Reviewed by: Frederico Cantante.
Milanovic, Branko (2011), The Haves and the Have-Nots. A Brief and Idiosyncratic History of Global Inequality, New York, Basic Books.
Do you know that the income of the world’s richest 1,75% matches the income of the poorest 77%?
Chapter II begins with an explanation of the indicators and methodologies that support the income comparison among countries. Then the author analyzes the evolution of global income inequality. According to Milanovic, if the unit of comparison is the country and its GDP per capita, inequalities are nowadays much more pronounced than before the industrial revolution or even at three decades ago. But if the population weight of each country is taken into account, that conclusion is not correct, because of the economic growth of both China and India in the last decades. Nevertheless, the author shows that the absolute income levels of these two countries continues to diverge from the United States income. In 1980, the difference of the American and Chinese GDP per capita was 25,000 US dollars Purchasing Power Parities (PPP); today the difference is 37,000 US dollars PPP. The author adds another interesting idea: contrary to the previsions made by some economists, poor countries did not become the main targets of the direct foreign investments. In 2007, direct foreign investments in the US (240 billion dollars) were much higher than the direct foreign investments in China (138 billion dollars) – and the direct foreign investments in China were smaller than direct foreign investments going to France or Great Britain. In fact, the weekly direct foreign investments in the United States are as big as the direct foreign investments India gets in one year (p. 105).