Globalization and Global Inequality: Assessing the Impact of the Rise of China and India, 1980-2005

This article uses updated purchasing power parity measurements of countries' income and a new strategy for approximating global inequality to examine how global income inequality-as a combination of increasing average within-country inequality and decreasing between-country inequality-changed in the period 1980-2005. In view of the overwhelming influence of China and India on trends in global inequality change, the authors base their strategy on estimating the change in world average within-country inequality from change in within-country inequality of these two countries. The authors find that global inequality decreased continuously throughout the period. They also project that global inequality will likely rise again in the next 25 years unless the stellar economic performance of China and India spreads widely to other developing countries.