The paper finds that although a reversal in global income inequality would have happened regardless, it is likely the COVID-19 pandemic has accelerated its emergence, as well as unequal access to vaccines across the developing world – which is preventing a full economic recovery and growth potential.
Focusing on the between-country component of inequality – that is the difference of incomes between countries – the paper finds the reversal in trends will likely take place towards the mid-to-late 2020s.
This is because of fast-growing, populous countries like China and India have been catching up to rich countries, while simultaneously increasing the gap between themselves and low-income countries.
The consequences of this, for instance, means more marginalisation of poorer countries in global decision-making bodies and a continuation of poverty.
However, as co-authors Professor Andy Sumner and Dr Eduardo Ortiz-Juarez, of the Department of International Development, and Professor Ravi Kanbur (Cornell University), point out in a corresponding blog post, there is potential to counteract the boomerang.
Our paper suggests that a possibility to counteract the upward movement in global income inequality is for countries’ policy to focus on lowering interpersonal income differences within their borders.– Dr Eduardo Ortiz-Juarez, Lecturer in Development Economics
They also urge the “sunshine narrative” of declining global income inequality be tempered.