Globalisation “Not to Blame” for Income Woes, Study Says

The idea that ordinary people have been unfairly hit by the rise of emerging markets and China over the past 30 years and the income gains of the global super-rich was propagated by the so-called “elephant chart” devised by the economist Branko Milanovic, a former senior official at the World Bank. Development experts celebrated the graph as the “chart that explains the world”. But a new study by the Resolution Foundation, a British charity founded to support the interests of those on low to middle incomes, has overturned its findings. After a detailed replication of the global incomes data provided by Mr Milanovic, the Resolution Foundation analysis challenges the conclusion that globalisation and trade harms the middle classes of rich countries. A separate update by Mr Milanovic to the data from 2008 to 2011 also suggests greater income growth among precisely the groups hurt by stagnating incomes in the previous 30 years and much less gain for people with the top 1 per cent of global incomes, Mr Milanovic said in an interview. His update also demonstrated the world’s wealthy took a significant hit in the global financial crisis, which had actually served to narrow inequality.

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