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Re: World Bank Study Contradicts Its Free-Trade Income Theories by Carl Nordlund 06 September 2002 09:56 UTC |
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Did some research on the source - here it is: -----Ursprungligt meddelande----- Från: wsn-owner@csf.colorado.edu [mailto:wsn-owner@csf.colorado.edu]För Carl Nordlund Skickat: den 5 september 2002 11:47 Till: wsn@csf.colorado.edu Ämne: VB: World Bank Study Contradicts Its Free-Trade Income Theories Hi all, Just got this from a colleague - might be of interest. It's from the globalfarmcrisis mailing list. Carl >Subject: [globalfarmcrisis] World Bank Study Contradicts Its Free-Trade Income > Theories >World Bank Study Contradicts Its Free-Trade Income Theories >By JOSEPH REBELLO >DOW JONES NEWSWIRES >WASHINGTON -- A new World Bank study has challenged one of the bank's most >herished ideas about the virtues of freer trade and investment. >"Globalization," the study argues, generally widens the income gap between >the world's poorest people and the richest. >The study, based on a review of national surveys of household income in 88 >developing countries, concludes that trade and investment liberalization >promotes income equality only among middle-income and rich countries. Among >poor countries -- those with per-capita incomes of less than $5,000 a year >-- it simply increases inequality. "At very low average income level, it is >the rich who benefit from openness," said the study, conducted by Branko >Milanovic, the bank's top economic researcher on matters involving poverty. >"It seems that openness makes income distribution worse before making it >better." Those findings contradict standard economic theory, which holds >that freer trade and investment especially benefit poor countries by >allowing them to increase exports to richer countries and attract >investment from them. The implication of that theory, Mr. Milanovic says, >is that income >inequality in poor countries should decline. >The findings also contradict the World Bank's official view. For the last >two decades, the bank has vigorously advocated trade liberalization, often >making it a condition for loans to poor countries. That has angered >free-trade opponents, some of whom regularly protest outside the bank's >headquarters. But the bank's commitment to freer trade hasn't wavered. "A >widespread anxiety is that growing integration is leading to heightened >inequalities within countries," the bank said in a report last December. >"Usually this is not the case. Most of the globalizing developing countries >have seen only small changes in household inequality, and inequality has >declined in such countries as the Philippines and Malaysia ." >But Mr. Milanovic, who compared national household-income surveys from 1985 >through 1991 with those from 1992 through 1997, found significant increases >in inequality. During that time trade liberalization increased markedly: >among the countries studied, the average ratio of imports and exports to >the countries' gross domestic product rose from 62% to 77%. Liberalization >increased in "all the regions except the most developed," the study found. >So did inequality. In 1988, the average income of the poorest 10% of the >people in the countries studied was 30.7% of the average of all people. By >1993, it had declined to 24.8%. By contrast, the average income of the >richest 10% was 273.5% of the average of all people in 1988. By 1993, the >number had risen to 293.4%. "Incomes of the low deciles have tended to fall >behind the mean income growth; incomes of the top tend to forge ahead of >the mean," Mr. Milanovic said in the study.
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