[Combating poverty and inequality] Tackling ethnic and regional inequalities

Abstract

"Structural change affects individuals, groups and regions differently. Group membership is intrinsic to human development, and when the benefi ts and costs of structural change correspond to ethnic or religious affi nities, or geographic location, individuals may perceive development in terms of those cleavages. Such inequalities can be a source of confl ict and adversely affect well-being. However, measures of inequality that rank individuals and households by income often exclude group and spatial dimensions. Group inequalities are closely linked to the ways in which groups are integrated into different sectors of the economy, as well as their representation in political and social institutions. They are also refl ected in how identities are valued in the cultural sphere. Such inequalities are therefore multidimensional and encompass economic, social, cultural and political dimensions. Achieving equality in each of these dimensions has intrinsic value, and is also instrumental in promoting equality along other dimensions, or in achieving other development goals. Addressing ethnic and spatial inequalities is critical to poverty reduction for a number of reasons. First, betweengroup (or horizontal) inequalities make up a large component of overall inequality within any country. A focus on only vertical inequality (see chapter 2) may obscure important differences among groups or regions. Some groups may be seriously disadvantaged or have higher than average concentrations of poverty even when overall vertical inequality is low. Second, regional inequality in large industrializing countries, as well as in most developing and transition economies, appears to be on the rise. If ethnic groups are geographically clustered, industrialization or development may bypass groups that are not located in economically dynamic zones, intensifying poverty in the neglected areas. Third, inequalities between ethnic groups can lead to confl ict, which is likely to affect development. Indeed, most confl icts today tend to have an ethnic dimension1 and are diffi cult to resolve. Fourth, horizontal or between-group inequalities are signifi cant because, in some situations, it may not be possible to improve the position of individuals without tackling the position of the group. In ethnically diverse societies, spatial and ethnic inequalities may be closely interrelated, although the dynamics may differ in situations where ethnic groups are highly mobile or widely dispersed. Widening regional inequalities are typical of early stages of development, while decreasing regional inequalities tend to characterize more mature stages of development. However, it is not always obvious how ethnic inequalities will evolve over time as incomes increase. Indeed, while ethnic inequalities are often created by a foundational shock that may propel a country along a particular development trajectory, those inequalities often persist for long periods of time after the shock. Moreover, individuals may become trapped because of the diffi culties of moving across groups. Groups that start from a position of privilege may forge ahead, while those that have historically been disadvantaged may fall into a vicious cycle, or a relative poverty trap. Breaking through these cycles of wealth accumulation will be crucial to tackling poverty among disadvantaged groups."(pg 81)