Problem

Unequal income distribution between countries

Other Names:
Dependence on unequal income distribution among countries
International income gap
Income inequality among countries
Maldistribution of wealth between countries
Excessively wealthy countries
Incidence:

There is worsening inequality both within societies and between states. In 1960, it was estimated that the richest fifth of the world's population, almost all living in developed countries, were 30 times richer than the poorest fifth, almost all living in developing countries. By 1997 the top fifth were 74 times richer, and the figures are believed to have got worse since then.

The income disparity between the richest 20% and the poorest 20% of the world's people has more than doubled in the years between 1970 and 2000, going from 30 to 1 to 61 to 1.

Comparative per capita income in developed market countries in 2000 was ten to eleven times higher than in developing market economies. On a regional basis for all countries: Africa was just below the average for developing market economies; Asia above the average and 30 to 40% above Africa; the Middle-East was about $300 higher than Latin America, but less than a third of the developed market economy's average; all European countries average over ten times Africa, and seven times Asia, but were 15% lower than the developed market economies; Australia-Oceania and North America were the highest – both above the average for developed market countries, the former 5% above average, the latter 35% above; North American per capita income exceeded African by over 1,500%.

Between 1960 and 1993 the per capita income gap between industrial and developing countries almost tripled. The growth of the world economy from 1962 to 1997 was enormous, measured only by GDP, which falls far short of measuring wealth in its entirety. Informal business and speculative activities are left out, especially clandestine and illegal activities, which, regrettably today make up a substantial share of globalized economic activity. Nevertheless in 35 years it rose from 1.1 to 24.9 thousand million dollars. The poor countries were comparatively poorer in 1997 than 35 years previously. The one fifth poorest countries achieved absolute growth in the sixties and have stagnated (in absolute terms) in the 15 years up to 1997. This explains why their share has declined in a more than alarming manner, from 0.21 to 0.07%.

Although they saw the repercussions of the crisis of the late sixties and early eighties, the rich countries recovered their share of 92% of international GDP. The countries at an intermediate level of development recovered in the period 1990-1994, with figures corroborating the "opportunities" for countries of intermediate growth at the periphery to integrate into the "wave of globalization".

Claim:

The average amount of pocket money of children in the USA in 1993 – $230 a year – is more than the total annual income of the world's half-billion poorest people.

 

Counter Claim:

It is quite unlikely, with the best will in the world, that international inequalities can be reduced, or even prevented from increasing, for the rest of this century. But if one looks at realities rather than appearances, this does not seem an insoluble problem. The immediately urgent objectives are to achieve a substantial absolute improvement in the levels of the poorest countries (which is by no means identical with reducing inequality) and to bring about profound qualitative changes in all countries, which are needed for their survival in a world of limited resources and delicately poised ecological equilibria. To make a major issue of international inequalities only distracts attention from these more serious and urgent problems. It plays into the hands of those who are interested not in achieving real economic progress but in making political capital out of alleged economic failure.

Problem Type:
C: Cross-sectoral problems
Date of last update
23.11.2017 – 20:20 CET