# Global Gap

By [DYLIT Chronicles](https://dylit.info/user/dylitmediabuzz)

[Global Economic Coverage](https://dylit.info/pr/global-economic-coverage/6a6849fd61bb0e07120aa486) > [Global Gap](https://dylit.info/ch/global-gap/6a6849fd61bb0e07120aa4ae)

Raise the Floor: How Developing Economies Can Build OECD-Style Opportunity The Real Inequality Problem in Developing Economies Every developing country faces the same tempting shortcut. When inequality is stark, the loudest proposals usually target the people at the top: punishing taxes, seizures, and rhetoric that treats success as theft. It feels like justice. In practice, it rarely helps a single poor family. The better goal is simpler and harder. Raise the floor. Measure progress by how many people escape poverty and how many children end up better off than their parents, and judge every policy against that test. A billionaire leaving the country doesn't put a teacher in a village classroom. Opportunity Starts in the Classroom Equality of opportunity means a child's future shouldn't be decided by where she was born. Nothing shapes that future more than school. A well-run public education system gives the farmer's daughter and the factory owner's son a shot at the same jobs, the same wages and the same dignity. Heavy taxes on profitable entrepreneurs can't do that job on their own. They may shrink the gap at the top of the income ladder, but they do little to help anyone climb it from the bottom. Worse, they can drive away the very firms that hire newly educated workers. Skills without employers lead to frustration. So the priority is clear. Fund early childhood programs, train and pay teachers properly, track what students actually learn, and get girls through secondary school. These investments turn equal opportunity from a slogan into a fact. Growing the Pie, Then Sharing It Pro-growth redistribution is a straightforward idea. Governments share the gains of growth through public services and targeted support while protecting the conditions that let the economy expand: stable prices, secure property rights, open trade and predictable rules. The evidence backs it. World Bank research by David Dollar and Aart Kraay, covering 92 countries over four decades, found that incomes of the poorest fifth tend to rise in step with average incomes. Growth isn't the whole story, but for the poor it's most of it. Redistribution that kills growth ends up dividing a shrinking pie, and the poor feel the squeeze first. What the OECD Actually Shows Look at how rich democracies really reduce inequality. In OECD countries, some of the biggest equalizers are public services such as healthcare, schooling and elder care. An OECD study found that these in-kind benefits, together with childcare and social housing, absorb about 13% of GDP on average and reduce income inequality by between one-fifth and one-third. That matters. The model that made Scandinavia and much of Western Europe more equal rests on universal services that give ordinary households a doctor, a school place and care in old age, whatever their income. Confiscating fortunes played a minor role. Who Pays for the Welfare State Those services cost money, and the money comes from somewhere specific: taxes on private-sector incomes and profits. A broad, growing tax base is what keeps clinics open and teachers paid. Here's the uncomfortable arithmetic for developing countries. If the private sector stays small, informal and stagnant, there's very little to tax. Squeezing a handful of successful firms harder won't fund universal healthcare for tens of millions of people. Growth comes first because it's what makes redistribution affordable year after year. What This Means for Policy For governments across South Asia, Africa and Latin America, the roadmap follows naturally: Make it easy to start and formalize a business. Spend first on schools, basic health and nutrition. Broaden the tax base before raising rates on a few. Target cash support at the poorest households. Protect price stability, since inflation hits the poor hardest. Fairness matters. The fairest society, though, is one where a poor child can realistically become prosperous. Lifting people up achieves that. Pulling others down never has. Sources Dollar, D. and Kraay, A. (2001). Growth Is Good for the Poor. World Bank Policy Research Working Paper. https://openknowledge.worldbank.org/handle/10986/19679 Verbist, G., Förster, M. and Vaalavuo, M. (2012). The Impact of Publicly Provided Services on the Distribution of Resources. OECD Social, Employment and Migration Working Papers. https://www.oecd.org/en/publications/the-impact-of-publicly-provided-services-on-the-distribution-of-resources_5k9h363c5szq-en.html Videos Hans Rosling’s 200 Countries, 200 Years, 4 Minutes - The Joy of Stats - BBC: https://www.youtube.com/watch?v=jbkSRLYSojo Esther Duflo: Social experiments to fight poverty (TED): https://www.youtube.com/watch?v=0zvrGiPkVcs