PRESS CONFERENCE ON BOOK ‘FLAT WORLD, BIG GAPS’

 

Contrary to the claims of many mainstream economists that globalization would create worldwide growth and that economic liberalization would reduce inequality, a new United Nations publication presented considerable evidence that the gap between the very rich and the very poor, however measured, was enormous, the book’s editors said at a Headquarters press conference today.

Presenting an overview of the book’s findings, Jacques Baudot and Jomo Kwame Sundaram said the book, entitled Flat World, Big Gaps:  Economic liberalization, globalization, poverty and inequality, provided rigorous empirical analysis of how economic liberalization had affected inequality, poverty and development. 

While economists and political leaders were debating whether global inequality had continued to fall since the 1980s, Flat World, Big Gaps showed that the world economy in the 1980s and 1990s had experienced slower growth, as well as greater inequalities within countries.  In recent decades, income inequality in most countries had worsened.

Mr. Baudot, an economist and the former Coordinator of the 1995 World Summit for Social Development, said the publication attempted to show that the question of economic growth was not simply a matter of increasing aggregate income, but of the type of growth and whom it benefited.  Indeed, the book presented strong evidence that, in the last 20 years, economic growth rates had not been on average superior to what they had been and had not been particularly favourable for poverty reduction.

Flat World, Big Gaps also described the relationship between the questions of distribution, growth and environmental protection, he said.  In that regard, the book showed that reliance on economic aggregates to reduce poverty had, in fact, been conducive to strategies that were disrespectful of the environment.  Inequality was not only bad economically, but also ethically. 

Mr. Jomo, the Assistant Secretary-General for Economic Development in the Department of Economic and Social Affairs, explained that the book was one of a number of volumes which the Department had recently published, in a novel way.  The Department had tried to ensure the extensive availability of the publications at modest prices.  The idea of that initiative was to influence the public discourse and international debate on matters of concern to the United Nations particularly, and the international community generally.  The Copenhagen Summit, together with the Commission for Social Development, had, in important ways, been the international community’s conscience, he added.

Describing the book’s format, he noted that the first half looked at trends globally, while the second half looked at regional trends.  Focusing on the last decade of the last century, it was clear that inequality had grown both between and within countries.  That was clearly contradictory to the proponents of a flat world theory, in which economic liberalization would result in a more equitable world.  Unfortunately, that had not been the case.

That had important implications for efforts to reduce poverty, he said.  In the last three decades, there had been slower economic growth in much of the world, with some notable exceptions.  With increasing inequality, it was not surprising that, despite some growth, there had not been a significant decrease in the hundreds of millions who continued to be poor by any measure. 

The Economic and Social Council and the Social Commission had paid attention to the goal of creating full, productive and descent employment, he said.  That was not insignificant, as there was no way to reduce poverty but by creating jobs.  The growth in the recent half decade had been characterized by jobless growth.  Even China, with its tremendous expansion of output, had seen a decline in jobs in the manufacturing sector.

Providing a context for the book, Johan Scholvinck, the Director of the Division for Social Policy and Development of the Department of Economic and Social Affairs (DESA), noted that, five years ago, Jacques Baudot, together with the Division, had initiated the International Forum for Social Development, a three-year project designed as a follow-up to the outcome of the World Summit for Social Development in Copenhagen.  Responding to Copenhagen’s call for a people-centred development, the Forum’s aim had been two-fold:  to promote international cooperation for social development; and to support developing countries and social groups not benefiting from the globalization process.

The Forum had concluded its work in 2004 with a focus on “Equity, Inequalities and Interdependence” and a subsequent debate in the context of the General Assembly’s fifty-ninth session.  One of the participants in the Forum, Mr. Jomo, had contributed a background analytical paper.  Quick to recognize the significance of the meeting, its rigorous analysis and thought-provoking contributions, Mr. Jomo had galvanized participants and other noted scholars to contribute their work to further illuminate the debate on inequality.  The result was Flat World, Big Gaps.

Regardless of one’s views on the causes and consequences of inequality, it was hard to ignore the prevailing debate being played out in many fora, including on the economic and editorial pages of global newspapers.  The New York Times, for example, had covered the subject in a number of contexts and countries, including in references to the rise in wage gaps, rapid growth recovery being trumped by rising social and economic inequality and in calls to replace the emphasis on rapid growth and wealth creation with a focus on social equity.  The Financial Times had used such phrases as “the advancing tide of inequality” and had described as naïve the beliefs of those who pretended that the benefits of economic growth trickled down naturally to raise all living standards.

He noted that, in 2005 and 2006, the United Nations had issued three major publications or variations of the subject, including the Report on the World Social Situation entitled, “The Inequality Predicament”.  The Report maintained overall that issues of equity and inequality had acquired such importance that strengthening and implementing the development agenda could not take place without first addressing the polarization of society that, among other reasons, rising levels of inequality had produced. 

“If there is a single, if implicit, theme running through the various reports -– this book in particular –- it is that they each present cogent arguments for moving inequality to the top of the international agenda,” he said. 

Other more recent publications had underscored the report’s findings, leading to current efforts to redress inequality in countries with a view to ensuring greater social integration and creating the conditions for sustained peace, he added.  In fact, “inequality, socio-economic and political marginalization and exclusion” had been singled out as the “witches’ brew of terrorism” in the debates leading up to the development of the Assembly’s 2006 Global Counter-Terrorism Strategy.

Responding to a question, Mr. Jomo said it was true that there was a relationship between conflict, poverty and employment.  That relationship was complex, however.  Greater effectiveness in limiting conflict would go a long way towards reducing poverty.  It was increasingly recognized that one of the important reasons for conflict was greed and access to precious natural resources.

Mr. Baudot added that poverty had also increased in developed countries, including in Europe.  It was a question of economic arrangements and policies, not just conflict.

Responding to another question, Mr. Jomo said it was true that Africa had experienced more growth in the past decade, not only in the mineral rich countries.  There had been a significant increase in primary commodity prices other than oil.  Owing to the United States Federal Reserve policy of keeping rates down, funds had been more available, resulting in greater investments in the developing world.  Recent trends in Africa suggested that foreign investment was mineral oriented.

Responding to a question on World Bank reports, he noted that a recent external review found that much of the World Bank’s research had supported predetermined policy recommendations.  The claim that globalization was good for growth, which had been very much a part of the Bank’s mantra in earlier times, had been undermined by the external review of its research.

Asked if the book’s title was in response to Thomas Friedman’s book, The World is Flat, Mr. Jomo said the flat world metaphor was a direct reference to the suggestions in Mr. Friedman’s book. 

Some economists suggested that countries adopt a well-being, rather than a gross domestic product index, a correspondent noted.

Responding, Mr. Baudot said all agreed that gross domestic product, while a useful measure, was inadequate for measuring a country’s progress in economic terms.  Efforts to build different kinds of indices were interesting.  He was not sure, however, that the solution was to adopt a different type of aggregate measure.  While it was tempting to rank countries, it could also be misleading.

Asked if the book presented solutions, as well as analysis, Mr. Jomo said much of the discussion dealt with income and consumption levels.  The question of inequality of wealth was a related issue and the subject of major research.  There was a tremendous concentration of wealth today.  Income was not only asset related, but also work related.  Regarding the United Nations approach to the issue, the best summary statement was the 2005 World Summit outcome, which emphasized the commitment to the internationally agreed development goals and national development strategies.  There had also been a strong commitment to policy space.  Developing countries often had very little policy choices, as they were constrained by the conditionalities placed on them. 

Responding to a question on the issue of migration, Mr. Baudot recalled that the primary objective of the Cairo conference was trying to give people a choice and the possibility of staying where they were. 

Mr. Jomo added that it was a very complicated issue.  The advent of new information and communications technology had brought with it the possibility for the cross-boarder provision of services.  The international community was divided over how to address migration. 

* *** *

For information media • not an official record