Global Versus National Income Inequalities and Their Impact on Global Governance

Abstract

The debate on the increasing income and wealth inequalities in the USA and some other advanced economies often disregards the opposite trend, i.e. decreasing income inequalities between individuals throughout the entire world. The purpose of this chapter is to examine the potential trade-off between both trends and the role of globalisation in such a trade-off. Another important question relates to the impact of this trade-off on global governance. On the one hand, catch-up growth in emerging-market economies and the resulting decrease in global inequality can help reduce the economic and social sources of political conflicts and tensions between countries and enable their cooperation on various issues such as trade, environment, climate change, health, fighting terrorism, managing migration and many others. On the other hand, growing income inequalities within advanced economies can undermine the existing global political and economic order and boost protectionism and nationalistic egoism in many areas.