Is Globalization Reducing Poverty and Inequality?

Abstract

Over the past 20 years or so, India, China, and the rest of East Asia experienced fast economic growth and falls in the poverty rate, Latin America stagnated, and the former Soviet Union, Central and Eastern Europe, and sub-Saharan Africa regressed. But what are the net trends? The neoliberal argument says that world poverty and income inequality fell over the past two decades for the first time in more than a century and a half, thanks to the rising density of economic integration across national borders. The evidence therefore confirms that globalization in the context of the world economic regime in place since the end of Bretton Woods generates more “mutual benefit” than “conflicting interests.” This article questions the empirical basis of the neoliberal argument.