Global and regional drivers of multidimensional inequality

Below you can find out more about the ten prominent global and regional drivers of multidimensional inequality.

1. Dominant narratives, and corresponding policies, that justify and perpetuate inequality

A central element of this narrative is that neoliberalism and free markets provide the best framework for wealth creation. That this wealth may be highly concentrated has been recognised, but it is claimed wealth will 'trickle down', that those who flourish merit their large rewards because it reflects their own hard work, and that everyone has an equal freedom to succeed in upwardly mobile societies. Those who benefit from these narratives are in a powerful position to contest any change.

2. Values, norms, practices and structures that perpetuate discrimination and intolerance, especially discrimination against women

Discrimination is often entrenched and complex. It may be systemic rather than personal, and not easily identified and understood. It is often widespread and persistent, frequently taking the form of gender discrimination, racial discrimination, religious discrimination, or discrimination on the basis of sexual orientation. It is often associated with entrenched poverty, a denial of rights, violence and victimisation, and exclusion. After decades of action to enshrine international human rights standards in domestic laws and eliminate discrimination, racism and prejudice through legislation, it is clear that not enough has been done. The lack of implementation of existing legislation may be partly to blame in some countries. However, deeply entrenched social and cultural attitudes appear also to drive the reproduction of discrimination.

3. Financialisation, the power of capital and global elites

Financialisation broadly refers to the increasing importance of finance, financial markets, financial institutions, and financial elites in the operation of the economy. It implies a shift in the way wealth is accumulated. Where higher profits can be made through financial speculation, productive investment in actually producing goods or services with wider public value tends to decline; with corresponding implications for job creation, wages, and investments in areas such as technology and research and development. The shift has major implications for inequality, particularly given the excessively high rewards to finance based on non-productive, ‘rentier’ type activity. The commodification of housing, and the trading of housing debt on global financial markets, is another area where financialisation leads to inequality with housing treated as a commodity, a financial asset and repository for capital, rather than a place for habitation.

4. The rise and power of global corporations and the lack of effective regulation

Increasing global corporate profits have led to increasingly powerful global corporations. Increasing concentration of ownership of corporations locates that power in an ever-narrower group of owners. This power manifests itself in multiple forms including the power they hold as a result of their business lobbying and political contributions and their ability to achieve favourable policies and regulations when making locational decisions. Their structural power is also visible in their ability to influence complex intra-firm trades in ways that minimise their tax contributions; the existence of tax havens greatly increase the structural power of global corporations. About 80% of global trade has become linked to the international production networks of global corporations, and the terms and conditions of jobs on offer in those production networks have direct implications for hundreds of millions of workers and their families.

5. Lack of financial transparency and ineffective global tax governance

The lack of financial transparency is seen as a major contributing factor enabling tax abuse, corruption and fraud, each of which has implications for both developing and developed countries’ public finances and the nature of income and wealth inequalities in all countries. International tax rules have not kept up with the changing nature of business and the power of global corporations and their ability to exploit tax loopholes. Although a lack of transparency is not the only factor, it is clear that the ability of corporations to shift profits and hide assets from public view with no scrutiny, has a detrimental impact on the ability of countries to raise revenue and fund crucial public services and welfare states which could be used effectively to minimise inequalities.

6. Skewed structure of global trade

Global trade can drive economic inequality by causing a wage decrease for those with a low level of skills and education while also delivering wage increases for those with a high level of skills and education. However, the impact of global trade on any single country or groups of workers is complex and not the same in every context. Where trade leads to higher economic growth and greater work opportunities it can be beneficial to lower skilled workers as well as higher skilled workers but can still increase inequality. Competition between locations for investment can lead to low wages and a harmful race to the bottom on labour rights. The structure and pattern of global trade has led to many developing countries relegated to low profit and labour intensive ‘extractive’ activities supplying mainly primary commodities. The globalised economic system has also allowed an enormous concentration of wealth in few hands as the ‘winners’ in particular supply chains become global winners and reap huge rewards.

7. Climate change and environmental degradation

The impact of global warming and extreme weather events is likely to be greater in the developing world, with lower income countries least able to adapt to the required changes. While climate change increases people’s exposure to disasters, it is their vulnerability to them that determines whether they survive, and if they do, whether their livelihoods are destroyed or the quality of their lives reduced. Least advantaged people are at greater risk due to the higher likelihood of living in poorly constructed homes, often on land more exposed to hazards such as floods, droughts, or landslides, and in areas without effective health services or infrastructure. They are also least able to cope due to having fewer assets to use or sell in the aftermath of a disaster.

8. Conflict, global displacement and international migration policies

The number of people affected by disasters and conflicts is rising. The nature of displacement is also changing and therefore the response needs to adapt. Humanitarian aid is usually associated with camps and emergency shelters but increasingly large number of refugees are living in cities and towns. How to deliver protection and assistance to refugees in an urban context is an increasing relevant challenge. While migration may be a response to conflict and disasters, international migration is also driven by income inequalities as migrants move across borders seeking job opportunities and a better life. This can result in a ‘Brain drain’ from lower income countries and can be seen as a threat to receiving countries. The net effect of migration on development and inequality is a complex question that depends on the context, norms and policies in both sending and receiving countries.

9. Skewed technological development, scientific progress and innovation

What technology countries are investing in and who stands to profit from it matters greatly for the pattern of inequalities. New technologies can have a direct impact on income inequalities if they are skill-biased. Technological developments often favour skilled over unskilled workers, creating wage inequalities and differences in employment prospects between the two groups. Indirect effects can arise where investment decisions and government subsidies favour advanced technology industries rather than simpler technologies that would deliver greater efficiency, productivity and quality of life for lower income and rural households – such as lighting, housing, cooling or sanitation. Inequalities can also be driven by access to technological developments such as digital technologies and medical advances.

10. Lack of effective global governance

The system of global governance faces many challenges and how they deal with these challenges has consequences for the quality of people’s lives. Some of the main challenges include: how to manage an effective response to climate change; how to correct global financial imbalances; how to deliver genuine human development progress for all; how to maintain global peace and security; and how to tackle inequality. Global governance institutions, structures and processes set up to deliver in these areas have many shortcomings including particularly being insufficiently representative of the interests of all nations and falling short in terms of the effectiveness of the responses on offer. Global governance also looks increasingly fragile in the face of rising isolationism, populism and extremism in some nations. How to tackle high and rising inequality in many countries has risen up the policy agendas for many of these organisations, systematic tools such as the multidimensional inequality framework could help these organisations make progress in this area.