Income Disparity and Growth

Rapid economic growth over the past decade was the main driver of poverty reduction. However, due to the global market turmoil, growth in recent times has slowed and ground may be lost in poverty reduction. An important question for the sustainability of growth is: Has the world become more equal or unequal with globalisation? The evidence on trends in inequality is dependent on the normative judgments and measurements used. However, there has been rising inequality within countries. The greater the degree of income inequality, the lower the impact of growth on poverty reduction. This makes growth, equality of income and poverty reduction important considerations when formulating development strategies. Reform of trade, productivity, and human capital have had positive implications for growth, employment, and equality. Trade liberalisation has proven to both increase growth and reduce inequality. Education inequality is closely related to increasing growth and reducing poverty. Jobs are the most sustainable way to reduce poverty. Complementary measures are also needed to ensure that financial reforms take place, labour markets function well, there is free movement of people and goods and services and natural resources are used in a sustainable way.