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Global growth and distribution : are China and India reshaping the world?

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  • Bussolo, Maurizio
  • De Hoyos, Rafael E.
  • Medvedev, Denis
  • van der Mensbrugghe, Dominique

Abstract

Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank's LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per-capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class-a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growthis often characterized by high urbanization and growing demand for skills, both of which result in widening of income distribution within countries. These opposing distributional effects highlight the importance of analyzing global disparities by taking into account - as the GIDD does - income dynamics between and within countries.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4392.

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Date of creation: 01 Nov 2007
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Handle: RePEc:wbk:wbrwps:4392

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Keywords: Inequality; Economic Theory&Research; Emerging Markets; Achieving Shared Growth;

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References

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  10. Francisco H. G. Ferreira & Phillippe G. Leite, 2003. "Meeting the Millennium Development Goals in Brazil: Can Microeconomic Simulations Help?," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
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  13. Rod Tyers & Qun Shi, 2006. "Global Demographic Change, Labour Force Growth and Economic Performance," ANU Working Papers in Economics and Econometrics 2006-462, Australian National University, College of Business and Economics, School of Economics.
  14. Bussolo, Maurizio & Lay, Jann & van der Mensbrugghe, Dominique, 2006. "Structural change and poverty reduction in Brazil : the impact of the Doha Round," Policy Research Working Paper Series 3833, The World Bank.
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  16. François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications, The World Bank, number 6586, October.
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Cited by:
  1. Clovis Freire & Alberto Isgut, . "High Food and Oil Prices and Their Impact on the Achievement of MDG 1 in Asia and the Pacific," MPDD Working Paper Series WP/11/18, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  2. John COCKBURN & Jean-Yves DUCLOS & Agnès ZABSONRÉ, 2012. "Is the value of humanity increasing? A critical-level enquiry," Working Papers P52, FERDI.
  3. van der Mensbrugghe, Dominique & Osorio Rodarte, Israel & Burns, Andrew & Baffes, John, 2009. "How to feed the world in 2050: Macroeconomic environment, commodity markets - A longer temr outlook," MPRA Paper 19019, University Library of Munich, Germany.
  4. Bussolo, Maurizio & De Hoyos, Rafael & Medvedev, Denis, 2009. "Global income distribution and poverty in the absence of agricultural distortions," Policy Research Working Paper Series 4849, The World Bank.
  5. Jing Wang & Dana Medianu & John Whalley, 2011. "The Contribution of China, India and Brazil to Narrowing North-South Differences in GDP/capita, World Trade Shares, and Market Capitalization," NBER Working Papers 17681, National Bureau of Economic Research, Inc.

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