Over the past two decades there has been a split in inequality trends. Inequality within countries has increased whereas inequality between countries has decreased. But now, as a result of the COVID-19 pandemic, between-country inequality is also on the rise. In response, innovators are playing their part to make societies more equal
There are two ways of looking at global inequality, and SDG 10 addresses both the inequality within countries, and the inequality between them.
Trends in within-country inequality vary between regions. For example, much of the English-speaking world has seen increases in inequality since the late 1980s, whereas this trend is less pronounced in Europe and Japan. And in Latin America and the Carribbean, income inequality has actually declined over the past two decades. However, in broad strokes, within-country inequality has increased over the past 25 years, with 71 per cent of the world’s population living in countries where inequality has grown.
Until the COVID-19 pandemic, the trend in between-country inequality had been markedly more positive. There has been a general convergence in global incomes over recent decades with incomes in poorer countries growing faster than those in the developed world. This has largely been driven by strong economic growth in China and South-East Asia, and has caused a notable decline in inequality between countries – that is until the global pandemic.
With the onset of coronavirus, the United Nations has noted a partial reversal in fortune with regards to between-country inequality as the disease has hit the developed world hard. Often a politically-charged issue, inequality is, to a large extent, an issue of policy. And indeed many of the targets within SDG 10 are aimed at policy-makers. But that is not to say that innovation cannot play a role, and innovators around the world are helping to tackle inequality in all its forms.
Lack of financial literacy and access to financial services is an important driver of economic inequality – one which innovation can help to solve. For example, fewer than half of Mexican households save money in a bank or other financial institution. In conjunction with its entry into the Mexican market, Argentinian startup Ualá has launched a free financial education platform that helps unbanked communities to achieve financial literacy. The company believes that expanding access to services is ineffective if the communities themselves lack an understanding of their importance.
Even in developed countries where there is a greater understanding of the importance of financial services, many people lack access to certain products due to a poor or difficult-to-calculate credit history. US startup Petal is tackling this issue by developing an alternative to traditional credit history calculations that takes into account a broad range of data points often ignored by banks. Petal is particularly helpful to young people and immigrants who struggle to transfer their banking histories to the US.
Social and political inclusion
Inequality is not just economic. Target 10.2 within SDG 10 highlights the importance of social and political as well as economic inclusion. And social inequalities can also have economic implications. For example, in the UK, the British Business Bank has found that businesses owned by Black and Asian entrepreneurs are faced with barriers that prevent them from matching the financial performance of their white counterparts. Yard + Parish has developed a discovery platform for sustainable Black-owned luxury brands. The platform provides curated offerings of fashion, beauty, wellness, and homeware products, powered by a growing community of over 40 independent Black-owned brands.
It is not only in the world of startups that innovators are promoting diversity. Diversio has developed a platform that helps companies track areas where they face specific challenges with diversity and inclusion. Outside of business, popular media has a powerful influence on a society’s cultural and political values, and a lack of diversity can harm under-represented groups. Startup Ceretai is tackling this with software that automatically analyses the diversity of media content.
Target 10.7 within SDG 10, calls for countries to facilitate orderly, safe, regular, and responsible migration and mobility of people. While innovators outside of government do not have a direct say on policies affecting migration, they are helping to streamline bureacratic application processes, while making life better and safer for migrants when they arrive in their adopted country.
The crisis in Ukraine has pushed the number of global refugees to a record high. In the US, a new platform called Welcome Connect provides an example of how innovation can help to facilitate responsible migration. The platform provides US citizens willing to sponsor a refugee with a safe, streamlined process for connecting with Ukrainians displaced by the current conflict.
Innovation can also help to formalise jobs where foreign-born workers are often exploited. For example, in Malaysia many domestic workers come from Indonesia, the Philippines, and Cambodia, and are vulnerable to modern slavery. Pinkcollar works to directly connect women seeking domestic work, with prospective employers within a transparent and ethical job-search and recruitment process.
Investment in developing economies
Foreign direct investment in developing countries is promoted by target 10.b within SDG 10. However, such financial assistance has taken a hit during the pandemic with global foreign direct investment falling by 42 per cent in 2020. Innovation can help to fill some of this gap by making it easier to invest in home-grown companies.
For example, in 2020 Nigerian accessibility-focused fintech startup Carbon set-up the The Disrupt Fund to invest in pan-African startups and facilitate cross-industry collaboration through shared access to technology and data. In Latin America, Chilean startup Xepelin hopes to tackle the difficulties SMEs face raising financing. The company has developed a platform that facilitates short-term capital loans to small businesses through an AI-driven underwriting engine that greatly speeds up the loan approval process.
Words: Matthew Hempstead
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19th July 2022