Income inequality has been rising globally in recent decades, posing a serious challenge to economic growth and stability. Discussion initially focused on widening income and wealth gaps across households and population cohorts but has recently shifted to the long-term fall in the labour share of income, including in many developing and emerging economies since the 1990s.
Explanations of this trend have to date been dominated by a “textbook story of globalization and technology”, a narrative that ignores the role played by market power and corporate rent-seeking in widening income inequality.
Growing public concern over the significant rise of large technology companies, the continued excesses of financial rentierism and the proliferation of abusive tax-related practices by large corporations has led to a renewed interest in how private corporate interests prevail over public interests of inclusiveness, higher income equality and sustainability.
Based on a new firm-level database on developed and developing countries, this policy brief discusses recent trends in the evolution of non-financial corporate rents and their core policy implications.
Key points:
-
Rising market concentration and corporate rentierism in core sectors of the global economy are a major driver of growing global income inequality.
-
In 2009–2015, the surplus profits – due largely to rentierist profit strategies rather than productive investment – of the top 1 per cent of publicly listed firms in a new UNCTAD firm-level database for 56 developed, developing and transition economies represented 55 per cent of recorded operating profits.
-
Measures to curb abusive business practices should include a review of the United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices and of bilateral and megaregional trade and investment agreements
