Gabriel Demombynes — What Does Piketty’s Capital Mean for Developing Countries?

This is all to say that we are still ignorant about trends in the high income share in developing countries. We definitely need more creative approaches to understand the evolution of inequality in developing countries. What we have so far from tax records is not enough to tell a substantially different trend story from what we see in household surveys.

 Demombynes sees the importance of Piketty chiefly in sparking discussion and research. There is still too much that remains unclear for definitive analysis, especially in the emerging world where data availability is limited and unreliable.

In my view, the wild card regarding future development globally and the emerging world in particular is the effect of climate change. All indications are that climate change will have profound negative effects, some of which are already in evidence. On the positive side, their will be a counter-response in terms of technological innovation, but this is likely to benefit developed countries mostly. However, given the magnitude of anticipated change, innovation will be insufficient to blunt the full force of changing climate enough to overcome the serious challenges many countries face. Given food and water shortages that are projected, leading to mass migrations, the future is highly uncertain. The militaries of the developed countries now regard this as the chief national security risk, for example.

Future Development
What Does Piketty’s Capital Mean for Developing Countries?
Gabriel Demombynes | Senior Economist in the Hanoi office of the World Bank
(h/ Mark Thoma at Economist's View)