***** Increasing gap between rich and poor By Martin Dickson Published: September 20 2000 11:19GMT | Last Updated: December 19 2000 17:21GMT
...Until the industrial revolution in the west in the 19th century, there was relatively little inequality because there was so little economic growth. In 1820, the difference between the richest and poorest countries was a ratio of about three to one. Around that year, according to the United Nations Human Development Report, Britain's GDP per capita (in 1990 dollars) was roughly $1,765, while that of China, one of the world's poorest countries, was $523.
By 1992, the US, now the world's richest country, had GDP per capita of $21,558, while Ethiopia, among the poorest, had one of just $300 - a ratio of 72 to one.
These extremes mask the fact that a significant number of countries have caught up, or narrowed the gap with, the most advanced nations in the period since the second world war - Japan had only 20 per cent of US income in 1950 but 90 per cent in 1992, while some states in southern Europe, the Middle East and Asia have also seen very big increases in income.
However, the very poorest nations have been getting relatively worse off for most of the post-war period. In 1960, according to the UN, the 20 per cent of the world's people in the richest countries had 30 times the income of the poorest 20 per cent, while by 1997 that had risen to 74 times.
World Bank figures show a similar picture. The average per capita income of the poorest third of all countries fell from 3.1 per cent of the richest third to 1.9 per cent between 1970 and 1995, while the middle third suffered a decline from 12.5 to 11.4 per cent.
East Asia is the only region where incomes in low and middle income countries are converging towards incomes in richer countries, while in sub-Saharan Africa and the other least developed countries, per capita incomes today are lower than they were in 1970....
But is overall global income inequality still increasing? A recent paper by Andrea Boltho, of Oxford University, and Gianni Toniolo, of the University of Rome, claimed that it reached its maximum in the 1970s and has been shrinking as China and India, which together account for more than one third of the world population, have begun to grow rapidly.
However, their arguments have been attacked by other economists on the grounds that their measurements are inaccurate, relying on too small a sample of countries, and are, anyway, not the best gauge of global income disparity, since they assume that every Chinese and every American has the same national mean income.
Disparities of income within nations are certainly an important part of inequality measurement, and in China economic growth has been particularly uneven between the export-oriented coastal regions and the interior. Domestic income inequality has therefore increased sharply.
A similar situation exists in the former communist states of eastern Europe and Soviet Union. In Russia, the share of income of the richest 20 per cent is 11 times that of the poorest 20 per cent.
Income inequalities have also been growing in south-east Asian nations such as Indonesia and Thailand that had achieved high growth with improving income distribution and a reduction of poverty in earlier decades.
So, depending on the definition, global inequality is still rising, or has fallen marginally, thanks, in particular, to China's success. But as Nancy Birdsall, of the Carnegie Endowment for International Peace, has pointed out: "It would take China almost a century of constant growth at its recent high rate just to reach the current level of US income per person."
Whatever is happening to relative inequality, the number of people in absolute poverty - living on less than $1 a day is a popular yardstick - seems set to increase over the next two decades.
World Bank figures show that some parts of the developing world have enjoyed levels of growth high enough to reduce absolute poverty in recent decades. In southern Asia, for example, the proportion of the population below the poverty line declined from 44.9 per cent in 1987 to 42.3 per cent in 1996 and is estimated at 40 per cent in 1998.
But in others, such as Latin America and Africa, it has increased. Worldwide, the total population living on less than $1 a day has risen from 1.2bn in 1987 to around 1.5bn today, and if recent trends persists, it will reach 1.9bn by 2015.
<http://specials.ft.com/worldeconomy2000/FT31MFCQBDC.html> *****
***** South trading more but earning less...
by Chakravarthi Raghavan
GENEVA: Developing countries, since the early 1980s, have rapidly liberalized trade and foreign direct investment (FDI), their exports have grown faster than the world average, and they now account for one-third of world merchandise trade, with much of the growth in manufactured exports, which now account for 70% of their total exports.
Many developing countries also appear to have succeeded in moving into technology-intensive manufactured exports, among the most rapidly growing products in world trade, notably electronic and electrical goods, and have increased their share, between 1980 and 1998, from 5.5 to 22 percent.
Good news? Not really, says UNCTAD in its Trade and Development Report, 2002. The trade statistics, taken at face value, are quite misleading and can hide more than they reveal; and in many cases, developing countries have been trading more and earning less....
<http://www.twnside.org.sg/title/twe279b.htm> ***** -- Yoshie
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