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Reducing inequalities within countries: converting the global debate into action

Studies N°01/2017. Iddri, 2017. 26 p.

Economic inequalities have negative impacts on societies' health, politics, economic and environmental performance. This contributes to explain the emergence of a historical consensus on the necessity to reduce them. Sustainable Development Goals adopted by the UN represent an important tool for actors seeking to tackle inequality for at least three reasons: they offer a common metrics to follow inequality dynamics, peer pressure to push for action and peer-learning of successful inequality reduction policies.

KEY MESSAGES:

  • DOMESTIC INEQUALITIES AS A KEY SUSTAINABLE DEVELOPMENT CHALLENGE

A growing body of literature highlights the negative impacts of rising domestic inequalities on a wide number of political, social, economic and environmental issues—thus rendering domestic inequalities a key sustainable development challenge. However, over the past decade, despite growing concern, debates have not been converted into action, and domestic inequalities keep rising. The inclusion of inequalities within the Sustainable Development Goals framework shows that the international community is now willing to tackle the problem.

  • POLICY-DRIVEN (REDUCTION OF) INEQUALITIES

The rise in inequalities is policy-driven: all the major drivers identified in the literature point to a certain extent to a policy failure. This is the case for the erosion of labour institutions, the decline in fiscal progressivity, skill-biased technical change, trade and financial liberalization, and the increasing political power of the wealthy. If policies, rather than exogenous forces drive rising inequality, then implementing more inclusive policies can reverse the trend.

  • SDGs CAN CONTRIBUTE TO THE REDUCTION OF INEQUALITIES

The SDGs provide three levers to turn the global inequality debate into national action: peer focus (a common metric), peer pressure (a ranking of countries) and peer review (mutual learning of policies). Matching the drivers of inequalities with these levers for action, our main finding is that even though the current contribution is quite limited, the potential of SDGs for domestic inequalities reduction deserves attention. While the common metric exists, only significant involvement from civil society and commitment from governments will make it possible for peer pressure and learning to become effective.

  • TACKLING INEQUALITIES WITHIN LONG-TERM DEVELOPMENT STRATEGIES

The global inequality debate within the SDG framework will not by itself trigger national action. The relationship between SDGs and international trade, investment and fiscal agreements in particular needs to be clarified and made consistent with long-term sustainable development strategies.