CAPTURING
THE
GAINS

economic and social upgrading
in global production networks



Capturing the Gains Working Paper 2012/09

Global inequality, rising powers and labour standards.

Dev Nathan and Sandip Sarkar

Abstract

The paper analyses growing inequality in the rising powers, concentrating on the situation in China and India. It describes the various processes that are currently underway to reduce inequality in these economies. These processes include a combination of tightening the labour market, as best seen in China, increasing rural productivity and government measures to boost basic rural incomes in all such countries. Reductions in inequality in the emerging economies have a global macroeconomic effect of increasing consumption and investment, counteracting the current global slowdown. They also have the benefit of creating more space at the bottom for poorer economies to take up more of the world’s low-skill production, as the emerging economies themselves move up to higher-skill production and exporting. This sequential upgrading is being driven by the growth of emerging economy markets and by wage increases in the emerging economies. 

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