Income spectrum

Globalisation's portrayal as the economic tide that lifts all boats contrasts with rising income inequalities within the two major counterpoints of this movement: the US and China.

by Morgan Stanley Global Economic Forum
Last Updated: 23 Jul 2013

The countries are at opposite ends of the global income spectrum, with averages of $38,000 and $1,700 respectively, but they also have in common some of the highest domestic income disparities of the big world economies.

Measured on the 'Gini index' scale of income inequality, the US is 41 (out of 100), while China is 45 (up from 35 in 1990) compared with Japan's 25, Europe's 32 and India's 33.

In the US, the occupational elite are getting richer, but despite rapidly rising productivity even most knowledge workers have seen their earnings restrained by low-cost competition.

China's inequality reflects its two economies: the 560 million coastal urbanites with incomes of $1,500+ and the 745 million in the rural areas on $500 a year.

Both income disparities have risks: protectionist politics in the US and social instability in China.

Globalisation's new underclass
Stephen Roach
Morgan Stanley Global Economic Forum, 3 March 2006

Review by Steve Lodge

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