Pre-distribution strategy could help counter inequality
Globalisation, while delivering huge benefits, has rejected segments of society because of distribution failures, according to a London Business School expert.
Linda Yueh, Adjunct Professor of Economics, made the comments while speaking on the BBC’s The Big Questions.
“Globalisation is tied up with structural change in the economy. De-industrialisation has seen people benefit from the process, but it has also seen others who have had their incomes squeezed. To reap the benefits of globalisation, we have to address those who have been left behind,” says Yueh.
As the world’s fifth biggest economy, the UK needs to recognise its role as a global stakeholder and install institutions that share the benefits of globalisation more equitably in the future, believes Yueh.
“A billion people have been lifted out of poverty since 1990. We are at a historic point, and that has to do with the opening up of emerging markets.
“But for every economic gain we have to think about the consequence as well.”
Widening inequality and downward pressure on wages is helping spawn a backlash in developed economies, raising concerns over the future of globalisation.
“There are distributional consequences of globalisation, which pose a policy challenge. Do you redistribute wealth or do you undertake pre-distribution policies? Redistribution means giving someone help when they lose their job, because of automation for example. Pre-distribution is about investing in education and skills, which creates more options for workers should the economy change,” explains Yueh.
“Although redistribution is required to help those who have been left behind, we also need a strategy of pre-distribution which could lead to a fairer outcome for all.”