The politics of economic inequality in developing countries by Nel Phillip. Great Britain: Palgrave Macmillan, 2008, pp. viii+206

✍ Scribed by Dr Rita Moch Arias

• Publisher: John Wiley and Sons
• Year: 2009
• Tongue: English
• Weight: 32 KB
• Volume: 21
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.1526

✦ Synopsis

A lot has been written on economic inequality and on its consequences. The Politics of Economic Inequality in Developing Countries written by Philip Nel, gives a twist as it tries to give a more inclusive explanation of the causes and consequences of inequality in low and middle-income developing countries.

A contribution of this book to the field of development is the search for a wider concept of inequality or what the author calls 'odious inequality'. He highlights the importance of a broader concept because 'economic inequality became incapacitating, impervious and pervasive, but nevertheless avoidable' (p. 1). Inequality is seen from his perspective as a multifaceted concept. On top of factors such as income, he brings into his analysis aspects of the particular historical and economic development of countries, as well as the building of political power at both national and global level. To develop his arguments he uses a dataset of estimated household inequality that covers the period from 1960 to 1999.

Of particular significance is Chapter 2, in which Nel explains the term 'odious inequality' and its internal and external factors. As a complex concept formed of various aspects, history plays a crucial role. He makes a point by explaining that historical causes, such as the colonisation process in the country, its course towards independence and the formation of economic, political and social institutions in these societies influence not only the level of inequality in a country, but also its possibilities of development. This is an argument made by many historical institutionalists and, although it is not new, it is rare to find this line of thought supported by economic arguments. Nel calls attention to the fact that quite the opposite of what is usually thought in economic theory, economic openness does not always improve to the level of inequality in a country, and, in fact, it can make it worse.

The author explores the consequences of the evolution of economies in countries of 'the periphery', i.e. low and middle-income countries in Chapter 3. He aims to find and to explain the 'historical detail of the inequality-generating mechanisms' (p. 50). Four different historical and economic periods are analysed, starting with the 1500s, because according to Nel, this date marks the birth of the capitalist world economic system. The benefit of this explanation, which includes economic aspects as well as social, political and historical facts, is that it enriches the reading and provides the reader with solid background to understand income inequality. In this chapter, Nel's empirical data demonstrates that a rich endowment of labour does not necessarily lead to declining inequality (p. 94); this is an important finding that contradicts current economic theory.

Chapter 4 covers the role that democratisation plays in income inequality. The analysis of this topic is relatively new, as it was commonly thought that a consequence of democracy was greater economic equity. The question posed here is whether the introduction of democracy can reverse historical patterns of increasing inequality (p. 95). Nel argues that 'economic equity is more likely to be achieved in countries with stable political regimes and effective public policy institutions. . .' (p. 96) which does not necessarily mean new democracies. He suggests that the effect of a regime change during a democratisation process should be considered. He proves with empirical data that democracy or the introduction of competitive elections is not sufficient to end odious inequality, particularly in places where the initial levels of economic inequality are high. According to Nel 'Instead, there is a high likelihood that electoral democracy and its trappings could exacerbate inequality in the medium to longer term, if special care is not taken to offset the systemic and