The recent success in reducing poverty and raising economic growth rates that has been achieved by many developing countries has not been accompanied by a corresponding reduction in inequality. If anything, the last years have witnessed an increase in within-country inequality in Asia as well as in many parts of Africa. This trend of rising inequality has not been unique to developing countries; as currently many OECD countries that have always had low inequality are facing the largest gaps between the rich and poor.

Globalization, the switch to skill-biased technologies, along with changes in the distribution of wages and salaries have often been cited as some of the major drivers behind growing inequality. While this holds true for advanced economies, inequality within developing countries is driven by far more complex and structural processes. For instance, inequality in Africa which is highest amongst Southern African countries is a remnant of distortionary land policies that were pursued during the colonial period. Whereas, in China and India, the gains from the remarkable growth of the last decade have not been evenly shared resulting in large gaps between the rich and the poor. Other factors that have equally played a role in driving within-country inequality in developing countries include differences in education, opportunities as well as the growing rural-urban divide.

Rising inequality is not conducive to economic growth or poverty reduction and if left unaddressed, it may lead to increased polarization, social unrest as well as increased mobility. Recognizing this, the international community through the United Nations backed 2030 Agenda for Sustainable Development has pledged to reduce inequality within and among countries. Going beyond traditional income measures, the targets of the Sustainable Development Goal (SDG) 10 stress the importance of adopting a more holistic approach that will reduce inequalities based on sex, religion, ethnicity and other socioeconomic characteristics.