Friday, March 10, 2006

Stephen Roach - Gini Index

Morgan Stanley's Stephen Roach on globalization, economic growth and income distribution -

Globalization's new underclass

As always, he is insightful and lucid. The most interesting observation is the increase in China's Gini index from 30 to 45 during the biggest economic growth spurt world has ever seen - between the years 1990 and 2003. The disparity is not only in coastal urban incomes and inland rural incomes, as popularly believed. There is also increasing divergence in the distribution of urban incomes. This could easily lead to social unrest and political upheaval. Roach asserts that Chinese leadership is taking this very seriously as they should.

India's Gini Index is at 33. It will be interesting to track this number over the next few years as India tries to grow at 8-10% like China continuously did for so long.

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