Over the last three decades, pro-growth neoliberal policies have been followed by many developing countries as part of structural adjustment programmes, at the behest of the IMF and the World Bank.
Faster growth has been achieved by emerging market economies like India but accompanied by an unprecedented rise in income and wealth inequality. In China and India, higher GDP growth has indeed led to a decrease in extreme poverty, but it has also led to huge gaps in income and wealth between the rich and the poor.
Globally, while absolute poverty has come down, inequality has risen, especially with the stagnating incomes of the middle classes in affluent countries. Growing inequality threatens the long-term social and economic development of countries experiencing high GDP growth. It destroys people’s self-worth and confidence, breeds crime, leads to various types of ill health and can lead to terrorist activities and environmental degradation. In an interconnected world, the rise of inequality affects everyone, no matter who we are or where we come from.
Furthermore, since the global financial crisis of 2008, a class of ‘super-rich’ has emerged across the world, with ownership of a vast amount of assets and wealth. They seem to be the biggest beneficiaries of the existing world order. A recent Oxfam report shockingly revealed that eight individuals own more wealth than the rest of the world combined (Oxfam, 2017).
Inequality today cannot be addressed at the global level alone and has to be tackled at the national level as well. Policies for the reduction of inequality should preoccupy rich and poor countries alike. This has often been discussed at the annual World Economic Forum meetings in recent years. ‘Reduction of Inequalities’ is the tenth UN Sustainable Development Goal. In general, reduction of inequality will require strong and targeted actions at the national level and a broad action plan at the global level.