Does Globalization Make the World

The world economy has become far more unequal over the last two cen-turies. Within-country income inequality has risen and fallen episodically. It has often risen in developing countries, although not always. It has fallen in the developed and industrialized countries, although this trend has re-cently reversed in some parts of the Organization for Economic Coopera-tion and Development (OECD). Thus, there is no ubiquitous trend in within-country inequality over the past two centuries. It follows that virtu-ally all the observed rise in world income inequality has been driven by widening gaps between nations, and almost none of it has been driven by widening gaps within nations. Meanwhile, the world economy has become much more integrated. If correlation meant causation, these facts would imply that globalization has raised inequality between all nations but that it has not raised inequality within nations. This essay argues that the likely impact of globalization on world in-equality has been very different from what these simple correlations sug-gest. Globalization probably mitigated the steep rise in income gaps be-tween nations. The nations that gained the most from globalization are