A GLOBAL KUZNETS CURVE

This paper studies the inequality of nations, treating the country as the unit of analysis. First, measures of inequality are computed for 1 960 to 1988. The international distribution of income has become more unequal over time. Secondly, the contribution of R&D investments and s pillovers to global inequality is studied. Cross-country differences i n R&D significantly account for the changes in the global distribution of income. National R&D investments have both a divergence and a conv ergence effect. The divergence effect arises from a high R&D nation fo rging ahead of other nations. The convergence effect comes from intern ational R&D spillovers enabling lesser developed nations to catch up. The empirical results indicate that on net, world R&D has a convergenc e effect. Controlling for R&D, the paper finds an inverted-U relations hip between global inequality and global development.