Distribution of Wealth, Equitability of

The Global Distribution of Wealth

We live in a highly unequal world. Although there is considerable debate regarding the percentage of the world's population that lives in absolute poverty, with this debate revolving around how to define it (e.g., whether it is those living below a certain threshold such as US$1 per day, or whether it should be based on the living standard pertaining in a given country), there is considerable agreement not only that global inequality persists but that it is growing as well. For example:

• United Nations Development Programme data show that the richest 20% of the world's population accounts for over 80% of global income, while the poorest 20% accounts for less than 2%. The income gap between them has more than doubled since the 1960s.
• Gross domestic product per capita in the world's 20 richest countries is 121 times higher than in the world's 20 poorest ones.
• Average incomes in more than 50 developing countries are now lower than in the 1990s.

The disparities are staggering; just 4% of the wealth of the world's 225 richest people, whose wealth amounts to over US$1 trillion, would be enough to provide access to education and health care, sufficient food, clean water, and sanitation for all those who currently do not have access to them.

This inequality is not random. Beyond western Europe and North America, there has been a substantial reduction in poverty in some East and South Asian countries but a substantial increase in sub-Saharan Africa and either stagnation or a mixed performance in Latin American countries. Therefore, it is often said that the nations of the world are broadly divided between those in the rich Northern Hemisphere and those in the poor Southern Hemisphere. This North-South divide is reflected in patterns of global economic activity. Rich, northern countries account for 80% of world production and 70% of international trade and are the source of 70% to 90% of all foreign direct investments. In fact, nearly 90% of the world's top 500 corporations are headquartered in just 10 countries: the United States, Japan, the United Kingdom, France, Germany, Canada, the Netherlands, Switzerland, Italy, and Australia. Of these, the majority are Anglo-American. Furthermore, according to the United Nations Conference on Trade and Development, the vast majority of their foreign direct investment goes to other northern countries rather than those in the poor South, which have rarely had more than 30% of global foreign direct investment stocks.

...