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 The UNDP warning echoes remarks from U.S. President Barack Obama in
his annual State of the Union address on Tuesday, in which he said
there was a widening gap between rich and poor in the world's
biggest economy and that while the stock market has soared, average
U.S. wages have barely budged.
The UNDP report said income inequality increased by 11 percent in
developing countries over the two decades between 1990 and 2010. The
majority of households in developing countries — more than 75
percent of those nations' populations — are living today in
societies where income is more unequally distributed than it was in
the 1990s, the report said.
The UNDP says this is a global trend that, if left unchecked, could
have dire consequences since it "can undermine the very foundations
of development and social and domestic peace."
The widening income gap comes as some major developing countries — such as China and India — have seen strong economic growth and an
overall increase in national wealth. But that wealth has not been
evenly distributed, which has contributed to greater inequality in
those societies.
"The sharpest increases in income inequality have occurred in those
developing countries that were especially successful in pursuing
vigorous growth and managed, as a result, to graduate into higher
income brackets," the UNDP report said.
"Economic progress in these countries has not alleviated
disparities, but rather exacerbated them," it said.
In an interview with Reuters, UNDP chief Helen Clark made clear that
this negative trend is reversible and that one of the key components
is creating quality employment opportunities.
"The key thing is the focus on jobs — jobs, jobs, jobs," Clark said,
adding that it was important for governments to pay attention to
ways of improving the skills of its labor force.
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She also touched on the subject of the widening income disparities
in countries like China and India, which have seen significant
levels of economic growth in recent decades.
"It's the nature of the growth," she said. "If it's uneven growth
... it does create tensions within society because people can see
that others are doing much better than them."
"The China example shows that you get fast growth and poverty
reduction, but you also get the growing inequalities," Clark said.
"And this is of concern to China's leadership."
The report said there was evidence that increases in inequality over
the last two decades were mainly due to trade and financial
globalization processes that weakened the bargaining position of
labor.
Clark said one of the problems with globalization is that it "has
proceeded in a very deregulated world." She advocates more
regulation of international trade and financial flows but without
eliminating risk and the ability of companies to generate profits.
"It's a balance," she said. "You have to leave room for risk."
(Reporting by Louis Charbonneau; editing
by Tom Brown)
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