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Well-Being Distribution in the Globalization Era: 30 Years of Convergence

Abstract

Globalization has brought with a period of economic growth and the expansion of well-being levels. However, nothing has been said about how such an increase in quality of life has been distributed among countries. The aim of this work is to investigate whether the enhancement of quality of life has lead developing nations to catch up with advanced economies or, instead, well-being levels have diverged across countries. To shed light on this question, we study the distributional patterns of well-being in the last wave of globalization. As a well-being indicator, we use the Human Development Index which includes income variables as well as social aspects, thus reflecting the multidimensional nature of this process. We found evidence of sigma convergence although an increase in polarization is also observed. Moreover, our results also point out that the convergence process has been nonlinear.

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Fig. 1

Notes

  1. According to Williamson (2002) the first great globalization era covers the period 1820–1914 and the second corresponds with period before the World War. Since the eighties decade another wave of this process is distinguished, (the so-called globalization decades, characterized by the dictations of liberalization of the Washington Consensus), which also involves changes on technological transfer, easily communications and reductions in transport cost.

  2. Dowrick and DeLong (2003) study the hypothesis of convergence clubs for the whole globalization period (since 1870), concluding the existence of a group of convergent economies, which comprises the advanced countries.

  3. Note that, in this study we focus on unweighted distribution of the HDI that considers each country as a unit of observation not taking into account the population size. We opt for this approach since we are investigating convergence hypothesis which is usually linked with country level analysis rather than population weighted measures.

  4. Originally, our data comprised only 105 countries, covering less than the 75 % of global population. We had non-available data for 25 countries for one or more years before 1995. In order to offer comparable results across periods and to not restricting the sample considerably, missing values have been estimated. The estimation is based on two complementary methodologies which jointly provide feasible and consistent results according to the sample: piecewise cubic Hermite interpolating polynomial (PCHI) and the average rate of change, which is used when PCHI offers unfeasible estimates or out of range results.

  5. In the original paper of Esteban and Ray (1994) p i was the population share of the group. However, as we focus on unweighted inequality measures, we compute unweighted polarization measure to make both analyses comparable.

  6. For a review of the evidence on the effect of globalization on income convergence see Milanovic (2003).

  7. In contrast to the trends observed for Eastern Asian countries, FDI flows and trade in South Asia remained almost constant during the nineties and eighties (Gundlach and Nunnenkamp 1996). These flat trends point out that the effects of globalization in this region are different from the consequences of this process in Eastern Asian countries. Then, we considered South Asia and East Asia as separated regions.

  8. A cubic relationship has been also tested, concluding that the cubic term was not significant in any case.

  9. The results of the Hausman test suggest that RE estimates are inconsistent, thus requiring the estimation of FE models and hence we focus on the results provided by the FE model.

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Acknowledgments

The authors thank the Ministerio de Economía y Competitividad (Project ECO2010-15455) for partial support of this work. The first author also thanks to the Ministerio de Educación (FPU AP-2010-4907) for partial support of this work and the Department of Economics at the University of Reading (UK) for its hospitality. Authors are grateful for the constructive suggestions provided by the editor and the reviewers, which improved the paper substantially.

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Correspondence to Vanesa Jordá.

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Jordá, V., Sarabia, J.M. Well-Being Distribution in the Globalization Era: 30 Years of Convergence. Applied Research Quality Life 10, 123–140 (2015). https://doi.org/10.1007/s11482-014-9304-8

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Keywords

  • Well-being
  • Human Development Index
  • Inequality
  • Convergence
  • Globalization
  • Polarization