Should we worry about income divergence or not?

 

Charles Kenney, in his paper titled “Why to worry about income when other quality of life indicators are converging?” tries to show that quality of life variables other than income are all converging; so, there is no need to worry about inequalities. As far as the numbers and quantities of the indicators he is talking about are concerned, I can agree with him. However, when it comes to the quality of the indicators, I have some questions and concerns that make me worry about income divergence.

The quality of life variables that Kenny is talking about consist of average basic health indicators such life expectancy, infant mortality rates, literacy, civil rights, political rights, primary school enrollment, access to everyday communication technology, child labor, total education per capital and some other social indicators. As he has shown, basic indicators are converging. For example, the number of children getting enrolled every year in developing countries are increasing rapidly and hence getting closer and closer to those numbers of enrolment in the developed world. But, we can ask a valid question here: is the quality of primary education also converging? Take Afghanistan for example, the number of enrolment in primary, secondary and tertiary schools have drastically increased over the past 20 years. However, a very big portion of these number of students are having the following problems: no regular teacher, lack of books, no school building. Solving all these problems need a stronger income. Given this, should Afghanistanis worry about income or not? I think they should. The case of India, which comes second after China amongst developing countries, is not very different in terms of education quality from that of Afghanistan. The numbers of children enrolment are remarkably significant; but, the quality is still very low, and to improve the quality, India needs more money. Higher-income can help India improve the quality of education both through direct investment and through improving relevant institutions.

We can ask such valid questions almost about all those indicators that Kenny talks of convergence in them. For example, when it comes to civil rights and political rights, the quality of civil rights in the developed world is far more ahead of what we have in the developing countries. Civil institutions and political institutions are weak and may not grow to the level of developed nations if GDP and income of the global south are falling behind the global north. I strongly doubt such a possibility in the absence of high income. The basics, structures and models of such institutions can be imported from the developed countries, as has been the case in  Afghanistan, and some other third world nations; but, the quality cannot be imported. There is a need for more money, stronger income and GDP to improve and well-establish such institutions. As Ha-Joon Chang argues, there is a strong causality running from economic development to better institutions. He particularly stresses the point that economic development increases the demand for better institutions and more transparency. So, to have developed institutions such as those in the developed world income convergence matters.

In the face of Covid-19 pandemic, we see how the quality of institutions, the quality of the health-care system, and the quality of education (for covid-19 research) and the strength of income have increasingly become important. This pandemic has shown that even if all other indicators are converging, but income is not, then your vulnerability remains very high. What Charles Kenny is suggesting cannot explain how developing countries will ensure that they will converge to developed nations when it comes to technological researches. For technological researches and making advances in these areas, heavy investments are needed. Only high-income countries can bear it. One might not be wrong to say that tech advances are now the backbone of economic development and economic competition.

 To sum up, I can agree with Kenny to the extent that low-hanging indicators and indicators that have a higher bound on them are concerned. However, this does not suffice to stop me from worrying about the divergence of income. The income divergence may push for further inequality when it comes to the quality of “quality of life indicators”. Hence, income convergence is needed to have a real convergence rather than being delighted by somewhat superficial convergence.

 

Bibliography:

Kenny, C. (2005). Why Are We Worried About Income? Nearly Everything that Matters is Converging. World Development, 33(1), 1-19. doi: 10.1016/j.worlddev.2004.06.016

CHANG, H. (2010). Institutions and economic development: theory, policy and history. Journal Of Institutional Economics, 7(4), 473-498. doi: 10.1017/s1744137410000378