Australia, Canada, the United States, South Africa,
New Zealand, and throughout Latin America continue to enjoy
significant advantages
Table 9.2 Health Inequalities
Adapted from UN Development Programme, Human
Development Report 2013: The Rise of the South. Human
Progress in a Diverse World (New York: UN Development
Program, 2013).
Physicians, 2005–2010 (per 1,000 people)
Life Expectancy at Birth, 2012 (years)

Maternal Mortality Ratio, 2010 (deaths per 100,000 live births)
Country
Rich Countries
Norway
4.1
81.3
7
Switzerland
4.1
82.5
8
Netherlands
3.9
80.8
6
Sweden
3.6
81.6
4
Germany
3.5
80.6
7
Ireland
3.2
80.7
6
Australia
3.0
82

7
United States
2.7
78.7
21
New Zealand
2.4
80.8
15
Japan
2.1
83.6
5
Republic of Korea (South Korea)
2.0
80.7
16
Poor Countries
Guinea
0.1
54.5
610
Central African Republic
0.1
49.1
890
Burkina Faso
0.1
55.9
300
Democratic Republic of Congo
0.1
48.7

540
Sierra Leone
0.0
48.1
890
Burundi
0.0
50.9
800
Eritrea
0.0
62
240
Mali
0.0
51.9
540
Chad
0.0
49.9
1,100
PPOL 650
Briefing Paper Outline Grading Rubric
Student:
Criteria
Novice
Competent
Proficient
Formatting
0–4 points
· Any of the following are not present: typed, 12-pt. font, Times
New Roman, double spaced, 1-inch margins.
· Information not conveyed in outline format.
5–6 points
· Typed, 12-pt. font, Times New Roman, double spaced, 1-inch

margins.
· Information partially or mostly conveyed in outline format.
7–10 points
· Typed, 12-pt. font, Times New Roman, double spaced, 1-inch
margins.
· Information conveyed in outline format.
Spelling and Grammar
0–4 points
· Continuous grammatical and spelling errors.
5–6 points
· Some grammatical and spelling errors.
7–10 points
· Minimal or no grammatical and spelling errors.
Content
0–52 points
· Major points are not clearly outlined, nor are they given
sufficient support.
· Summary of issue, clear explanation of current policies,
outline or proposed policies, and a recommendation are not
present.
53–54 points
· Major points are clearly outlined, but not sufficiently
supported.
outline or proposed policies, and a recommendation are present
but not clearly stated.
55–60 points
· Major points are clearly outlined.
outline or proposed policies, and a recommendation are present
and clearly stated.
References
0–14 points
· 0–4 references are present.
15–16 points
· 5–9 references are present.

17–20 points
· 10 or more references are present.
Earned Points:
/100
Earned Points ___/2 = ___ Total Points out of 50
PPOL 650
Briefing Paper Outline Instructions
This step in preparing for the Final Briefing Paper requires you
to focus on the data collected through your review of articles
listed in your annotated bibliography. Prepare a 5–7 page
detailed outline of your summary of issue. You will also need to
include a clear explanation of current policies. In addition,
clearly outline or propose policies and state a recommendation.
Include at least 10 of your scholarly resources from the
annotated bibliography to show support.
Your Briefing Paper Outline is due by 11:59 p.m. (ET) on
Sunday of Module/Week 5.

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