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Rohinton Medhora
Rohinton Medhora

ROHINTON MEDHORA

Global rankings: Although inequality between countries is falling, inequality within countries is rising Add to ...

The doyen of global rankings, the Human Development Index, computed by the United Nations since 1990, was released on Thursday. Canada has slipped a notch (to 11th place from 10th) since last year – but the real story is in the lower reaches of the rankings.

Every country in the world where the data exist has a higher human development score today than it did in 2000, with developing countries’ scores growing faster. The gains are evenly spread across the components of the index – income, life expectancy and education.

Behind the numbers lies the larger trend that also forms the theme of this year’s report, The Rise of the South. The pace of change is impressive. China and India have doubled per capita output during the past 20 years, a rate twice as fast as that during the Industrial Revolution, and covering many more people.

The financial crisis of 2008 laid bare more than just the weak underpinnings of many Western economies. China, and before it other Asian Tigers such as South Korea and Malaysia, underwent transformation at eye-popping rates of economic growth and poverty reduction. None of these countries did so with any discernible influence from liberal Western nostrums.

While much of the West – with Canada an important exception – continues to be mired in economic and political gridlock, Asian and many Latin American economies have slowed down more modestly. And what has come to be known as the African renaissance of 5 per cent or higher growth rates and greater democratization that started 15 years ago proceeds apace.

In short, the countries of the world are converging; risks to global stability lie not only in its dicey far-flung corners but at the fading, yet still salient, epicentres of the U.S. and Western Europe; and no region or school of thought has a monopoly on good ideas for growth and human development.

This suggests four broad trends for policy and scholarship.

First, integral to the rise of the South is the growth of a middle class the world over. Citing a Brookings Institution study, the UN report estimates that the middle class numbered 1.8 billion in 2009, about one billion of whom lived in Europe and North America. Globally, the number is expected to rise to 3.3 billion in 2020 and 4.9 billion in 2030, the entire growth occurring in Asia, Africa and Latin America.

At the same time, although inequality between countries is falling, inequality within countries – especially the growth success stories such as China and India – is rising.

Just like their counterparts in developed countries, policymakers in developing countries will increasingly be preoccupied with managing middle-class vulnerability. Their challenge will be to fight inequality, not poverty, so as to preserve political stability.

Second, globalization will ensure that cross-border, regional and global spillovers and interactions will come to be as important as national policy. Ongoing trends in international migration, financial flows and climate change will warrant this.

Third, the appropriate balance between government regulation and unfettered markets will still be a focus of policy debates. A varied number of models for growth and development now present themselves, and countries need no longer look to the U.S. or Western Europe alone for inspiration. Chile and South Africa have shown that it’s possible to pursue a social democratic system in the aftermath of dictatorship, while China and India present interesting contrasts in economic and political systems while delivering consistently strong economic growth.

Finally, the South will assume rights and responsibilities in global governance. The tawdry stitch-up between the U.S. and Europe in the allocation of power and top jobs in key international financial institutions must yield to accommodate countries that now hold economic clout through their overseas investments and international reserves, and have foreign aid programs of their own. If money and ideas flow together, then the rise of Southern capital will inevitably come with its own precepts. This can only help in finding solutions to problems such as climate change and regional conflict.

If the past five decades were characterized by a North-South, rich-poor global divide, the next five decades will see a more porous topography. A multitude of approximately equal countries will come together in their national interest but also to address common problems.

Behind the who’s up and who’s down in the rankings in any given year, the Human Development Index also points to the abiding implications of a rising South.

Rohinton Medhora is president of the Centre for International Governance Innovation, a think tank based in Waterloo, Ont.

There are about a billion members of the middle class in Europe and North America, not a million as was incorrectly stated in an earlier version of this column.

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