Inequality of World Development as a Global Challenge: «Response» Models

Abstract

The inequality of world development as a global «challenge» creates instability of the world economy, leads to an increase in social tension, and along with the threat of climate change, is a priority problem for humankind. The study aims to reveal the parameters and dynamics of global inequality, show its direction, tendencies, and assess the Western and Chinese models («responses») to this challenge, which is a highly urgent scientific and practical task. The research methods are based on developing the concept of inequality in world development using quantitative and qualitative analysis following the «challenge-response» law. For quantitative analysis, we used modern methods of statistical analysis, in particular, quantile regressions. Based on the received results, we concluded and substantiated that the main challenge of our time is the inequality of world development, which has increased under the influence of the pandemic. We have shown that despite the decrease in the share of high-income countries (notably the G7 countries) in world GDP, the trend towards an increase in the gap in per capita income between high and middle-income countries has continued. We also revealed the indicator of labour share in GDP for high and middle-income countries, confirms the hypothesis of increasing inequality between capital owners and workers in several countries over the past 20 years, particularly the United States. We have shown that the Western model of the world order is not focused on solving inequality. The results obtained can be used to develop concepts and models for reducing global inequality.

The Labour Share, Government Expenditure and Income Inequality of Post-Soviet Countries

“…The rationales behind the worries of scientists and politicians regarding this phenomenon are lucidly explained in Thomas Piketty's seminal work, Capital in the Twenty-First Century (Piketty 2014), which proves that the observed decline in the labour share may engender the growth of inequality due to "the private rate of return on capital being significantly higher for long periods than the rate of growth of income and output" and the wealth accumulated growing more rapidly than output and wages in the past. Besides fuelling social tensions, the increasing inequality could significantly hinder sustainable economic growth (Matyushok and Balashova 2021).…”