Part One of a Series
In the age of globalization, the gap between high and low income countries is not only persisting, but in many cases it is widening, as the OECD (Organization for Economic Cooperation and Development) has shown in its study of Luxembourg. While the existence of such a divide is unquestionable, its origins, structure, and consequences are not. Could one, for example, securely say that income gaps lead to conflict? Is it possible to relate intractability to this divide? Rather than answer these thorny questions, this article explores the debate with the aim of identifying its key arguments. But first, it is necessary to clarify some concepts.
Poverty, Inequality and Welfare
Poverty: Poverty has been approached in both absolute and relative terms. "Absolute poverty" is a measurable quantity referring to a lack of the basic resources needed to maintain a minimum of physical health, normally calculated in calories or nutritional levels. "Relative poverty" has a qualitative dimension. It refers to general standards of living in different societies, taking into account culturally sensitive interpretations of poverty, and variations between and within societies over time.
Inequality: For those concerned with social policies and economic growth, inequality is normally interpreted as lack of equality of condition, that is lack of achievement of any given welfare indicator (e.g. income, consumption) or any valuable attribute of a population. For example, the larger the difference in income between a country's rich and poor, the larger the inequality. Note that reduction of poverty levels within any given society may not imply a reduction of inequality, because all classes in society may benefit simultaneously from economic growth, keeping the same proportion among them. While it seems clear that inequality is undesirable, there is a great deal of debate over the desirability of total equality. One debate over equality questions is the meaning and value of concepts such as class, status, power, and authority. These cannot, it is argued, be completely equalized without suppressing other values such as personal freedom and individualism.
Welfare: It has a much broader meaning, referring to the general state of well-being that an "entity" enjoys. Here, "entity" can be taken as a person or as a state, thus one can speak in terms of "personal well-being" or "welfare of the state."
By Olympio Barbanti, Jr.
 OECD, Income Distribution in OECD Countries: Evidence from the Luxembourg Income Study (Paris: OECD, 1995).