World Economic Outlook

Globalization and Inequality

October 2007

Ordering Information

The World Economic Outlook (WEO) presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.

View the Full Text of the WEO (use the free Adobe Acrobat Reader).


  Assumptions and Conventions
Foreword (Data)
Executive Summary
Chapter 1. Global Prospects and Policy Issues
Full Text  |   Video Briefing  |   Boxes  |   Figures

Strong Global Growth Is Being Confronted by Turbulent Financial Conditions

The Baseline Outlook Has Been Marked Down Moderately—And Downside Risks Have Intensified

Living with Heavy Foreign Exchange Inflows

Sustaining Robust Growth

Policy Challenges

Appendix 1.1 Developments in Commodity Markets

Appendix 1.2 Climate Change: Economic Impact and Policy Responses


Chapter 2. Country and Regional Perspectives
Full Text  |   Boxes  |   Figures

United States and Canada: Uncertainties About the U.S. Outlook Have Risen

Western Europe: How Resilient Is the Recovery?

Industrial Asia: Deflation Is Not Yet Decisively Beaten in Japan

Emerging Asia: Successfully Managing Strong Foreign Exchange Inflows

Latin America—Responding to Surging Foreign Exchange Inflows

Emerging Europe: Brisk Activity, Rising Imbalances

Commonwealth of Independent States: Tensions Between Inflation and Exchange Rate Objectives

Sub-Saharan Africa—Benefiting from Globalization

Middle East: Balancing Cyclical and Long–Term Considerations in Fiscal Policy


Chapter 3. Managing Large Capital Inflows
Full Text  |   Summary  |   Video Briefing  |   Boxes  |   Figures

Two Waves of Large Capital Inflows to Emerging Markets

Identifying Episodes of Large Capital Inflows

Policy Responses to Large Capital Inflows

Linking Macroeconomic Outcomes and Policy Responses


Appendix 3.1. Event Analysis and Policy Indices: Methodologies and Data


Chapter 4. Globalization and Inequality
Full Text  |   Summary  |   Video Briefing  |   Boxes  |   Figures

Recent Trends in Inequality and Globalization

What Is the Impact of Globalization on Inequality?

An Empirical Investigation of Globalization and Inequality

Conclusions and Policy Implications

Appendix 4.1. Data Sources and Methods


Chapter 5. The Changing Dynamics of the Global Business Cycle
Full Text  |   Summary  |   Video Briefing  |   Boxes  |   Figures

Global Business Cycles: A Historical Perspective

Has the World Economy Become More Stable?

What Is Driving the Moderation of the Global Business Cycle?


Appendix 5.1. Data and Methods


  Annex: IMF Executive Board Discussion of the Outlook, September 2007
Statistical Appendix
  What's New
  Data and Conventions
  Classification of Countries
  General Features and Composition of Groups in the World
    Economic Outlook
  List of Tables Part A
  Output (Tables A1–A4)
  Inflation (Tables A5–A7)
  Financial Policies (Table A8)
  Foreign Trade (Table A9)
  Current Account Transactions (Tables A10–A12)
  Balance of Payments and External Financing (Tables A13–
  Flow of Funds (Table A16)
  Medium–Term Baseline Scenario (Table A17)
  List of Tables Part B
  Output (Tables B1–B2)
  Inflation (Tables B3–B4)
  Financial Policies (Tables B5–B10)
  Foreign Trade (Tables B11–B13)
  Current Account Transactions (Tables B14–B17)
  Balance of Payments and External Financing (Tables B18–B20)
  External Debt and Debt Service (Tables B21–B25)
  Medium-Term Baseline Scenario (Table B26)
  World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics
Chapter 1 Boxes
1.1 Who Is Harmed by the Surge in Food Prices?
1.2 Macroeconomic Implications of Recent Financial Market Turmoil: Patterns from Previous Episodes
  1.3 Multilateral Consultation on Global Imbalances
1.4 What Is Global Liquidity?
Data 1.5 Refinery Bottlenecks
Data 1.6 Making the Most of Biofuels
  1.7 The Discounting Debate
  1.8 Taxes Versus Quantities Under Undertainty (Weitzman, 1974)
  1.9 Experience with Emissions Trading in the European Union
Chapter 2 Boxes
2.1 What Risks Do Housing Markets Pose for Global Growth?
Data 2.2 Labor Market Reforms in the Euro Area and the Wage–Unemployment Trade–Off
Data 2.3 Managing the Macroeconomic Consequences of Large and Volatile Aid Flows
Chapter 3 Boxes
3.1 Can Capital Controls Work?
Chapter 4 Boxes
  4.1 Measuring Inequality: Conceptual, Methodological, and Measurement Issues
Data 4.2 What Do Country Studies of the Impact of Globalization on Inequality Tell Us? Examples from Mexico, China, and India
Chapter 5 Boxes
5.1 Major Economies and Fluctuations in Global Growth
Data 5.2 Improved Macroeconomic Performance—Good Luck or Good Policies?
Data 5.3 New Business Cycle Indices for Latin America: A Historical Reconstruction
Appendix Boxes
A.1 Economic Policy Assumptions Underlying the Projections for Selected Economies
1.1 Overview of the World Economic Outlook Projections
1.2 Global Oil Demand by Region
2.1 Advanced Economies: Real GDP, Consumer Prices, and Unemployment
2.2 Advanced Economies: Current Account Positions
2.3 Selected Asian Countries: Real GDP, Consumer Prices, and Current Account Balance
2.4 Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance
2.5 Emerging Europe: Real GDP, Consumer Prices, and Current Account Balance
2.6 Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance
2.7 Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance
2.8 Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance
3.1 Episodes of Large Net Private Capital Inflows—Summary Statistics
3.2 Post–Inflow GDP Growth Regressions
3.3 Real Exchange Rate Regressions
3.4 List of Net Private Capital Inflow Episodes
4.1 Determinants of the Gini Coefficient, Full Sample
4.2 Estimation of the Benchmark Model Using Quintiles' Income Shares, Full Sample
4.3 Determinants of the Gini Coefficient, Regional Heterogeneity
5.1 Cross–Sectional Regressions
5.2 Panel and Probit Regressions
Chapter 1 Figures
Data 1.1 Global Indicators
Data 1.2 Global Inflation
Data 1.3 Developments in Mature Credit Markets
Data 1.4 Mature Financial Market Indicators
Data 1.5 Emerging Market Financial Conditions
Data 1.6 External Developments in Selected Advanced Economies
Data 1.7 External Developments in Emerging Market and Developing Countries
Data 1.8 Global Outlook
Data 1.9 Current and Forward-Looking Indicators
Data 1.10 Risks to the Global Outlook
Data 1.11 Measures of the Output Gap and Capacity Pressures
Data 1.12 Productivity and Labor Cost Developments in Selected Advanced Economies
Data 1.13 Current Account Balances and Net Foreign Assets
Data 1.14 Simulated Effect of a Financial Disturbance on the Global Economy
Data 1.15 Private Capital Flows to Emerging Markets
Data 1.16 Current and Capital Account Flows to Selected Emerging Market and Developing Countries
Data 1.17 Perspectives on Global Growth
Data 1.18 Commodity Price Indices
Data 1.19 Crude Oil and Gasoline Prices
Data 1.20 Developments in Oil Consumption and Production
Data 1.21 Inventories and OPEC Production
Data 1.22 Oil Futures Prices, and Selected Energy and Metal Prices
Data 1.23 Sources of Demand and Prices of Selected Fuel–Related Food Items
Data 1.24 Greenhouse Gas Emissions by Region
Data 1.25 Actual and Projected Fuel–Related Carbon Emissions Under “Business-as-Usual”
Data 1.26 Time Profile of Aggregate Damages from Climate Change
Data 1.27 Mean per Capita GDP losses at Different Levels of Warming
Data 1.28 Greenhouse Gas Emission Paths Consistent with Alternative Concentration Targets
Data 1.29 Greenhouse Gas Emissions, Kyoto Targets, and Predicted Emissions
Chapter 2 Figures
Data 2.1 United States: Indicators of Investment
Data 2.2 Western Europe: What Is the Outlook for Inflation?
Data 2.3 Japan: Deflation Still Not Decisively Beaten
Data 2.4 Emerging Asia: Managing Strong Foreign Exchange Inflows
Data 2.5 Latin America: Capital Inflows Are Complicating Macroeconomic Management
Data 2.6 Emerging Europe: Rapid Credit Growth Is Fueling Domestic Demand
Data 2.7 Commonwealth of Independent States (CIS): Dealing with Capital Inflows
Data 2.8 Sub-Saharan Africa: Benefiting from Globalization
Data 2.9 Middle East: How Are Oil Revenues Used?
Chapter 3 Figures
Data 3.1 Net Private Capital Inflows to Emerging Markets
Data 3.2 Gross Private Flows, Current Account Balance, and Reserve Accumulation
Data 3.3 Current Account Balance, Private Capital Inflows, and Reserve Accumulation by Region
Data 3.4 Net FDI and Non–FDI Inflows
Data 3.5 Characteristics of Episodes of Large Net Private Capital Inflows
Data 3.6 Exchange Market Pressure Index
Data 3.7 Evolution of Policy Indicators
Data 3.8 Policy Indicators in the Episodes of Large Net Private Capital Inflows
Data 3.9 Selected Macroeconomic Variables: Averages During, Before, and After Episodes of Large Net Private Capital Inflows
Data 3.10 Post-Inflow GDP Growth, Selected Macroeconomic Variables, and Policy Indicators
Data 3.11 Real Effective Exchange Rate Appreciation and Policy Responses When Inflation Accelerates
Data 3.12 Regional Dimension
Data 3.13 Resistance to Exchange Market Pressures and Duration of Capital Inflow Episodes
Data 3.14 Fiscal Policy and Balance of Payments Pressures
Data 3.15 Mexico: Identification of Large Net Private Capital Inflow Episodes
Chapter 4 Figures
Data 4.1 Trade Globalization
Data 4.2 Financial Globalization
Data 4.3 Cross–Country Trends in Inequality
Data 4.4 Income Shares by Quintile
Data 4.5 Per Capita Income by Quintile
Data 4.6 Per Capita Income by Quintile in Selected Countries
Data 4.7 Inequality Versus Globalization: Selected Countries
Data 4.8 Information and Communications Technology (ICT) Capital, Private Credit, Education, and Sectoral Employment Shares
Data 4.9 Explaining Gini Coefficient Changes
Data 4.10 Decomposition of Globalization Effects on Inequality
Data 4.11 Inequality Versus Exports in Agriculture
Data 4.12 Foreign Direct Investment Stock by Sector
Data 4.13 Inequality and Technology, 1981–2003
Data 4.14 Explaining the Change in Income Share of Top and Bottom Quintiles
Data 4.15 Inequality, Import Share from Developing Countries, Inward Debt, and Outward Foreign Direct Investment (FDI), 1981–2003
Chapter 5 Figures
Data 5.1 World Growth Has Been Strong and Stable
Data 5.2 Expansions in Historical Perspective
Data 5.3 Recessions in Historical Perspective
Data 5.4 Volatility of Growth in the Main World Regions
Data 5.5 Decomposition of Changes in World Output Volatility by Region
Data 5.6 Decomposition of Changes to World Output Volatility by Expenditure Component
Data 5.7 Decomposition of Change in U.S. Output Volatility
Data 5.8 Volatility Patterns in Rapidly Growing Economies
Data 5.9 Some Determinants of Differences in Business-Cycle Characteristics
Data  5.10  Contribution to Outcome Differences