This may have two major implications:

a)The demand for international goods and services will rise, and

b) Pressures for policies that favor global integration will increase.

Conclusions

Thus, the results under the baseline scenario show that, between 2005 and 2030, global GDP more than doubles, with China and India accounting for a significant share (18%) of global expansion. In terms of income per capita, in 2005 the average Chinese had an income 1/5th of what the average citizen of a high-income country would earn and, by 2030, this gap narrows to almost one half. Due to faster population growth and more measured expansion in real GDP, per capita incomes in India are likely to rise much more slowly than in China, catching up from 1/10th of average incomes in rich countries in 2005 to less than 1/6th in 2030.

This strong economic expansion of China and India also explains two key features of the evolution of the global income distribution in the next 25 years:

1. A reduction of global inequality and
2. The emergence of a large global middle class.

From a global inequality perspective, the very populous and initially poor countries (China and India) are growing at a rate above that of rich countries. In an era of globalization, global inequality has become more policy relevant. Through easier international movement and communication, citizens in individual countries are more aware of the (economic) situation in other countries and this enhanced awareness is behind emerging political demands (for a more equal global income distribution).

 
However even though changes between countries explain a lot of the change in the aggregate index, a lot is also happening within countries. These changes of income distribution at the national level are still crucial for domestic policy and growth prospects of individual countries.

Source: AEPC Weekly (http://aepc.fibre2fashion.com/vol1issue24/)