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Is the Developing World Catching up? Global Convergence and National Rising DispersionThe present study uses the GIDD, a
 CGE-microsimulation model for Global Income Distribution
 Dynamics, to understand the ex-ante dynamics of global
 income distribution. Three main robust results emerge.
 First, under a set of realistic assumptions, there will be a
 reduction in global income inequality by 2030. This
 potential reduction can be fully accounted for by the
 projected convergence in average incomes across countries,
 with poor and populous countries growing faster than the
 rest of the world. Second, this convergence process will be
 accompanied by a widening of income distribution in
 two-thirds of the developing countries; the main cause being
 increasing skill premia. Third, a trend that may
 counter-balance the potential anti-globalization sentiment
 is the emergence of a global middle class: a group of
 consumers who demand access to, and have the means to
 purchase, international goods and services. The results show
 that the share of these consumers in the global population
 is likely to more than double in the next 20 years. These
 ex-ante trends in global income distribution suggest that
 the mid-1990s could be seen as a turning point after which
 global inequality began showing a negative tendency.
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Would Freeing Up World Trade Reduce Poverty and Inequality? The Vexed Role of Agricultural DistortionsTrade policy reforms in recent decades have sharply reduced the distortions that were harming agriculture in developing countries, yet global trade in farm products continues to be far more distorted than trade in nonfarm goods. Those distortions reduce some forms of poverty and inequality but worsen others, so the net effects are unclear without empirical modeling. This paper summarizes a series of new economy-wide global and national empirical studies that focus on the net effects of the remaining distortions to world merchandise trade on poverty and inequality globally and in various developing countries. The global LINKAGE model results suggest that removing those remaining distortions would reduce international inequality, largely by boosting net farm incomes and raising real wages for unskilled workers in developing countries, and would reduce the number of poor people worldwide by 3 percent. The analysis based on the Global Trade Analysis Project model for a sample of 15 countries, and nine stand-alone national case studies, all point to larger reductions in poverty, especially if only the non-poor are subjected to increased income taxation to compensate for the loss of trade tax revenue.
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Global Growth and Distribution : Are China and India Reshaping the World?Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank's LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per-capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class-a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in widening of income distribution within countries. These opposing distributional effects highlight the importance of analyzing global disparities by taking into account - as the GIDD does - income dynamics between and within countries.