Dollar, David2013-12-202013-12-202005-09-01World Bank Research Observerdoi:10.1093/wbro/lki008https://hdl.handle.net/10986/16430One of the most contentious issues of globalization is the effect of global economic integration on inequality and poverty. This article documents five trends in the modern era of globalization, starting around 1980. The first trend is that growth rates in poor economies have accelerated and are higher than growth rates in rich countries for the first time in modern history. Developing countries per capita incomes grew more than 3.5 percent a year in the 1990s. Second, the number of extremely poor people in the world has declined significantly. The share of people in developing economies living on less than dollar 1 a day has been cut in half since 1981, though the decline in the share living on less than dollar 2 per day was much less dramatic. Third, global inequality has declined modestly, reversing a 200-year trend toward higher inequality. Fourth, within-country inequality in general is not growing, though it has risen in several populous countries (China, India, and the United States). Fifth, wage inequality is rising worldwide. This may seem to contradict the fourth trend, but it does not because there is no simple link between wage inequality and household income inequality. Furthermore, the trends toward faster growth and poverty reduction are strongest in developing economies that have integrated with the global economy most rapidly, which supports the view that integration has been a positive force for improving the lives of people in developing areasen-USCC BY-NC-ND 3.0 IGOACCESS TO MARKETSADJUSTMENT PERIODAGGREGATE GROWTHAGRICULTURAL OUTPUTAGRICULTURAL SECTORAID DONORSAVERAGE GROWTHAVERAGE INCOMEBARRIERS TO ENTRYCAPITAL CONTROLSCAPITAL FLOWSCLOSED ECONOMIESCOLONIALISMCOMMODITIESCONSTANT PRICESCONSUMER GOODSCOUNTRY INEQUALITYCROSS-COUNTRY STUDIESCURRENCYDEBT CRISESDEREGULATIONDEVALUATIONDEVELOPING AREASDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMIESDEVELOPING ECONOMYDEVELOPING REGIONSDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDEVELOPMENT STRATEGIESDEVELOPMENT STRATEGYDIRECT FOREIGN INVESTMENTDISTRIBUTION DATADOMESTIC SAVINGSDYNAMIC ECONOMYECONOMIC ACTIVITYECONOMIC CRISISECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIC PERFORMANCEECONOMIC POLICIESECONOMIC REFORMECONOMIC REFORMSECONOMIC RESEARCHECONOMIC REVIEWECONOMIC THEORYECONOMICSEDUCATED WORKERSEDUCATIONAL OPPORTUNITIESEMPIRICAL FINDINGSENVIRONMENTAL CONSIDERATIONSENVIRONMENTAL STANDARDSEQUAL ACCESSESTIMATES OF POVERTYEXCHANGE RATEEXCHANGE RATESEXPORT GROWTHEXPORT TAXESEXTERNAL TRADEEXTREME POVERTYEXTREMELY POOR PEOPLEFARMERSFOREIGN AIDFOREIGN ASSETFOREIGN ASSETSFOREIGN DEBTFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN FIRMSFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN TRADEFREE TRADEFUTURE PROSPECTSGINI COEFFICIENTGLOBAL ECONOMYGLOBAL MARKETGLOBAL POVERTYGLOBAL VIEWGLOBALIZATIONGLOBALIZATION PERIODGROSS DOMESTIC PRODUCTGROWTH RATEGROWTH RATESHARMONIZATIONHIGHER INEQUALITYHISTORICAL PERSPECTIVEHOUSEHOLD CONSUMPTIONHOUSEHOLD DATAHOUSEHOLD INCOMEHOUSEHOLD SURVEYHOUSEHOLD SURVEYSHOUSEHOLD WELFAREINCOME DISTRIBUTIONINCOME DISTRIBUTION DATAINCOME DISTRIBUTIONSINCOME GROUPSINCOME GROWTHINCOME INEQUALITYINCOME STUDYINCOME TAXINCOMESINCREASED INEQUALITYINCREASING WAGEINCREASING WAGE INEQUALITYINDUSTRIALIZED COUNTRIESINEQUALITYINEQUALITY MEASURESINEQUALITY WILLINSTITUTIONAL MODELINTELLECTUAL PROPERTYINTERNATIONAL COMPARISONSINTERNATIONAL COMPETITIONINTERNATIONAL LABOUR ORGANIZATIONINTERNATIONAL MARKETINTERNATIONAL POVERTY LINESINTERNATIONAL TRADEINVESTMENT CLIMATEINVESTMENT POLICIESLABOR FORCELABOR MARKETLESS DEVELOPED ECONOMIESLIBERALIZATIONLIBERALIZATIONSLOW-INCOME COUNTRIESLOW-INCOME COUNTRYMARKET ACCESSMARKET STRUCTUREMEAN LOG DEVIATIONMEASUREMENT ERRORMEASURING POVERTYMONETARY ECONOMICSMONEY INCOMEMONOPOLIESMULTINATIONAL CORPORATIONSNATIONAL ACCOUNTSNEGATIVE GROWTHNEOCLASSICAL GROWTHNEOCLASSICAL GROWTH THEORYOPEN ECONOMIESPARTICULAR COUNTRIESPAYMENTS CRISISPER CAPITA GROWTHPER CAPITA GROWTH RATEPER CAPITA INCOMEPER CAPITA INCOMESPERSISTENT POVERTYPOLICY REFORMPOLICY RESEARCHPOLITICAL ECONOMYPOORPOOR AREASPOOR COMMUNITIESPOOR COUNTRIESPOOR COUNTRYPOOR ECONOMIESPOOR FAMILIESPOOR HOUSEHOLDSPOPULATION GROWTHPOPULOUS COUNTRIESPOSITIVE EFFECTPOVERTY INCIDENCEPOVERTY LINEPOVERTY LINESPOVERTY REDUCTIONPOWER PARITYPRIMARY PRODUCTSPRIVATE INVESTMENTPRIVATIZATIONPRODUCTIVITY GROWTHPROPERTY RIGHTSPUBLIC SECTORPUBLIC UTILITIESPURCHASING POWERRAPID GROWTHREAL INCOMEREAL LEVELREDUCED POVERTYREFORM PROGRAMREGULATORY FRAMEWORKRICH COUNTRIESRICH PEOPLERISING INEQUALITYRISING WAGE INEQUALITYRURALRURAL HOUSEHOLDRURAL HOUSEHOLDSRURAL INCOMESAVINGSSKILL PREMIUMSKILLED WORKERSSMALL COUNTRIESSOCIAL PROTECTIONTAXTECHNOLOGICAL ADVANCETECHNOLOGICAL ADVANCESTHIRD WORLDTHIRD WORLD ECONOMIESTHIRD WORLD ECONOMYTRADE LIBERALIZATIONTRADE POLICYTRADE REGIMETURNOVERUNSKILLED LABORWAGE GROWTHWARWORLD ECONOMYWORLD INCOME DISTRIBUTIONWORLD TRADEWTOJournal ArticleWorld Bank10.1596/16430