The Globalization Reader, 5th Edition

23 Global Income Inequality by the Numbers: In History and NowAn Overview

Branko Milanovic

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As the world becomes more integrated the global dimension of inequality is likely to become increasingly relevant. This is for at least two reasons: because of much greater movement of factors of production across borders, and because of greater influence of other people's (foreigners') standard of living and way of life on one's perceived income position and aspirations. Greater movement of capital, goods, technology and ideas from one end of the globe to another implies greater connectivity with people who are not one's compatriots, and greater dependence on other nations for generation of one's income. Movements of labor which illustrate this interdependence in a most obvious fashion are still less important than movements of capital, but they are increasing. The knowledge of how other people live and how much money they make influences strongly our perception of our own income and position in the income pyramid. An imaginary community of world citizens is thus gradually built. And once this is done, comparisons of actual incomes and welfare between different members of that imaginary community acquire importance. This is why global inequality, even if not as relevant and important for an average individual as inequality within her political community (nation state) will gain in importance. Once we compare ourselves with people from other parts of the world, we are indeed interested ...