Economics of Consumption, International

National Consumption and Income

In 1900, public and private consumption was estimated at a total of $1.5 billion worth of goods and services. By 1975, the figure was $12 trillion; in 2010, the total amount consumed worldwide is $31 trillion (at constant prices). The usual focus of the analysis of global consumption patterns is the nation-state, although some claim that there is a transnational ruling class defined both by its control of production and its consumption pattern. The world's population is over 6.5 billion spread over 194 officially recognized countries with different average income levels, which determine the overall patterns of consumption. The World Bank categorizes these countries as low income, middle income, and high income. Figure 1 shows that the gulf between high-, middle-, and low-income countries has grown substantially since the mid-20th century. gross domestic product (GDP) per capita in Switzerland was 191 times higher than that in Malawi in 1960; in 2010, it was 229 times higher.

Seventeen percent of the world's population lives in high income countries, yet they account for 80 percent of the world's consumption. The United States, with just 4.5 percent of the world's population, accounts for 32 percent of its total consumption. Despite their huge populations and booming economies, China and India only account for 4 and 2 percent of world consumption, respectively. In other words, these two countries, with 37 percent of the global population, consume only 6 percent of global output. For those in less-developed countries, consumption is strongly linked to the fulfillment of basic human needs.

Figure 2 Share of global consumption by country Income group

Source: World Bank Development Indicators

Consumption is also a function of inequality—an aspect that has been increasing since the mid-20th century—within countries. The way in which the number of billionaires and millionaires has risen on all continents is one visible aspect of this. Although the exact figures are disputed, there are over 1 billion people in the world living in extreme poverty (surviving on less than $1.25 per day) and an additional 1 billion people living on less than $2 per day. Such individuals have limited access or hope of access to sophisticated mass consumption goods like mobile phones, computers, or even a regular electricity supply. The volatile prices of basic commodities compound the problem of fulfilling consumption needs for those in extreme poverty. Increasing global demand for food, with supply hampered by uneven distribution and environmental disasters, has driven up global food prices, leading to fears of a global food crisis. Food riots in low-income countries reflect a moral economy of consumption that goes beyond market forces.

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