Branko Milanoviç's Paper Chronicles Three Eras of Global Inequality: A Historical Perspective and Future Challenges
- From Xhulia Likaj
- Reading duration 2 min
A new paper by renowned economist Branko Milanoviç, "The three eras of global inequality, 1820–2020 with the focus on the past thirty years," delves into the intricacies of global economic history over the past two centuries, shedding light on significant shifts in income distribution and the emergence of a new global landscape.
Milanoviç identifies three distinct eras of global inequality, spanning from 1820 to the present day. The first era, up to 1950, witnessed rising income disparities both within and between countries. The second era, from 1950 to the end of the 20th century, marked a period of high global and between-country inequality. The ongoing era, since the 1990s, is characterized by decreasing inequality, fueled by the economic ascent of Asian nations, particularly China.
One striking observation is the rise of the global "median" class with per capita incomes ranging from $PPP 3,000 to $PPP 5,000. This era has witnessed a significant reshuffling of income positions between the West and China, reminiscent of the Industrial Revolution. However, absolute income differences in the last 30 years have increased, maintaining a substantial gap between the affluent "core" and the impoverished "periphery."
In essence, Milanoviç's work unravels the intricate tapestry of global economic history, emphasizing the transformative impact of events such as the Industrial Revolution and the recent rise of Asia. It concludes that the future trajectory of global inequality hinges on the growth rates and inequality trends in India and large African countries, as well as the looming threat of climate change. The historical analysis underscores substantial progress in reducing inequality in recent decades while emphasizing the urgency for sustained efforts to address remaining disparities, particularly in the world's poorest regions.
The full paper is available here.