Globalization, Inequality Within Countries, and Domestic Conflict

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Globalization, Inequality Within Countries, and
Domestic Conflict
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Percentage Share of Income   Highest
10 Highest 20 Lowest 20 Lowest
10 Argentina 38.9 56.4
3.1 1.0 (2001)
Brazil 46.7 64.4
2.0
0.5 (1998) Chile 47.0
62.2 3.3
1.2 (2000) Mexico 43.1
59.1 3.1
1.0 (2000) Source the World Bank
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• q  Measurement of Inequality Within Countries
• n The comparability problems in the Deininger
  Squires data
• Sparse coverage, problematic measurements,
  diverse data types, Biased missingness.
• n Example Sri Lanka (1987-1990) decreases by
  17 Gini points
• in 3 years.
• Venezuela (1989-1990)
  increased almost by 10
• points in a year.
• n Galbraith and Kums (2003) data set.

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Inequality Among World Citizens 1820-1992
(Bourguignon Morrisson)

• By overlooking inequality within countries, the
  empirical growth literature gives a biased view
  of the evolution of world inequality over time,
  clearly underestimating it.
• We may be facing the new pattern of global income
  inequality changing from inequality between
  countries to inequality within countries in
  recent decades (Firebaugh 2003).

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Sources of Changes in the World inequality

• Disequalizing forces
• Better economic performance of European
  countries the relatively poor growth
  performances of China and India until late the
  20th c the slow growth growth of Africa in the
  second half of the 20th c.
• Equalizing forces
• The equalizing of incomes within Western European
  countries, Russia, and Eastern Europe in the
  interwar period and after WWII Chinas
  outstanding growth performance in the last
  decade.
• ? Economic growth, population growth.

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Conclusions

• World income inequality worsened dramatically
  over the past two centuries.
• The increase in inequality across countries is
  the leading factor in the evolution of the world
  inequality.
• The increasing concentration of world poverty in
  some regions (Africa) of the world is worrying.
• Shannons critique on the effect of pertinent
  factors (technology) on inequality since 1950.
• Walts critique on the method of grouping.

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Globalization and Inequality

• Does the widening of wage inequality a result
  from globalization?
• International Trade
• Immigration

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Source ECLAC
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Williamson ( Wood)

• The decline in the relative wages of less-skilled
  northern workers is caused by the elimination of
  trade barriers and the increasing abundance of
  southern workers with a basic education.
• The sources of differences between East Asia and
  Latin America in terms of the growth-inequality
  linkage?
• Brendas critique.

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• q  Trade Effect on Inequality Within Countries
• n   Trade raises inequality within countries.
• (e.g. Leamer 1996, Wood 1994, Kremer Maksin
  2003)
• n    Trade reduces inequality within countries.
• (e.g. Dollar Kraay 2001 Sala-I-Martin)
• n    No ubiquitous trend or statistically
  insignificant.
• (Lindert and Williamson 2001 Li, Squire, and
  Zou 1998).
•  

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• Why Is Trade Effect on Inequality Heterogeneous
  (or Insignificant)?
• Economic Explanations
• A long-term positive effect (Agenor 2003).
• Production innovation and technology transfer.
• (Autor et al. 1998 Beaulieu et al. 2004 Zhu
  2004)
• It depends on the level of GDP per capita.
• (Barro 2000 Kapstein and Milanovic 2002)
• Political Explanations
• It depends on domestic political institutions or
  regime types. (Gradstein et al. 2001 Knack and
  Keefer 1997 Lipset 1959).

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• Research questions
• Does economic inequality affect on the
  occurrence of intrastate conflict? If so, then
  under what conditions (the relative deprivation
  perspective and the resource mobilization
  perspective)?
• Is a low level of economic development rather
  than high inequality the cause of political
  violence? (MacCulloch vs. Muller)

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• q  Inequality and Political Violence
• The perception of relative deprivation stirs
  social discontent. (Gurr 1970)
• Economic inequality induces social discontent and
  political violence. (Muller Seligson 1987
  Wang, Dixon, Muller, Seligson 1993).
• Inequality is often concomitant with social
  cleavages between classes, religions, or regions,
  heightening the probability of political violence
  (Lichbach 1989).

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Why Intrastate Conflict?

• In the 187 wars in the world between 1945 and
  1995, 129 of them (69) have been wars within
  state borders. Between 1990 and 2000, there were
  more than 100 intrastate but only seven
  interstate conflicts around the world.
• Intrastate conflicts have presented a challenge
  to our understanding of war and to the conflict
  management mechanisms. (e.g. Rwanda 1994)
• The forces of globalization are evident in the
  increasing concern over transnational security
  issues, including proliferation, refugees,
  environmental degradation, and non-state actors
  such as terrorism.

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The Impact of Income on the Taste for Revolt
MacCulloch

• Question?
• Whether support for revolutionary change amongst
  individuals depends on the level of national
  income
• It implies that economic growth rather than
  inequality does matter.
• Data The World Values Survey and Euro-Barometer
  surveys.

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Conclusions

• As the level of national income (GDP per capita)
  increases, the probability of supporting revolt
  decreases.
• Lessons? To decrease the taste for revolution
• Improve the economy.
• Make people get married earlier.
• Encourage people to have female babies.

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Comments?

• Adams and Smitas critique on the dependent
  variable.
• Brendas critique on the credibility of the data.
• Rolfs critique on the policy implication of the
  results (trade-off between growth and
  inequality?)
• Problems in interpretation.
• Bad interpretation of the coefficients.
• Cannot explain the inequality effect on violence.

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Income Inequality, Regime Repressiveness, and
Political Violence Muller

• Question
• Whether the political opportunities available to
  dissident groups affect the prospect of political
  violence.
• Whether inequality (willingness) has a positive
  impact on violence.
• Hypothesis
• The extent of regime repressiveness should be
  related to violence in a curvilinear fashion.
• The incidence of political violence is relatively
  high under conditions of intermediate regime
  repressiveness and relatively low when the regime
  is either very repressive or very open.

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• How to measure regime repressiveness?
• Freedom House Political Rights Index / Civil
  Rights Index.
• Polity IV data sets. http//www.cidcm.umd.edu/insc
  r/polity/
• How did he measure the level of income
  inequality?
• Upper-quintile income share.
• Adams critique.
• Smitas critique on additional control variables.

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• How to measure the level of political violence?
• The death rate (not the number of deaths) from
  political conflict.
• Brendas critique on this measure.
• Rolfs critique on the type of political
  violence.
• Conclusions
• Countries following a strategy of development
  which ignores the inequality problem may be prone
  to experience comparatively high levels of mass
  political violence.
• Countries with an intermediate level of regime
  repressiveness are more likely to face political
  violence. (Political leaders should either
  embrace or crush their opposition.)

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• Ians critique on the data plots.
• Walts comment on the effect of the Cold War and
  the interaction between inequality and racial
  (cultural) divisions.
• How can we know that countries with an
  intermediate level of regime repressiveness are
  more likely to face political violence from the
  result?
• Another interpretation issue.

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Does Economic Inequality Breed Political
Conflict? Lichbach

• Three approaches to EI-PC studies.
• The Statistical Modelers data-involved test,
  quantitative
• The Formal Modelers deductive, mathematical
• The Theory Builders assumptions, qualitative
• Deprived Actor SRP (Scientific Research Program)
  willingness, psychological approach
• Rational Actor SRP opportunities, costs and
  benefits approach.

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Conclusions

• The statistical modelers
• No clear answer about the EI-PC nexus exists.
• The necessary and sufficient conditions under
  which inequality produces positive, negative, or
  no effects on conflict should be investigated.
• The formal modelers
• By employing some set of assumptions to arrive
  deductively at EI-PC propositions, we must
  explain the EI-PC nexus in a formal model.
• The theory builders
• Some general theory that uses social, political,
  and economic variables is needed.

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• A unified and coherent set of EI-PC theorems (the
  assumptions of the theory builders the
  deductive methodology of the formal modelers
  the data test from the statistical modelers) are
  necessary.
• Suggestions
• EI-PC propositions should be formally deduced
  from a simple and stylized version of a major
  scientific research program.
• Different dimensions of inequality (political or
  status inequality,) should be examined.
• The relevant conditions should be examined.

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• Suggestions (cont)
• Not only the number of political conflict but
  also the extent (number of participants and
  duration), geographic scope, intensity (number of
  deaths, injuries), etc. should be examined.