Shared prosperity and protest

Posted in: International development

Professor James Copestake is Professor of International Development at the University of Bath, as well as being a member of the IPR Central Team and Director of Studies for the Professional Doctorate Programme (DPRP).

Donald Trump’s victory in the USA earlier this month coincided with a campus lecture here at Bath from Kaushik Basu, who played a leading role in the World Bank’s decision to add shared prosperity to its mission statement alongside the already established goal of absolute poverty reduction. Defined as growth in the income of the poorest 40%, shared prosperity is not in itself a measure of inequality – but it does invite comparisons with how their income growth compares with that of others in society. It also echoes the attention being paid under the UN’s new Sustainable Development Goals for 2030 to “ensuring that no one is left behind’ (the Republic of Uganda, for example).

That said, many people living towards the bottom of the economic pyramid are likely to regard such worthy statements as at best irrelevant, and at worst fodder for the expensive bureaucratic ‘system’ for centralising power and promoting the global free markets through which they were marginalised in the first place. This takes us back to Trump, to Brexit and, most likely, to further political protest movements and ‘surprise’ votes. If so, then rising demand for better evidence of who is benefitting most from economic growth looks set to continue. Here are three examples of literature to watch.

First, there are 'Kakner-Milanovic global growth incidence curves', also known as Elephant Diagrams. Integrated global versions reveal rising shares of growth among world income deciles from 0% to 60%, high growth for the top 1%, and a stagnant trough of disaffected poor-to-middle class voters in between, mostly living in richer countries. This suggests that we should not be surprised to see more news stories that reverse the polarity of neo-liberal versus protectionist debate between the global north and south.

Second, there is the P20 initiative to monitor the poorest 20% of the world’s population: who they are, how they are doing, and where they are. Three-quarters of them currently live in just nine countries – India, China, Bangladesh, Nigeria, Indonesia, DR Congo, Ethiopia, Pakistan and Tanzania. Hoy and Sumner argue that other people in these same countries are now rich enough to transfer the simplistic sums necessary to eliminate this poverty – through a mix of higher taxes and shifts in funding from military spending and regressive fossil-fuel subsidies, for example. This is likely, in turn, to fuel renewed demand for incorporating estimates of countries’ relative tax effort into aid allocation.

Third, there is more nuanced political economy analysis of the causes and consequences of unequal shares in income growth. Take Ethiopia. Its government has been impressively successful over the last two decades in both promoting economic growth and channelling it into poverty-oriented activities, including rural roads, agriculture and social protection programmes. A symbol of its economic success is the construction boom in Addis Ababa and other prospering centres, and the rising property prices and rents anyone fortunate enough to own or acquire land there can enjoy. But investor confidence behind this model is threatened by protests linked to perceived horizontal inequality of access to these windfalls between different regional/linguistic groups. In short, if economic growth leads to rising inequality, political intolerance of the same will sooner or later threaten to hold it back.

All this suggests that indicators of shared prosperity (equitable or otherwise) are of interest not only to academics, researchers and development bureaucrats, but also to politicians, investors and activists – particularly to the extent that they can be disaggregated not only by income but also by class, ethnicity, gender, region, religion, disability, age and their intersections.

You can read more about Kaushik Basu's visit, his lecture and the conferment of his honorary degree here.


Posted in: International development


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