The Gap Between Rich And Poor

Contending Perspectives On The Political Economy Of Development

Mitchell A Seligson

• Publisher: Taylor & Francis
• Year: 2019
• eBook ISBN: 9781000301762
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Increasing concern has been expressed by Third World leaders and international organizations alike over the growing gap between rich and poor nations. Between 1950 and 1980 alone, the per capita income gap between low-income and industrialized countries grew from $3, 677 to $9, 648. In addition, within the developing nations themselves, an ever-widening gap separates the rich from the poor.

Other evidence suggests that middle-income countries may be gaining on the rich countries. Some research shows that the gap in education and health is narrowing rather rapidly, and studies of domestic inequality have revealed that growth with equity has occurred in a number of developing nations that have committed themselves to such a policy.

This volume presents the evidence for both sides of the debate. It begins by stating the conventional wisdom–that international and internal gaps are widening–and goes on to examine the major explanations offered, which focus on culture, urban bias, dependency, and world-system analysis. The book then presents empirical studies on the existence and causes of the gap, as well as key case studies that challenge the conventional wisdom.

Unique in its objectivity, this text does not seek to serve either side of the debate, but instead draws upon the best research in the field to highlight major issues and to present studies that have subjected the differing perspectives to rigorous empirical analysis. It will prove especially useful in courses on Third World development, political economy, comparative politics, development economics, the sociology of development, and related topics.

Part 1
Defining the Gap between Rich and Poor

1.
The Dual Gaps: An Overview of Theory and Research

Mitchell A. Seligson

The income gap between rich and poor countries has grown dramatically over the past 30 years. In 1950, the average per capita income (in 1980 U.S. dollars) of low-income countries was $164, while the per capita income of the industrialized countries averaged $3,841, yielding an absolute income gap of $3,677. Thirty years later, in 1980, incomes in the poor countries had risen to an average of only $245, while those in the industrialized countries soared to $9,648; the absolute gap in 1980 stood at $9,403. For this period, then, there is clear evidence to support the old adage that “the rich get richer.” It is not true that the poor get poorer, but that would be a perverse way of looking at these data. A more realistic view of the increases in “wealth” in the poor countries would show that in this thirty-year period the poor countries increased their incomes by an average of only $2.70 a year, less than what an American might spend for lunch at a neighborhood fast-food stand. And in terms of relative wealth, the poor countries certainly did get poorer; the total income (gross national product or GNP) of the low-income countries declined from 4.3 percent of the income earned by the industrialized countries in 1950 to a mere 2.5 percent by 1980.¹

One might suspect that these data do not reflect the general pattern of growth found throughout the world, but are influenced by the disappointing performance of a few “basket case” nations. That suspicion is unfounded. The low-income countries comprise nearly half the world’s population; more than two billion people live in countries with incomes of less than $400 a year. It is also incorrect to speculate that because some poor countries have recently outperformed the growth rates of the industrialized countries that the gap will soon be narrowed. In Chapter 2, David Morawetz tells us that it could take China, which alone contains some one billion people, 2,900 years to close the gap. Even in the cases of the “miracle countries,” like South Korea and Taiwan, where growth rates have been twice as high as in the industrialized countries, the gap has doubled.

There is another gap separating rich from poor: within many developing nations there is a growing internal gap between their own rich and poor citizens. Poor people who live in poor countries, therefore, are not only falling further behind the world’s rich, but are also falling further behind their relatively more affluent countrymen. Moreover, precisely the opposite phenomenon seems to be taking place within the richer countries, where the gap between rich and poor has been narrowing. The world’s poor, therefore, find themselves in a position of double jeopardy.

The consequences of these widening gaps can be witnessed every day. In the international arena tensions between the “haves” and “have-nots” dominate debate in United Nations and other international forums. The poor countries demand a “New International Economic Order” (NIEO), which they hope will result in the transfer of wealth away from the rich countries. The industrialized countries, in turn, have responded with foreign aid programs that, by all accounts, can only hope to make a small dent in the problem. Indeed, some argue that foreign aid actually exacerbates the gap (see Chapter 17). Within the developing countries, domestic stability is frequently tenuous at best as victims of the yawning gap between rich and poor (along with their sympathizers) seek redress through violent means. The guerrilla wars that spot the globe may be directed by those with linkages to international movements, but their root causes invariably can be traced to inequality and deprivation, whether relative or absolute.

Thinking and research on the international and domestic gaps between rich and poor has been going through a protracted period of debate that can be traced back to the end of World War II. The war elevated the United States to the position of world leader, and in that position the United States found itself confronted with a Western Europe in ruins. The motivations behind the Marshall Plan for rebuilding Europe are debated to this day, but one thing remains evident and that is that unprecedented amounts of aid were given and the expected results were rapidly forthcoming. War-torn industries were rebuilt, new ones were begun, and economic growth resumed.

The success of rebuilding Europe encouraged many to believe that similar success would meet efforts to stimulate growth in the developing world. More often than not, however, such efforts have failed or fallen far below expectations. Even when programs have been successful and nations seemed well on the way toward rapid growth, they nonetheless continued to fall further and further behind the already wealthy countries. Moreover, growth seemed to be accompanied by a widening income gap within the developing countries.

The authors of this collection present a comprehensive treatment of the thinking that is evolving on the subject of the international and domestic gaps between rich and poor. Their studies are not confined to a single academic discipline or geographic area. Rather, their work reflects a variety of disciplines, including economics, political science, sociology, history, psychology, and geography, to mention the principal ones, and they have examined the problems from the viewpoint of a single country or region as well as with a macroanalytic approach. This diversity produced three major perspectives on the gap.

In the first, the widening gap between rich and poor nations is viewed as being principally a cultural problem. Specifically, the cultural values associated with industrialization are seen as foreign to many developing nations, which are deeply attached to more traditional cultural values. Yet the values of punctuality, hard work, achievement, and other “industrial” values are keys to unlocking the economic potential of poor countries, according to these scholars. Most adherents of this perspective believe that such values can be inculcated in a population through deliberate effort. Others argue that the values will emerge naturally as the result of a worldwide process of diffusion of values functional for development. This perspective has been incorporated into a more general school of thought focusing on the process called “modernization.” Development occurs and the international gap is narrowed when a broad set of modern values and institutions are present.

A number of economists, most notably Simon Kuznets, have been associated with the second school of thought, which sees domestic income inequality occurring as an almost inevitable by-product of development. Kuznets traces a path that seems to have been followed quite closely by nations that have become industrialized. The process begins with these nations enjoying relative domestic equality in the distribution of income. The onset of industrialization produces a significant shift in the direction of inequality and creates a widening gap. Once the industrialization process matures, however, the gap is again reduced.

In marked contrast to these two perspectives, which suggest that the phenomena of rich and poor disparity are transitory, there is a third, more recent school of thought that comes to rather different conclusions. The scholars supporting this approach—known as dependentistas—observe that the economies of the developing nations have been shaped in response to forces and conditions established by the industrialized nations, and, as a result, their development has been both delayed and dependent. The dependentistas conclude that the failure of poor countries to catch up with the rich ones and the widening internal income gap are both products of the distorted development brought on by dependency relations. A further elaboration on this thinking has emerged in recent years in the form of the “world-system” perspective developed by Immanuel Wallerstein and his followers. According to this group, since the sixteenth century a world capitalist economy has existed, divided geographically (rather than occupationally, as...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• Preface
• PART 1 DEFINING THE GAP BETWEEN RICH AND POOR
• PART 2 CONTENDING EXPLANATIONS OF THE GAPS
• PART 3 EMPIRICAL STUDIES: EVIDENCE MEETS THEORY
• PART 4 CASE STUDIES AND CONCLUSIONS
• Index
• Other Titles of Interest from Westview Press
• About the Book and Editor