Chapter

Global Growth and Distribution: Are China and India Reshaping the World?

Maurizio Bussolo, Rafael E. De Hoyos, Denis Medvedev and Dominique van der Mensbrugghe

in Southern Engines of Global Growth

Published in print April 2010 | ISBN: 9780199580606
Published online May 2010 | e-ISBN: 9780191723353 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199580606.003.0005

Series: WIDER Studies in Development Economics

Global Growth and Distribution: Are China and India Reshaping the World?

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Over the past twenty years, aggregate measures of global inequality have changed little, even if significant structural changes have been observed. The high growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank's global general equilibrium model LINKAGE and the newly developed global income distribution dynamics (GIDD) tool, this chapter assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class—a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in a widening of income distribution within countries. These opposing distributional effects highlight the importance of analysing global disparities by taking into account—as the GIDD does—income dynamics between and within countries.

Keywords: China; global income distribution dynamics; India; middle class

Chapter.  11639 words.  Illustrated.

Subjects: Economic Development and Growth

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