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HUMANITY DIVIDED Confronting inequality in Developing Countries Almudena Fernandez, Bureau for Policy and Programme Support, UNDP Dialogue on Inequality, Istanbul 21 January 2015

HUMANITY DIVIDED: Confronting inequality in Developing Countries

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HUMANITY DIVIDEDConfronting inequality in Developing Countries

Almudena Fernandez, Bureau for Policy and Programme Support, UNDP

Dialogue on Inequality, Istanbul

21 January 2015

1

OUTLINE

1 Conceptual Framework

2 Inequality in developing countries: what has happened and why

3 Policy framework

TAKING THE DEBATE FORWARD

Outcomes and opportunities are not independent but in fact are highly interdependent

Although inter-dependent, inequality of outcomes and opportunities have different underlying drivers

horizontal inequalities are of special concern as they tend to be very stubborn and persistent over time.

4/27/2015 Footer Text 4

?INEQUALITY: WHAT HAS

HAPPENED AND WHY

INCOME INEQUALITY CHANGES IN

DEVELOPING COUNTRIES

-7%

0%

13%

35%

-5%

11%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Africa Arab Asia&Pacific

E&CIS LatinAmerica&Caribbean

Developingcountries

Ch

ange

%

Income Inequality Trends by Region

Population-weighted Average Change in the Gini Index ( Early 1990s to Late 2000s)

• Income Inequality rose by 35% in

Eastern Europe and the CIS and

13% in the Asia the Pacific

• Meanwhile, it fell in both Sub-

Saharan Africa by 7% and in the

Latin America and Caribbean

region by 5%.

Source: UNDP, Humanity Divided

ECONOMIC PERFORMANCE AND INCOME

INEQUALITY

8%

17%

-3%

25%

21%

-7%

1%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Low-income (Nochange)

Low-income (Movedto lower middle)

Lower-middleincome (No change)

Lower-middleincome (Moved to

upper middle)

Lower-middleincome (Moved to

high-income)

Upper-middleincome (No change)

Upper-middleincome (Moved to

high-income)

Ch

ange

%

Income Status Groups

Income Inequality Trends by Income GroupPopulation-weighted Average Change in the Gini Index ( Early 1990s to Late 2000s)

Source: UNDP, Humanity Divided

LOW INCOME LOWER-MIDDLE INCOME UPPER-MIDDLE INCOME

DRIVERS OF INCOME INEQUALITY

Technical Change

Financial and trade globalization

Domestic policies

Not every country that had above average growth during this

period saw inequality rise. And not every country with below

average growth saw inequality fall.

In the last 20 years, of 24 developing countries with above

average growth (3% or more), 11 countries experienced an

increase in inequality but 13 countries were able to maintain

or lower inequality.

DO WE HAVE TO SACRIFICE FASTER

GROWTH FOR GREATER EQUITY?

THE REDISTRIBUTIVE IMPACT OF FISCAL

POLICY IN DEVELOPING COUNTRIES

-20%

-10%

0%

10%

20%

30%

40%

50%

Upper-middle Lower-middle Low

Ch

ange

in In

eq

ual

ity

(%)

Income group

Change in the Gini Index of Income Inequality Post-Taxes and Transfers (Late 2000s)

• In the majority of countries, taxes

and transfers had an inequality

reducing effect.

• The average redistributive impact

of taxes and transfers was 11% in

Upper-Middle Income countries, 4%

in Lower-Middle and 3% in Low-

Income countries.

• Yet, country experiences vary

widely. Even among low and lower

middle income countries there are

cases where taxes and transfer

reduce inequality by more than

30%Source: UNDP, Humanity Divided

INCOME INEQUALITY IS RELATED TO

INEQUALITY IN WELL-BEING

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Sub-SaharanAfrica

Middle East South Asia East Asia LatinAmerica &Caribbean

Rat

io o

f o

utc

om

es

by

qu

inti

le

Health and nutrition outcomesRatio of top to bottom wealth quintiles (late 2000s)

Under-5 Mortality Rates Stunting Rates Female Malnourishment

• Under-5 mortality rates are higher

by more than 50% for children in

the bottom wealth quintile as

compared to children in the top

wealth quintile, in all regions

• Women from the bottom wealth

quintile are up to 9 times more

likely to be malnourished

compared to women from the top

wealth quintile

Source: UNDP, Humanity Divided

• Gender inequality has declined for some indicators.

• The F/M ratio of total years of education increased,

on average, from 82% in 1990 to 91% in 2010.

• The global ratio of F/M employment rates rose from

62% in 1990 to 70% in 2010.

• Exception:

• Worsening job segregation in industrial sector.

• Wage gaps remain large and widening in many

countries.4/27/2015 Footer Text 11

GENDER INEQUALITY

Reasons to be concerned about trends.

• Employment equality substantially lags educational

improvements.

• Closing educational gaps not sufficient in order to

achieve gender equality.

• Gaps in political representation remain wide. Public

policy does not reflect women’s life conditions and

perspective in allocation of resources.

4/27/2015 Footer Text 12

GENDER INEQUALITY

4/27/2015 Footer Text 13

?HOW TO ADDRESS INEQUALITY

A COMPREHENSIVE POLICY FRAMEWORK

You can download the report at:

http://on.undp.org/vLKqj

4/27/2015 Footer Text 15

THANK YOU