income inequality is probably greater than it has ever been in human
history. There is some debate about
whether it is getting worse or getting better. Currently, the
richest 1% of people in the world receives as much as the bottom
57%. The ratio between the average income of the top 5% in the world
to the bottom 5% increased from 78 to 1 in 1988 to 114 to 1 in 1993
(Milanovic 1999). In this section of the Atlas,
we examine aspects of contemporary income inequality. On this page
we look at the distribution
of global income and changes in regional distribution of income.
The maps in this section show changes in GDP/person, GNP/person
and changes in the ratio of national incomes to world mean income.
of the world's people are poor
that the richest 25% of the world's population receives 75% of the
world's income, even when adjusting for Purchasing Power Parity.
The poorest 75% of the population share just 25%. This occurs because
a large proportion of the world's population lives in the poorest
countries, and within the poorest regions of those countries, particularly
in the rural areas of China, rural and urban India and Africa.
graph (from an article in the Economist by Robert Wade and based
on a graph in Milanovic) shows how the world's income is divided
among the world's population. It indicates the distribution of world
population (vertical scale) against income (horizontal scale). Income
here is measured the same way as in the atlas' GDP maps, using Gross
Domestic Product per person
in US dollars
compared at purchasing power parity rates.
This graph uses
data from household surveys of income, rather than the average income
for each country. Average values can be misleading because they
hide the gap between the high- and low-income levels. By using household
surveys of income, the graph reflects both inequalities between
countries and within countries.
The "Twin Peaks" of
Rich and Poor
contributors to world income inequality are the large countries
at either end of the spectrum, the "Twin Peaks," as defined
by Quah, 1997.
One pole represents the 2.4 billion people whose mean income is
less than $1000 year and includes people living in India, Indonesia
and rural China. With 42% of the world's population, this group
received just 9% of the world PPP income. The other pole is the
group of 500 million people whose income exceeds $11,500. This group
includes the US, Japan, Germany, France and the UK. Combined, they
account for 13% of the world's population yet garner 45% of the
world PPP income.
The gap between
these two poles is so large it comprises the major component of
the world's income inequality. Populous countries with middle income,
such as Brazil, Mexico and Russia, do contribute to world income
inequality, but to a much smaller degree.
increased between some regions, decreased between others
In the last
25 years, some regions of the world have raised their average income
per person, while others have suffered a decline in income. The
UNDP Human Development Report
2002 identifies the regions where there has been growth or
(UNDP 2002: 19). The graph shows the relative changes in income
between different regions of the world:
(1) The continued
rapid economic growth in the already rich countries of Western Europe,
North America and Oceania, relative to most of the rest of the world.
The decline in real income of Sub-Saharan Africa and Eastern Europe.
The relatively modest gains in Latin America and the Arab States.
These regions provide another example of how inequality increases
worldwide. Even though each of these regions saw an increase in
income, it was modest compared to the gains made by the high-income
countries. The result is that between 1975 and 2000, these regions
suffered a slight deterioration relative to OECD countries.
The graph also
shows the gains in income in East Asia. While the rapid growth was
impressive, it had little effect on global inequality due to the
relatively small populations involved. Although not evident in the
graph, the UNDP report also found that world
income inequality was
decreased somewhat by the rapid growth in China since 1970s and
India since 1980s, and the fact that European economies began to "catch-up" with
the United States.
in this section:
The maps in
this section of the Atlas show different ways of comparing average
country income levels:
Gross Domestic Product shows GDP per person for the decades
1970 to 1999.
Gross National Product shows GNP per person for the decades
1960 to 1999.
ratio shows the ratio of national income to the world mean for
the decades 1980 to 1999. In this case national income is measured
as GDP per capita in purchasing power parity US$.
in Income" graphic is from the Human Development Report
2002 by United Nations Development Program,
2002 by the UNDP. Used by permission of Oxford
University Press, Inc.
world income distribution, 1988 and 1993: First calculation based
on household surveys alone", World Bank.
for growth and distribution: stratification, polarization and convergence
clubs", London School of Economics and Political Science,
Center for Economic Performance Discussion Paper No. 324, pp. 1-29.
Human Development Report 2002 -- Deepening
Democracy in a fragmented world. New York, Oxford University