Horizontal Inequalities: A Neglected Dimension of Development

Current thinking about development places individuals firmly at the centre of concern for analysis and policy. This paper explores why groups are important for individual welfare and social stability, and argues that horizontal inequalities (ie inequalities between culturally formed groups) is a very important but neglected dimension of development. Most attention is focussed on inequality between individuals. The paper recognises that groups are socially constructed and malleable, often with fluid membership. Nonetheless, group's relative performance in economic, social and political dimensions is an important source of individual welfare and can cause serious political instability. This is illustrated by nine case studies, in which horizontal inequalities have led to a range of political disturbances, in some cases modified by state action to correct the inequalities. The paper concludes by pointing to an array of actions that can be taken to correct horizontal inequalities, arguing that such policies should form an important part of development strategy, but currently do not in either economic or political conditionality.

Income Distribution and Development

Income distribution is extremely important for development, since it influences the cohesion of society, determines the extent of poverty for any given average per capita income and the poverty-reducing effects of growth, and even affects people's health. The paper reviews the connections between income distribution and economic growth. It finds that the Kuznets hypothesis that income distribution worsens as levels of income increase is not at all strongly supported by the evidence, while growth rates of income are not systematically related to changes in income distribution. However, evidence is accumulating that more equal income distribution raises economic growth. Both political and economic explanations have been advanced. The finding suggests that more equal income distribution is desirable both for equity and for promoting growth.

Policies towards Horizontal Inequalities in Post-Conflict Reconstruction

inequality, conflict, reconstruction, culture

Economic and Political Causes of Genocidal Violence: A comparison with findings on the causes of civil war

Genocide is different from civil war: it usually involves deaths on a much larger scale and targets particular groups – mostly civilians - often with the aim of exterminating them. The violence is one-sided, and, fortunately, genocides are much rarer than civil wars. Although with genocide, as with civil wars, it is possible to identify underlying political and economic patterns that make genocide more likely, there have been two distinct strands of investigation by social scientists: studies of the economic and political causes of ‘normal’ civil war; and those studying genocide. This paper contrasts the findings of the two strands of investigation, focussing on quantitative investigations, exploring the main differences in findings, and pointing to policy conclusions that emerge. It finds that civil wars tend to be higher in low income countries and in intermediate regimes, whereas genocides tend to be higher in low and middle income countries and in authoritarian regimes. Both, however, are more common during political upheaval and transition. In the case of genocides, civil wars themselves are one important predisposing condition. Hence policies to prevent civil wars may also contribute to preventing genocide. Once a situation has evolved in which there are high risks or actual episodes, any policy advice about preventative action is likely to fall on deaf ears. What is important is that appropriate policies should be in place in every multiethnic society to avoid a high risk situation emerging.

Crisis Prevention: Tackling Horizontal Inequalities

Civil wars not only cause huge amounts of human distress, but are also a major cause of low-incomes. Hence their prevention should be a central aspect of poverty reduction strategies. Since about half low-income countries have been affected by wars, and a much higher proportion of the very worst off economies, policies to prevent conflict should form a central part of policies towards low-income countries. The paper draws conclusions from a research programme undertaken by WIDER and Queen Elizabeth House, Oxford which included a large number of case studies of countries that have suffered conflict in recent years. Civil wars occur when groups mobilise against each other; their leaders use ethnicity or some other characteristic like religion, to unite and mobilise the group. Such mobilisation is effective where there are substantial horizontal inequalities, i.e. inequalities among groups, which cause resentment. Such inequalities have political, economic and social dimensions. Other factors, e.g. growth failures and a weak state, are also often present in countries in which violent conflict occurs on a substantial scale. However, strong states also frequently initiate conflict, by attacking groups which they believe might threaten the ruling power. Policies to prevent conflict need to be directed at reducing horizontal inequalities in conflict-prone countries in all dimensions - political, economic and social. A major problem, however, is that domestic governments may not wish to pursue such policies, as they want to continue the dominance of their own group. International donors can contribute through their own expenditures, and also through policy conditionality. In practice, current conditionalities do not contribute to a reduction in horizontal inequality except accidentally. Current political conditionality is concerned with establishing democracy, not inclusive government, while current economic and social conditionality is directed towards promoting growth and efficiency and poverty reduction but not reducing horizontal inequality. Yet, the prevailing conditionalities will not succeed in realising their objectives of economic growth and democracy if civil war occurs. Hence they need to be changed for conflict-prone countries to place the reduction of horizontal inequality as a central objective. Countries which are conflict-prone include countries that have had serious conflict over the previous twenty years, low-income countries and countries with sharp horizontal inequalities. For all such countries, the measurement of horizontal inequalities and the introduction of policies to offset them when they are excessive should complement general development policies.

Do We Need a New 'Great Transformation'? Is One Likely?

markets, social protection, regulation, transformation

Do we need a new 'Great Transformation'? Is one likely?

Karl Polanyi wrote 'The Great Transformation' in 1944 which analysed the double movement Europe experienced, from a situation where the market was heavily regulated and controlled in the 18th century to a virtually unregulated market in the 19th century; and the great Transformation in which the market was once more brought under control as a reaction to the poverty, unemployment and insecurity brought about by the unregulated market. Yet in both developed and developing countries there has since been a reaction with a new move towards the market. This paper analyses such processes in contemporary developing countries, and considers whether, in the light of the consequences of the unregulated market, a new 'Great Transformation' is needed. It also considers whether such a transformation is likely, reviewing moves towards increased regulation of the market, and also the constraints faced by any contemporary great transformation arising from globalisation and the nature of politics.

Successful Transition towards a Virtuous Cycle of Human Development and Economic Growth: Country Studies

This paper explores the two-way links between Economic Growth and Human Development by examining the performance of some countries which have been successful in both dimensions and a few which have not. The specific aim is to examine the historical experience of six countries in order to determine how a system can move to a situation in which improvements in Human Development accompany and support higher rates of growth which, in turn, contribute to further improvements in Human Development as the basic societal objective.Economic Growth, Human Development, Comparative Country Studies

Growth and Human Development: Comparative Latin American Experience

This paper seeks to examine the interdependence between economic growth (EG) and human development (HD). It is concerned with changes in per capita income and its two-way relationship with the basic societal objective of human development. Regressions across various Latin American countries are run for 1960-92. Country performance is separated into virtuous/vicious cycles or HD/EG lopsidedness. The study makes an attempt to correct the commonly held view that ensuring increases in economic growth automatically leads to advances in human development. Human development has to occur prior to or simultaneous with improvements in economic growth, if a country is to reach a virtuous cycle. The Latin American experience indicates that a balanced approach to development has to be adopted. It is imperative to focus on human development from the outset of any reform program, as policies that emphasize economic growth alone are futile in sustaining high levels of human development.Human Development, Economic Growth, Latin America

Success and Failure in Human Development, 1970-2007

The paper reviews experience in advancing Human Development since 1970 by investigating behaviour among countries that made the largest improvements in HD, and those that made the least improvement. The three developing countries with the fastest growth in the HDI over the period are selected from initial low-HDI, middle HDI- and high HDI country groupings, and their experience compared on a range of indicators. Certain characteristics were common to all success cases: good or moderate educational enrolment ratios; good or moderate female/male enrolment ratios; and good or moderate Human Poverty Indices. The other three major inputs into success appear to be growth, social expenditure and income distribution, and the successful countries showed different combinations of performance on these. Weak performers all experienced poor or moderate economic growth. Two classes of weak performance were: low income countries with weak growth, poor distribution and high poverty; and transition countries where economic, institutional and demographic disruptions led to poor progress. We also look beyond the HDI as an indicator of HD, explore such other features as political freedoms, security and environmental sustainability, and find little correlation between achievements on these indicators (both in levels and changes) with success and failure with respect to the HDI. Finally we provide short country vignettes of some of the success and failure cases, exploring some historical and institutional features associated with their performance.Human Development, growth, income distribution