2013. vol. 8. No. 3

John J. Kirton –PhD in International Studies, Professor, Director of the G8 Research Group, Co-Director of the G20 Research Group of the University of Toronto, M5S 1A1, 100 St. George, Toronto, Ontario, Canada; E-mail: john.kirton@utoronto.ca  

Abstract

The presented article is a translation of the second chapter of John Kirton’s book “Governance for a Globalized World” made with the permission of the author.

The author analyses the G20 phenomena drawing on various theories of international relations: realism, liberal institutionalism, Gramscian political economy, and constructivism. It is concluded that none of these classical theories is sufficient to explain the G20 governance.

Followed one after the other economic shocks, exposing new vulnerabilities in the process of globalization (e.g. financial crisis of 1997-1999, emerging in Asia and spreading around the world), contributed to the rapid establishment in 1999 of a broader, possessing large collective capabilities and closely interrelated "Group of Twenty", which was designed to help the "Group of Seven / Eight" and other organizations to provide global governance in the field of economics and finance. The increased number and variety of systemically important countries represented in the G20 helped to increase its capacity, representativeness, effectiveness and legitimacy as a new center of collective leadership. In 2008, an even more serious financial crisis that began with the U.S. and spread to the entire world, has led to an increase in the level of cooperation within the G20 to the meetings of the leaders of the Member States. This step contributed to the emergence of new opportunities and levels of interaction.

The G20 governance could be explained by a model of systemic hub governance, which adapts and extends the proven concert equality model of the G8 governance by selectively drawing on concepts from international relations theories of realism, liberal institutionalism, political economy, constructivism, complex adaptive systems, clubs, and networks. The G20 represents a special kind of club, defined by the systemic significance of its members in the world where the connectivity among them as well as the relative capability across countries is a central feature of the system.

Gabriel Goodliffe - Professor of International Relations and International Political Economy at the Mexico Autonomous Institute of Technology (ITAM), Río Hondo No. 1 Col. Tizapán San Ángel C.P. 01000 México D.F.; Email: gabriel.goodliffe@itam.mx

Stephan Sberro - PhD in Political Science, Professor at Department of International Studies, Mexico Autonomous Institute of Technology, Co-director of the Institute of European Integration Studies, National Researcher of CONACYT (Mexican Official Council for Developing Science and Technology, Río Hondo No. 1 Col. Tizapán San Ángel C.P. 01000 México D.F.; E-mail: ssberro@itam.mx

Abstract

The paper is a translation of the similarly named article firstly published in the International Spectator: Italian Journal for International Affairs in December 2012. The translation was made with the permission of the authors.

The failure of the Los Cabos summit to satisfactorily address the European sovereign debt crisis and ominous world economic outlook, let alone agree on concrete measures to improve the oversight and functioning of the global economy, appears to confirm the diminishing effectiveness and relevance of the G20 as an organ of international governance since its inception in December 2008. While few accomplishments were achieved in the area of global governance during the Mexican presidency, acute collective action problems, made worse by the present economic crisis, paralysed the G20 in the lead-up to and during the Los Cabos summit.

These collective action problems and the ensuing failure of global governance are attributable to the absence of leadership evident at both the global and European levels, which in turn testifies to the excessive dispersion of state economic and political power within the international system. The authors emphasize that without such a state to provide – and pay for – the means of compulsion that are synonymous with global governance, individual states remain much more likely to pursue their own narrow national self-interests or to be torn between parochial domestic interests than to act in accordance with collective global goals. It is in this sense that the demotion of the United States and the reticence of China to shoulder responsibility at the global level, or the unwillingness of Germany to assume the burdens of leadership within Europe, bode so ominously for the future. The paper concludes that unless one or more of these states steps forward and take on the duties and costs of leadership, the chances of the G20 realising its goal of providing effective global governance remain slim.

Barry Carin- Senior Research Fellow at the Centre for International Governance Innovation, Waterloo, Ontario, Adjunct Professor at the University of Victoria, British Columbia, N2L 6C2, 57, Erb St. W., Waterloo, Ontario, Canada, E-mail: bcarin@cigionline.org

David Shorr- Program Officer at the Stanley Foundation, IA 52761, 209, Iowa Av., Muscatine, USA; E-mail: dshorr@stanleyfoundation.org

Abstract

The presented article analyses the G20 effectiveness. The authors discuss negative evaluations of this international multilateral institute and analyse the G20 agenda management to improve its effectiveness. The tools used by the G20 are also thoroughly explored. The authors argue that not only traditional methods (e.g. fulfillment of the commitments announced in summit communiqués) should be used to assess the G20.

The authors suggest recommendations on improving the G20 effectiveness. First of all, the G20 should focus on priority issues: food security, commodity-price volatility, challenges of energy and climate change. 

To keep the G20 from being overwhelmed by persistent agenda creep, it should devise ways to sunset its involvement with certain issues, perhaps by handing off efforts on an issue to other bodies or spinning them off into self-sustaining initiatives. Such filters as governance gap, global implications, need for high-level attention, complementarity, clarity, proportionate scale are recommended to develop the G20 agenda.

In the authors’ view the real key to the G20 effectiveness is focusing all effort on the avenues that best rectify the given problem. The group can surely do better at contributing toward progress on the world’s urgent challenges, but the critique emphasizing distraction from its main business is neither a correct diagnosis nor a basis for constructive reform.

Pavel Jdanov - PhD student at the Department of World Politics of the National Research University Higher School of Economics, 20, Myasnitskaya, 101000, Moscow, Russian Federation; E-mail:p.jdanov@gmail.com

Abstract

In the contemporary world interstate networks and networks of non-governmental organizations form the net of the new world order. These networks gradually acquire their own identity, separate from the states, and start acting independently.

The presented article is an attempt to review the G20 in terms and categories of a network approach. For this purpose, the author identifies six characteristic network variables with specific values: the network resources, the group interest, the lack of a classical hierarchy, the culture of political consensus, the potential for change and heterogeneity of the network actors. Interconnection of the G20 characteristics and the selected variables is analysed and the G20 network nature is proved.

In addition to the qualitative characteristics, the network-based approach enables to examine the quantitative characteristics and reflect the network graphical structure. To illustrate capabilities of network approach the author constructs a network where the communication parameter is getting the country from G20 in the top-5 trading partners in the trade balance for 2011-2012.

The analysis demonstrates that the quantity and density of links in the G8 is significantly higher than in the BRICS.  It is also shown that economic integration of the G7 countries is stronger than integration of the G8 countries. The analysis reveals that the links within G7 are bilateral. The BRICS countries are bound more by the common political positions than economic integration.  

The author argues that the network approach can be helpful both for political systems and G20 analysis. However, its application depends on defining a set of criteria to identify political and economic links between actors. 

Sophia Murphy - Senior adviser to the Institute for Agriculture and Trade Policy, Trade and Global Governance team, 55404, 2105, First Av. South, Minneapolis, Minnesota, USA; E-mail: sophia.iatp@gmail.com

Abstract

The presented publication is a translation of the article published in the Stanley Foundation Policy Analysis Brief in March 2013. The translation was made with the permission of the author.

The article presents the review of the G20 participation in solving food security problems within a context of measures, taken after the 2007-2008 crisis, that led to dramatic food price spikes in the international food market.

In the author’s opinion the G20 can play a positive role in ensuring food security through: reforming inefficient food policies in some countries; increasing transparency and predictability of grain reserves; regulation of export restrictions and cooperation with developing importing countries to reestablish their confidence in the global trade system; improving regulation in speculation and increasing transparency on commodity-futures markets; reducing emissions and developing the eco-friendly agricultural sector.The unique leverage of the G20 is its ability to spur reforms that can have positive externalities for international markets and all the countries that depend on them.

The article includes recommendations to the G20. Applying market mechanisms and policy measures related to the distribution of food is critically important because they determine who will have access to the food that is grown.

The G20 is able to improve international markets stability and their sensitivity to importing countries’ needs, reduce negative effects of external factors through tighter coordination of national policies.

Marina Larionova - Dr. of Political Science, Head of International Organisations Research Institute (IORI)of the National Research University Higher School of Economics, 20 Myasnitskaya, 101000, Moscow, Russian Federation; E-mail:mlarionova@hse.ru

Mark Rakhmangulov- Deputy Director of the Global Governance Research Centre of the International Organisations Research Institute (IORI)of the National Research University Higher School of Economics, 20 Myasnitskaya, 101000, Moscow, Russian Federation; E-mail:MRakhmangulov@hse.ru

Andrei Sakharov- Researcher at the Global Governance Research Centreof the International Organisations Research Institute (IORI) of the National Research University Higher School of Economics, PhD student of the Department of International Affairs of the Faculty of World Economy and International Affairs of the National Research University Higher School of Economics,101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:agsakharov@hse.ru

Andrey Shelepov- Researcher at the Global Governance Research Centreof the International Organisations Research Institute (IORI) of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russia; E-mail:ashelepov@hse.ru

Valerie Ganzhela- Graduate of the Master Programme, Faculty of World Economy and International Affairs of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:valerie_ganzhela@mail.ru

Ekaterina Ivanova- Student of the Faculty of Public Administration of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail: bigdeals.hse@gmail.com

Dina Karakash- Student of the Faculty of World Economy and International Affairs of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:dina9393@mail.ru

Anton Komarov- Student of the Faculty of World Economy and International Affairs of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:komar94@inbox.ru

Maya Kostina- Graduate of the master programme, Department of Public Policy of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail: kostina.maya@gmail.com

Yana Nyrsubina- Student of the International College of Economics and Finance of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:nys0107@gmail.com

Alice Prokhorova- Student of the Faculty of Public Administration of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:alicepro@mail.ru

Pavel Prokopyev - Graduate of the Faculty of World Economy and International Affairs of the National Research University Higher School of Economics; 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:pavel.prokopyev@gmail.com

Sergej Rastoltsev-PhD student of the Institute of World Economy and International Relations of the Russian Academy of Sciences, 117997, 23, Profsouznaya, Moscow, Russian Federation; E-mail: sergej-ras@yandex.ru

Andrei Scriba- PhD student of the Faculty of World Economy and International Affairs of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:askriba@gmail.com

Kira Zatzepina- Student of the Faculty of World Economy and International Affairs  of the National Research University Higher School of Economics,101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:loskiros.music@gmail.com

Anastasya Zhuravleva- Student of the Faculty of Politics of the National Research University Higher School of Economics, 20, Myasnitskaya, Moscow, Russia 101000; E-mail:anastasiya.zhuravleva93@gmail.com

Abstract

The article reviews the progress of G20-B20 engagement since Toronto to St. Petersburg with the objective to identify which mechanisms and areas of cooperation are most effective to ensure continuity of the B20 efforts on the key priorities, the B20 influence on the G20 decision-making and the G20 compliance with commitments related to the B20 priorities. With this objective in mind the study is focused on two dimensions. The first dimension is B20 recommendations influence on G20 deliberation, direction setting and decision making on the basis of analysis of how the B20 specific recommendations are reflected in the G20 documents. The second dimension is B20 influence on the G20 delivery on the pledges made, which is assessed by monitoring the G20 compliance with the B20 related commitments.

The authors assess the average level of the B20 recommendations reflection in the G20 documents as considerable, however its dynamics across presidencies is mixed. The average level of G20 members’ compliance on the B20 related commitments is lower than the G20 average score for compliance with general non B20 focused commitments. It can be explained by a shorter monitoring period and by the fact that the B20 related commitments are more specific. Key areas where cooperation can be most effective (financial regulation, employment, investments, trade) have been identified. Key factors of success have been revealed. The analysis shows that a high level of B20 recommendations’ inclusion into the G20 documents and actions does not guarantee subsequent implementation of the commitments made. The B20 should ensure continuity on their priority recommendations in the dialogue with the G20 and engage in the follow up process by more actively participating in the G20 agreed initiatives and projects at the national and global levels.

Progress on the B20 related commitment should be reviewed and made public for each summit. It can help to increase the level of effectiveness of B20 and G20 engagement.

Marina Larionova - Dr. of Political Science, Head of International Organisations Research Institute (IORI)of the National Research University Higher School of Economics, 20 Myasnitskaya, 101000, Moscow, Russian Federation; E-mail:mlarionova@hse.ru

Mark Rakhmangulov- Deputy Director of the Global Governance Research Centre of the International Organisations Research Institute (IORI)of the National Research University Higher School of Economics, 20 Myasnitskaya, 101000, Moscow, Russian Federation; E-mail:MRakhmangulov@hse.ru

Andrei Sakharov- Researcher at the Global Governance Research Centreof the International Organisations Research Institute (IORI) of the National Research University Higher School of Economics, PhD student of the Department of International Affairs of the Faculty of World Economy and International Affairs of the National Research University Higher School of Economics,101000, 20, Myasnitskaya, Moscow, Russian Federation; E-mail:agsakharov@hse.ru

Andrey Shelepov- Researcher at the Global Governance Research Centreof the International Organisations Research Institute (IORI) of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Moscow, Russia; E-mail:ashelepov@hse.ru

Abstract

Economic inequality is increasing both within and across countries. Growing inequality has negative economic, social and political consequences, it constrains economic growth, undermines social cohesion and political stability. Eradicating causes of inequality and turning structural barriers to equality into opportunities is fundamental for generating strong, sustainable, balanced and inclusive growth. Transition to this growth model will depend on G20 coherent policy actions globally and nationally.

In the run up to the St. Petersburg G20 summit the Civil 20 initiated preparing a report and recommendations to the G20 focused on surmounting the risks originating from growing income inequality. A special Task Force, bringing together experts from G20 member countries has been established to draft the report. Presented and discussed within the Russian G20 Presidency Civil Society Track, the report provided an independent analysis and proposals for a dialogue between a wide range of stakeholders and the G20 governors on the G20 concerted policies and actions to improve economic equality within their countries and beyond.

This set of policy recommendationson how G20 can address inequality took full account of the existing authoritative, best available, consensus, analysis and evidence of the IMF, OECD, UNDP, other international organizations and relevant scholarly, civil society and policy communities, as summarized above. It built directly upon the extensive evidence and analysis of the causes and practical policy cures for income inequality in the G20 member countries, as identified in the country reports prepared by and for members of the Task Force on Inequality (currently including Australia, Canada, China, France, India, Indonesia, Mexico, Republic of Korea, Russia, Turkey and the United States).

The Civil 20 proposed that G20 leaders at their St. Petersburg summit can act together to improve income and economic equality within their countries and beyond by agreeing to act together for Strong, Sustainable, Balanced and Inclusive Growth affirming the value of equality and inclusion along with economic growth and efficiency.

The publication presents Civil 20 recommendations for the G20 on measures to tackle inequality and the country reports.

Daria Popova - PhD in Social Policy, Leading Research Fellow at the Independent Institute for Social Policy (IISP), Leading Research Fellow at the Centre for Analysis of Income and Living Standards of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Russian Federation; E-mail: dpopova@hse.ru

Abstract

The article discuses development trends, factors and forms of inequality in Russia. The author concludes with recommendations on reducing inequality.

At the beginning of the transition period in the 1990s Russia experienced an abrupt increase in income inequality. In the 2000s the Russian government attempted to take income disparities under control using redistributive policies such as: an accelerated increase in earnings of the public sector workers; a sharp increase in the minimum wage; a series of increases in the average and minimum pensions; and an increase in spending on safety nets for vulnerable groups of the population. Income inequality has stopped growing only recently as a result of the new economic crisis which had a more adverse effect on income of the well-off strata, while incomes of the poor were supported by increases in the minimum wage and several indexations of pensions. However, inequality in Russia, particularly regional, remains high. At the macro-level inequality is caused by the weakness of the tax related redistributive mechanisms, including a flat income tax rate, regressive social security contributions and low property taxes. For example, the total personal income tax and social security contributions in 2010 on average amounted to 43% of net earnings.

At the micro-level, income inequality is a result of disparities in incomes of households with different demographic and socio-economic characteristics. For example, earnings tend to grow with age due to the accumulation of experience and/or improving the match between employees’ skills and employers’ requirements. The family composition has an impact on household incomes; the latter are usually reduced due to the presence of children. Since employment is the main source of livelihood for most households, household incomes are largely determined by the labour market status of the household members. One of the most negative features of the Russian labour market is the high incidence of low-paid employment.

To tackle inequality it is recommended to improve social protection of the most vulnerable social groups, to enhance redistributive capacities of the tax system, to improve citizens’ access to education and health. The package of policies to reduce regional disparities should include policies promoting labor migration, investment in social infrastructure of the depressed territories and subsidies to firms creating new jobs, instead of subsidies to the budgets of those territories.

David Lansley– Master of Economics, Master of International Business, PhD, Team Leader Food Security, World Vision Australia, 3151, 1 Vision Drive, Burwood East, Victoria, Australia; E-mail: david.lansley@worldvision.com.au

Abstract

The presented country report surveys the trends in inequality in Australia over the past several decades and discusses the complex interaction of factors behind these trends.

This paper surveys the trends in inequality in Australia over the past several decades and discusses the complex interaction of factors behind these trends. As in many countries, there is a marked skewing of income and wealth in Australia. Further, the top 20 per cent of the population has increased its share of both over the past four decades, although this upward trend has included periods of falling inequality. A range of factors has contributed to this. Government policies to reduce inequality and domestic social trends including demographic situation and changes in the labour market appear to have had the greatest impact, but external factors – for example the global financial crisis and the stimulus to the Australian economy from increasing global integration – have had some influence. Despite a trend of generally increasing inequality, however, by international standards, Australia has been considerably more successful than many countries in directing assistance to the most needy.

The author demonstrates that aging population, changes in the labour market with the increasing demand for high-skilled, high ability workers and insufficiently effective tax and pension policies negatively affect income distribution. The middle class shrank as high-income individuals and people on low income benefited from the tax and pension policies. The internal factors have more influence on inequality development compared to the external. Data from the Australian Bureau of Statistics (Household Expenditure Survey and Survey of Income and Housing) were used for the analysis.

The conducted analysis demonstrates that, despite the government efforts, over the past three decades, and particularly through the first decade of the 21st century, it has been the forces increasing inequality that have dominated, leaving Australia on the broad measure of household disposable income inequality at the higher end of OECD countries.

Samir Saran– Senior Fellow and Vice President, Observer Research Foundation (ORF), 110002, 20, Rouse Avenue Institutional Area, New Delhi, India; E-mail: samirsaran@orfonline.org

Vivan Sharan– Associate Fellow, Observer Research Foundation (ORF), 110002, 20, Rouse Avenue Institutional Area, New Delhi, India; E-mail: vivansharan@orfonline.org

Abstract

India is a study in contrasts. In the post liberalisation era, since 1991, the country has witnessed a rapid GDP growth, secular expansion of its services sector, and a commensurate increase in per capita consumption. As a result, in 2012, the country overtook Japan’s GDP (in purchasing power parity terms), to become the third largest economy in the world. At the same time, a recent survey across 100 districts in the country revealed that 42 per cent of India’s children under the age of 5 are underweight and a shocking 59 per cent are stunted in their physical development (Naandi Foundation, 2011). Extrapolating these results to reflect the overall state of socio-economic development, the picture at once becomes stark. This paper delves into some macro trends through which it aims to unbundle facets of the country’s distorted growth narrative.

 According to the National Sample Survey data only about 4 per cent of India’s population earns more than INR100 a day (approximately USD1.8 a day in nominal terms). The majority of rural population has no access to drinking water and electricity. The disparity among classes, castes, urban and rural population is also high. The country experiences a lack of qualified labour force. The authors recommend that the government measures on reducing inequality should be based on understanding its causes with account of the multidimensional nature of inequality, which can not be reduced only through the intensive economic growth.

It is suggested that inequality could be reduced by improving access to education for all and professional training for the most vulnerable groups. It is also important to create jobs that guarantee permanent employment; develop the export sector; revitalize the secondary sector; stimulate the private sector by a better environment for doing business. Developing the financial sector and increasing financial literacy of the population would also contribute to reduction of inequality. Household savings must be productively and efficiently deployed in order to finance the current account deficit. According to the authors emphasis should be placed on reducing all forms of inequality despite political cycles.

Sugeng Bahagijo- Executive Director, International NGO Forum on Indonesian Development; 12540, Jl Jatipadang Raya, 105, Pasar Minggu, Jakarta Indonesia; E-mail: sbahagijo@infid.org

Abstract

In the last five years inequality in Indonesia has increased from 0.35 in 2005 to 0.41 in 2011 based on the Gini coefficient. Indonesia is by no means an exception; the data also shows that among almost all the countries that are experiencing rapid economic growth in the last 10 years, inequality is on the rise, including in China, India and South Africa. Closing the inequality gap, however, is possible and can be done. With a population of 230 million, Indonesia is more prosperous now than 10 years ago. Income per capita is USD3,000, with the 20^th largest GDP in the world, it now surpasses Belgium and Sweden, with an annual budget of about USD150-170 billion. This paper describes (a) the forms of inequality, (b) the causes of inequality (c) responses and government policies; (d) policy options to decrease inequality in Indonesia.

The author starts with exploring the various forms of inequality in Indonesia: income inequality, inequality in social security, inequalities in the burden of tax payments and regional inequalities . Land control inequality is acute for Indonesia as private companies own the majority of land. Income inequality is a result of market mechanisms and the government should take all possible measures to reduce inequality. Lack of social subsidies for the financially disadvantage groups, insufficient support of the agricultural sector, where most of the population is employed, and insufficient funding of some social programmes should be dealt with as causes of inequality in Indonesia.

Highlighting the causes of inequality the author moves over to consider the policy options to address inequality the Indonesian government should take integrated actions: evaluate development programmes, taking into account inequality trends; support the most vulnerable social groups, for example introduce health insurance for all; implement effective pension reform with the account of aging population. Access to key public services: health, education, should be improved, as well as the system of social subsidies. The funds allocated to fuel subsidies could be diverted to cover the costs of health care and educational services as well as infrastructure development in rural and remote areas. The agricultural subsidies should target the farmers and not the state owned enterprises.

Tax policy needs to be revamped to ensure that the system is fair and equitable. All these measures will enable Indonesia to reduce inequality and strengthen its position in the G20.

John J. Kirton–PhD in International Studies, Professor, Director of the G8 Research Group, Co-Director of the G20 Research Group of the University of Toronto, M5S 1A1, 100 St. George, Toronto, Ontario, Canada; E-mail: john.kirton@utoronto.ca 

Caroline Bracht– Researcher at the G20 Research Group of the University of Toronto, M5S 1A1, 100 St. George, Toronto, Ontario, Canada; E-mail: carolinebracht@gmail.com

Abstract

Although, Canada successfully tackles inequality and social mobility in the country is high, income distribution is unfair: growth in incomes of Canada’s richest 1% of people is increasing and growth in incomes of the poorest is falling over the last decades. Moreover, inequality in Canada is growing faster than in the USA and other OECD countries. Inequality within Canada is increasing among individuals, within individual regions of the country, and within cities. The authors noted that there is less inequality in Atlantic Provinces than in resource-rich provinces such as Alberta. Income inequality is also growing in the largest Canadian cities: Vancouver, Toronto, and Montreal. The correlation between inequality and life expectancy was revealed. Income inequality is particularly acute among aboriginal (Indians) and non-aboriginal Canadians. Aboriginal Canadians have fewer opportunities for employment and they can not support their basic needs.

The causes of inequality are disparities in payment for high-skilled and low-skilled workers, shifts in the labour market: increasing numbers of self-employed people, whose incomes are decreasing, changes in redistribution through taxes and benefits, particularly, decline in spending on social programmes.

According to the authors inequality could be reduced through creating more and better jobs, investing in education, including life-long education, reforming tax and benefit policies, widening access to quality social services: health care, education, social care for the most vulnerable social groups.

Yihuan Wang - Executive Director of Research Center for International Development, Professor, Assistant Dean of College of Humanities and Development, China Agricultural University, 100083, 17, Qinghua Donglu, Beijing, China; E-mail: wangyh@cau.edu.cn

Abstract

The presented paper discusses trends and causes of income inequality in China. The author also examines the influence of various forms of inequality in China on economic development and provides recommendations to reduce inequality. Despite rapid economic growth and increasing incomes of the country’s residents, Gini coefficient is still high and it has a negative impact on social stability. The author explores such forms of inequality as regional, gender, rural-urban inequality, inequality between industries as well as classes.

Income inequality between urban and rural population is increasing. Despite investments in the agricultural sector, emphasis is put on developing urban areas. As a consequence, incomes, education attainment, labour productivity of rural residents are lower compared to the urban population.

The author also discusses unbalanced regional development: the eastern China regions earn more compared to the western and central regions as the result of beneficial location and government policies aimed at developing the eastern regions.

Inequality growth negatively affects China’s economy, reducing domestic demand and hindering reforms of the economic structure. If not controlled the expanding income gap can seriously undermine the fairness and justice of society, having a negative impact on social development and stability, and damaging the construction of a harmonious society.

To reduce inequality it is recommended to establish a system in which distribution according to work input is dominant and multiple forms of distribution coexist; to strengthen the government macro-control; and to change rural-urban dual economic structure. Such tools as tax incentives, cultivating entrepreneurs’ sense of social responsibility should also be employed.

Kim KiHan -Steering Committee Member, Global Call to Action Against Poverty Korea (GCAP Korea), Director of Economic Policy Team, Citizen’s Coalition for Economic Justice (CCEJ), 110-809, 26-9, Dongsung 3-gil, Jongno-gu, Seoul, Republic of Korea; E-mail: hyjo@ccej.or.kr

Abstract

The presented paper analyses inequality trends in Korea, its causes and its impact on the country’s economic development. The paper concludes with the recommendations on tackling inequality in South Korea.

South Korea faces inequality and an ever widening gap between the rich and the poor with harmful social consequences as a result of the rapid introduction of a neo-liberal economic model since the IMF financial crisis in 1997. Decreasing employment opportunities, declining quality of work, and widening income gaps have become more visible.

The main causes of inequality growth are an increasing number of temporary employment contracts, aging population, and insufficiently effective income distribution system. As a result the gap between the rich and the poor, the major companies and small business has widened. Over the last few years the Korean government has implemented policies aimed at intensive economic growth to the benefit of major corporations. It has not been sufficiently focused on social protection of the vulnerable social groups.

In the author’s opinion Korea needs “economic democracy” that guarantees a fair and equitable market economy and competition.

To reduce inequality the government should reform the tax system, abolish discrimination of temporary workers, implement effective social policy to improve the quality of life of its citizens; introduce necessary changes to the legislation and encourage NGOs to participate in programmes aimed at reducing inequality.

Stephan Sberro - PhD in Political Science, Professor at Department of International Studies, Mexico Autonomous Institute of Technology, Co-director of the Institute of European Integration Studies, National Researcher of CONACYT (Mexican Official Council for Developing Science and Technology, Río Hondo No. 1 Col. Tizapán San Ángel C.P. 01000 México D.F.; E-mail: ssberro@itam.mx

Abstract

The presented paper discusses the problems of inequality in Mexico. Despite intensive economic growth, the Mexican society is one of the most unequal in the world. The five last presidents of Mexico have led a strong liberal policy. They all have declared that the fight against poverty would be their priority and three programs have been implemented. But despite this strong will and the relatively good results of the economy, half of the Mexican are still living in poverty. According to the National council for the evaluation of social development 51% of Mexicans are poor. Mexico inequality indicators are the highest in Latin America.

The author examines social measures on reducing inequality taken in post-revolutionary Mexico (1940 – 1990) and the new liberal programmes, which can reduce inequality to an acceptable level.

The efforts on building “welfare state” during 1940-1990 led to improvement of living standards, widening access to education and health care, but did not help to overcome inequality. The gap between rural and urban population was increasing. After the serious economic crisis of the 80’s, Mexico accelerated its economic liberalization. To reduce inequality social programmes for supporting vulnerable social groups: Indians, women, old citizens were launched. However, despite the efforts of the government and relatively good economic performance, poverty was not eradicated.

The author concludes that liberalizing trade and embracing globalization is not enough to tackle the inequality problems and the Mexican government should implement consistent policies to equalize opportunities. He also points out that Mexico should prioritize measures ensuring equality of opportunities in order to enable the country to realize its full capacity and opportunities of globalization.

Feride Inan - Research Associate at TEPAV, 06560, Sogutozu Cad. No: 43 TEPAV Building, Sogutozu, Ancara, Turkey; E-mail: feride.inan@tepav.org.tr

Abstract

The article discuses inequality trends in Turkey and analyses the government measures tackling inequality. In spite of intensive economic development, regional and gender inequality in Turkey is growing. Income gap between rural and urban population is widening. One of the key causes of inequality is unequal access to the resources such as financial capital, quality education and basic health services for different social groups. Children from affluent social classes have more chances to receive high quality education and well-paid job.

The tax system, unemployment insurance scheme, social security programmes are aimed at reducing inequality and poverty eradication. The Turkish government also implements special programmes to develop the backward eastern regions. However, the analysis demonstrates that a reduction of government subsidies in the agricultural sector that was not supported by the investments is one of the causes of the rural areas relative poverty.

According to the author inequality can be reduced by launching special programmes for people employed in the informal sector. It is also important to reform the tax system, as its distribution effect is limited given that it relies on the regressive consumption tax while the progressive taxes on income make up only a small share of the total taxes. One of the important measures to reduce inequality should be improving access to education for the vulnerable social groups.

Andrew Yarrow- Senior Research Advisor, Oxfam America, США, 02114-2206, 226, Causeway St., 5th Floor, Boston, MA, USA; E-mail: research@oxfamamerica.org

Abstract

The author examines evolution, factors and forms of inequality in the USA. Measures to tackle inequality are also analysed.

The USA is one of the most dynamic worlds’ economies, but income inequality in the USA is one of the highest in the world. Inequality in wages, income, and wealth has grown dramatically during the last 35 years in the United States. Today, the US is the world’s most unequal rich country, with 421 billionaires and 16,000 families with average annual incomes of USD24 million, yet 50 million Americans live in poverty, and one-third of the nation’s 310 million people struggle to make ends meet in either poverty or near-poverty. Among the G20 countries, Indonesia, Argentina, Turkey, China, Russia, Mexico, Brazil, and South Africa are more unequal as measured by Gini coefficients, whereas all other G7 countries, plus Korea, Australia, and India are more equal. Unlike Brazil, Korea, Mexico, and Argentina, which have succeeded in reducing inequality since the 1990s, inequality continues to increase in the United States.

Growing inequality has been accompanied by a decline in social mobility, a number of studies found that the USA lag behind many developed European countries.

The growth of income inequality is explained by a growing demand for high-skilled workers and changes of some institutional policies on income distribution. Thus, over the last few years the rich benefited from the government policies and the middle class was diluted. Moreover, the USA education system is more accessible for the rich than the poor.

The USA government takes actions to reduce inequality through implementing progressive tax scale, providing low-cost college loans, housing assistance and child nutrition programmes. However, compared to the developed European countries, the USA social protection system is not sufficiently effective.

High priority measures to reduce inequality should include: better access to high quality education and professional training; tax reforms that simplify tax and increase the progressivity of the income tax, reduce tax evasion; imposition of a financial transactions tax; increasing the number of social protection programmes and promoting savings and assets building by lower income Americans.

Nicolas Fremeaux- Postdoctoral Fellow at THEMA of the Université de Cergy-Pontoise, F-95011, 33, blvd du Port, Cergy-Pontoise, France; E-mail: nicolas.fremeaux@u-cergy.fr

Abstract

The article discusses trends and causes of inequality in France and possible ways of reducing inequality. It is demonstrated that income and wealth inequality are growing over the last decades. The increase in income inequality in France occurred later than in many developed countries. Income inequality, as measured by the Gini coefficient, has followed a U-shaped curve over the period 1980-2010. More specifically, income inequality has decreased during the 1970s and 1980s. Then, after a period of stability in the early 1990s, inequality has started to rise. Thus, the levels of income dispersion in 1980 and in 2010 are very close. France was above the average level of income inequality in OECD countries during the 1970s and the 1980s. At the end of the 2000s, the country was just below the average (0.30 for France against 0.314 for OECD countries).

According to the author one of the causes of inequality is a non-progressive tax system when more affluent residents pay fewer taxes than the poor. Labour market inequality is also observed in France. Inequality leads to declining living standards of low-qualified workers. The analysis of various social factors that affect inequality revealed that it is not possible to define explicitly their role in inequality increase.

To reduce inequality it is suggested to introduce a more transparent and simple tax system, implement effective social and education policies with the focus on young people living in disadvantaged areas. Finally, an effective labour market policy should be launched to stimulate job creation.