International inequality

{{Short description|Inequality between nations' wealth}} {{About|the inequality between nations|inequality within nations|economic inequality}} {{more footnotes needed|date=September 2020}} {{Use dmy dates|date=October 2024}} {{Use American English|date=July 2013}} [[File:Map of countries by GDP (PPP) per capita in 2025.svg|thumb|upright=2|Countries or territories by GDP (PPP) per capita in 2025 (projection from October 2024) {{div col|colwidth=10em}} {{legend|#4B0082|>$70,000}} {{legend|#00008a|$60,000–$70,000}} {{legend|#003c00|$50,000–$60,000}} {{legend|#008f00|$40,000–$50,000}} {{legend|#00f900|$30,000–$40,000}} {{legend|#b3ff00|$20,000–$30,000}} {{legend|#ffff00|$10,000–$20,000}} {{legend|#ffd215|$5,000–$10,000}} {{legend|#ff852f|$2,500–$5,000}} {{legend|#ff0000|$1,000–$2,500}} {{legend|#a30000|<$1,000}} {{legend|#b9b9b9|No data}} {{div col end}} ]]

'''International inequality''' refers to inequality between countries, as compared to global inequality, which is inequality between people across countries. International inequality research has primarily been concentrated on the rise of international income inequality, but other aspects include educational and health inequality,<ref>{{cite journal |last1=Goesling |first1=Brian |last2=Baker |first2=David P. |title=Three faces of international inequality |journal=Research in Social Stratification and Mobility |date=June 2008 |volume=26 |issue=2 |pages=183–198 |doi=10.1016/j.rssm.2007.11.001 }}</ref> as well as differences in medical access. Reducing inequality within and among countries is the 10th goal of the UN Sustainable Development Goals and ensuring that no-one is left behind is central to achieving them.<ref name=":0">{{Cite web|title=Goal 10 {{!}} Department of Economic and Social Affairs|url=https://sdgs.un.org/goals/goal10|access-date=10 April 2021|website=sdgs.un.org}}</ref> Inequality can be measured by metrics such as the Gini coefficient.

According to the United Nations Human Development Report 2004, the gross domestic product (GDP) per capita in countries with high, medium and low human development (a classification based on the UN Human Development Index) was 24,806, 4,269 and 1,184 PPP$, respectively (PPP$ = purchasing power parity measured in United States dollars).<ref>{{Cite web |url=http://hdr.undp.org/statistics/data/indic/indic_4_1_1.html |title=Archived copy |access-date=6 December 2005 |archive-url=https://web.archive.org/web/20070608045739/http://hdr.undp.org/statistics/data/indic/indic_4_1_1.html |archive-date=8 June 2007 }}</ref>

== Proposed explanations ==

=== Differences in economic institutions === Economic institutions such as competitive markets, credible contracts, and systems of property rights enable economic agents to pursue the economic activities that underpin growth. It has been argued that the presence or absence of strong economic institutions is a primary determinant of development. Economists have begun to consider the set of economic institutions adopted by countries as a choice that, in turn, is determined endogenously by competing social forces.

According to this theory, differences in economic institutions arise from differences in political institutions. In their paper ''Paths of Economic and Political Development''<ref>{{Cite web |url=https://academic.oup.com/edited-volume/44403/chapter-abstract/373581655?redirectedFrom=fulltext |access-date=2024-04-29 |website=academic.oup.com|doi=10.1093/oxfordhb/9780199548477.003.0037 |title=Paths of Economic and Political Development |date=2009 |last1=Acemoğlu |first1=Daron |last2=Robinson |first2=James A. |pages=673–692 |isbn=978-0-19-954847-7 }}</ref> Acemoglu and Robinson discuss the intertwined nature of economic institutions to political ones. The authors conclude that although economic institutions are the key factor in final economic outcomes, they are endogenous. Meaning economic institutions are determined by political institutions and the distribution of resources.{{cn|date=February 2025}} They identify the above-mentioned as the "two main state variables". Accordingly, we find that political institutions affect economic institutions both directly and indirectly (via de jure and de facto power). Connecting to the issue of international inequality, the distribution of resources is identified as the main point of conflict. Because the distribution of resources is complex, opposing entities in a country cannot agree on a set of economic institutions that maximize "aggregate growth", thereby causing some countries to fall behind. Simply proving the influence of political institutions on economic ones, and with that, the development of a country. The main conclusion the authors reach is that the economic institutions that promote prosperity are dependent on democratic political institutions.

Others, on the other hand, have argued that a country's success is related to the trade-off between "dictatorship and disorder". Dyankov et al in ''The New Comparative Economics''<ref name="The new comparative economics">{{Cite journal |last1=Djankov |first1=Simeon |last2=Glaeser |first2=Edward |last3=La Porta |first3=Rafael |last4=Lopez-de-Silanes |first4=Florencio |last5=Shleifer |first5=Andrei |date=December 2003 |title=The new comparative economics |url=https://doi.org/10.1016/j.jce.2003.08.005 |journal=Journal of Comparative Economics |volume=31 |issue=4 |pages=595–619 |doi=10.1016/j.jce.2003.08.005 |issn=0147-5967|hdl=10419/61810 |hdl-access=free }}</ref> discusses this idea and uses the IPF (institutional Possibility Frontier)<ref name="The new comparative economics"/> to measure the optimal points of "dictatorship vs disorder" trade-off in individual countries. The idea of new comparative economics focuses on comparing differences in capitalist institutions across countries.<ref name="The new comparative economics"/> The new reforms to market economy and democracy have been different in each specific country and thus have reached different levels of efficiency. This can then manifest in the outcome we call "international inequality". According to Dyankov, institutions are made and work to control the "twin dangers"<ref name="The new comparative economics"/> of disorder and dictatorship. Coase (1960), also argues that "no rules are fully enforced, and no institution fully eliminates the transaction costs of dictatorship and disorder".<ref name="The new comparative economics"/> The IPF as a system can help to discuss the alternative forms of social control of business. It helps determine the efficient choice by identifying the shape and location of a country's IPF on an axis, plotting the social losses of dictatorship against those of disorder. In the end, the location of the IPF shows a country's "civic capital"<ref name="The new comparative economics"/> or the institutional possibility of a given society to reach its optimum. Many now argue that this study is most relevant to modern-day capitalist society, as it calls for efficient institutional design tailored to a country's specific characteristics.[[File:Globalization-5.png|thumb|Gross domestic product in 2011 US dollars per capita, adjusted for inflation and purchasing power parity (log scale) from 1860 to 2011, with population (disk area) for the US (yellow), UK (orange), Japan (red), China (red), and India (blue).<ref>Graph: [http://www.gapminder.org/world/#$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=30;stl=t;st=t;nsl=t;se=t$wst;tts=C$ts;sp=10;ti=2011$zpv;v=1$inc_x;mmid=XCOORDS;iid=ti;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj1jiMAkmq1iMg;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL_n5tAQ;by=ind$inc_c;uniValue=255;gid=CATID0;by=grp$map_x;scale=lin;dataMin=1864;dataMax=2082$map_y;scale=log;dataMin=236;dataMax=141476$map_s;sma=49;smi=2.65$cd;bd=0$inds=i110_l001800dRaJ;i238_l001800eAbq;i239_l001800eSaC;i101_d001800dzao;i44_d001800duar Gapminder.org]</ref>]]

In a widely cited paper by Daron Acemoglu, Simon Johnson and James A. Robinson, the authors concluded that the majority of present-day inequality among former European colonies can be attributed to the persisting role of economic institutions. Describing European colonization as a "natural experiment", they argued that colonizers who encountered dense populations with developed economies, such as in Central America and India, were incentivized to impose extractive economic institutions. In contrast, colonizers who encountered sparse populations with few natural resources, as in North America, were more likely to institute broad-based property rights. This resulted in a "reversal of fortune" around 1800 as regions that were underdeveloped at the time of colonization were able to industrialize more effectively.

=== Path dependence === In the context of development, path dependence is the idea that certain historical points may have an outsized and persistent impact on the long-term economic and political character of nations. These points may produce outcomes that induce positive feedback and are therefore difficult to reverse. Political scientist James Mahoney has examined the political consequences of a period of liberal reform in Central America during the 19th and early 20th centuries, and argued that whether policies were implemented along radical or reformist guidelines directly determined the success of the liberalization efforts and ultimately resulted in vastly different political outcomes which persisted for decades, ranging from military authoritarian regimes (Guatemala and El Salvador) to progressive democracy (Costa Rica).

=== The Dualistic-Development Thesis === Another concept of international inequality in the context of development can be found in the notion of dualism in the world, understood as "the coexistence of two situations or phenomena (one desirable and the other not) that are mutually exclusive to different groups of [international] society—for example, extreme poverty and affluence, modern and traditional economic sectors, growth and stagnation, and higher education among a few amid large-scale illiteracy." one can find the trace of dualistic society in structural-change as well as international-dependence theories. This concept demonstrates how the gap between the poor and the rich in the global world is persistent, if not steadily increasing. There are four key arguments in this thesis;

* Coexistence of two different sets of conditions, one superior and one inferior, in a given space * The chronic, persistent nature of this coexistence goes beyond historical and national elements aspects * An inherited tendency to increase the existing cleavage between the superior and inferior * Further depression and underdevelopment of the inferior as a result of its interrelation with superior elements

The dualism-development thesis rejects the traditional neoclassical and empirical theories that attribute poverty and inequality solely to internal factors and the political culture of these poor countries. It also refutes the recommendations given and forced upon developing countries. Instead, it focuses on external and international factors, such as international dependence in economics, finance, and trade, and forces that might not have given rise to international inequality but surely have played an important role in keeping the gap wide. Therefore, this doctrine suggests fundamental economic, political, and institutional reforms not only at the regional and domestic levels but also at the global and foreign levels.

However, there are criticisms about this type of thesis. First, although it offers a logical and well-founded explanation of international inequality, it lacks a comprehensive solution to the problem. Second, the number of successful fundamental reforms in many of the concerned countries largely failed to demonstrate significant progress or a decrease in overall inequality, whether at the domestic or foreign levels.<ref>{{Cite book |last=P. Todaro – C. Smith |first=Michael – Stephen |title=Economic Development |date=29 April 2024 |isbn=978-0-13-340678-8 |edition=12th |pages=133–135|publisher=Pearson }}</ref>

=== Other explanations === Multiple other causes of international inequality have been proposed, such as:

* Geography: The location of countries often affects their economy. For example, landlocked countries have difficulty accessing sea trade routes.<ref>{{cite journal |last1=Mackellar |first1=Landis |last2=Wörgötter |first2=Andreas |last3=Wörz |first3=Julia |date=January 2000 |title=Economic Development Problems of Landlocked Countries |journal=Reihe Transformationsökonomie |url=https://irihs.ihs.ac.at/id/eprint/1230/ }}</ref><ref>{{cite journal |last1=Faye |first1=Michael L. |last2=McArthur |first2=John W. |last3=Sachs |first3=Jeffrey D. |last4=Snow |first4=Thomas |title=The Challenges Facing Landlocked Developing Countries |journal=Journal of Human Development |date=March 2004 |volume=5 |issue=1 |pages=31–68 |doi=10.1080/14649880310001660201 |s2cid=10442596 }}</ref> * Economic structure: the economies of different countries are composed of different industries, such as poorer countries relying primarily on agriculture.<ref>{{cite journal |last1=Herrendorf |first1=Berthold |last2=Valentinyi |first2=Ákos |title=Which Sectors Make Poor Countries so Unproductive? |journal=Journal of the European Economic Association |date=April 2012 |volume=10 |issue=2 |pages=323–341 |doi=10.1111/j.1542-4774.2011.01062.x |url=https://orca.cardiff.ac.uk/51196/7/FinalSubmisionJEEA.pdf }}{{Dead link|date=December 2024 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> * The use of the United States dollar in international trade allows the US government to create wealth by creating new money.<ref>{{Cite web |url=https://www.oakton.edu/user/4/ebottorf/pistor.pdf |title=Archived copy |access-date=13 January 2021 |archive-date=15 September 2021 |archive-url=https://web.archive.org/web/20210915173455/https://www.oakton.edu/user/4/ebottorf/pistor.pdf }}</ref> * Environmental factors (including work by Jared Diamond) * Cultural factors (including work by Max Weber)

== International inequality during COVID-19 == The worsening of inequality is considered the most significant outcome of COVID-19.<ref name="scientificamerican.com">{{cite web | url=https://www.scientificamerican.com/article/covid-has-made-global-inequality-much-worse/ | title=COVID Has Made Global Inequality Much Worse | website=Scientific American | date=March 2022 }}</ref> The pandemic has had the greatest impact on vulnerable groups such as the elderly, people with disabilities, children, women and refugees, low-income people, youth, and informal workers.<ref>{{Cite web | url=https://www.worldbank.org/en/events/2021/02/10/covid-19-and-global-income-inequality | title=COVID-19 and Global Income Inequality }}</ref> The research and measures of the World Bank, say that "Covid-19 has increased inequality in nearly every sphere: in the availability of vaccines, in economic growth rates, in access to education and health care, and the scale of job and income losses".<ref>{{Cite web | url=https://live.worldbank.org/covid-19-and-rising-inequality | title=COVID-19 and Rising Inequality }}</ref> Between 2020 and 2021 global billionaire wealth grew by $4.4 trillion but at the same time, more than 100 million people fell below the poverty line.<ref name="scientificamerican.com"/>

===Impact on the labor market=== COVID-19 caused a change in the way certain activities, goods, and services, as well as certain production processes, are provided. They are considered to be riskier and costlier. Staff shortages and work interruptions caused by compulsory quarantines of Covid-positive workers are reasons to replace the human workforce with robots. Robots are easily managed, do not need masks, can be easily disinfected, and do not get sick.<ref>{{Cite web | url=https://spectrum.ieee.org/how-robots-became-essential-workers-in-the-covid19-response | title=How Robots Became Essential Workers in the COVID-19 Response | date=30 September 2020 }}</ref> The threat of automation has spread to the work of low-skilled, person-to-person service workers. Before the pandemic, the literature viewed these jobs as less affected, for example, in the health and education sectors. New labor market uncertainty reduces demand for certain types of labor. This shift consequently increases inequality.<ref name="imf.org">{{Cite web | url=https://www.imf.org/external/pubs/ft/fandd/2020/09/COVID19-and-global-inequality-joseph-stiglitz.htm | title=COVID-19 and Global Inequality – IMF F&D }}</ref> Another inequality was visible after the beginning of lockdowns. Millions of newly unemployed joined the long queues for social security benefits.<ref>{{Cite news | url=https://www.nytimes.com/2020/03/27/business/economy/coronavirus-inequality.html | title='White-Collar Quarantine' over Virus Spotlights Class Divide | newspaper=The New York Times | date=27 March 2020 | last1=Scheiber | first1=Noam | last2=Schwartz | first2=Nelson D. | last3=Hsu | first3=Tiffany }}</ref> The loss of jobs differs by the nature of the job. Tourism, gastronomy, recreational services and accommodation, airlines, and industries that rely on personal interactions have been the hardest hit.<ref>{{Cite web | url=https://www.economicsobservatory.com/update-which-firms-and-industries-have-been-most-affected-by-covid-19 | title=Update: Which firms and industries have been most affected by Covid-19? }}</ref> Lockdown rules and social distancing requirements limited employees. The inability of workers to work from home deprived a lot of them of their jobs.

=== Inequality in access to healthcare === COVID-19 is the biggest health crisis in a century. Not only were poor countries with weak health care systems hard-hit, but also economically strong, developed, and rich countries. America is considered the most hit country in terms of unequal access to resources and health services.<ref>{{cite journal |last1=Etienne |first1=Carissa F. |title=COVID-19 has revealed a pandemic of inequality |journal=Nature Medicine |date=January 2022 |volume=28 |issue=1 |page=17 |doi=10.1038/s41591-021-01596-z |pmid=35039656 |s2cid=246032203 |doi-access=free }}</ref> One of the reasons for their highest number of cases and deaths is their worst average healthcare standards among the major developed economies.<ref name="imf.org"/> The poorest suffer from the lack of a universal healthcare system and high prices of medications (and for health care, in general) the most. Many Americans skipped testing to see if they were infected because of the high cost of tests. They went to work, spreading the virus mostly among those who could not work from home. After being infected, they could not afford to buy medication or to search for medical help since they had no insurance.<ref name="scientificamerican.com"/>

===Inequality in the distribution of vaccines=== thumb|COVID-19 vaccination per 100 people by World Bank income group The development, production, and distribution of vaccines was a scientific, political, and economic triumph, given how quickly it was achieved. However, despite having the technology and the resources, the society failed to increase vaccine supply and distribute enough doses in poor countries.<ref name="scientificamerican.com"/> "As of October 1st, 2021, the highest-income countries—as classified by the World Bank—had a per-capita vaccination rate of 125.3 vaccinations per 100 people, representing nearly 3-fold higher than the rate for lower-middle-income countries of 45.3 per 100, and 30-fold higher than lower-income countries with 4.2 per 100."<ref name="Rydland Friedman Stringhini et al 2022">{{cite journal |last1=Rydland |first1=Håvard Thorsen |last2=Friedman |first2=Joseph |last3=Stringhini |first3=Silvia |last4=Link |first4=Bruce G. |last5=Eikemo |first5=Terje Andreas |title=The radically unequal distribution of Covid-19 vaccinations: a predictable yet avoidable symptom of the fundamental causes of inequality |journal=Humanities and Social Sciences Communications |date=23 February 2022 |volume=9 |issue=1 |pages=1–6 |article-number=61 |doi=10.1057/s41599-022-01073-z |s2cid=247060753 |doi-access=free |hdl=11250/2981281 |hdl-access=free }}</ref> Also, the efficacy varied between distributed vaccines. They are more likely to have lower average efficacy in lower-income locations. Sputnik, Sinopharm, and Janssen vaccines are mostly used in low and middle-income countries with lower efficacy against new variants of virus compared to vaccines from Pfizer and Moderna—used mainly in higher-income areas.<ref name="Rydland Friedman Stringhini et al 2022"/>

===Inequality in education=== The control measures introduced worldwide to curb the spread of the virus had a considerable impact on education. By April 2020, an unprecedented 1.4 billion students were shut out of their pre-primary, primary, and secondary schools in more than 190 countries, and classroom-based education had moved to online distance learning.<ref name="hrw.org">{{Cite journal | url=https://www.hrw.org/report/2021/05/17/years-dont-wait-them/increased-inequalities-childrens-right-education-due-covid | title="Years Don't Wait for Them": Increased Inequalities in Children's Right to Education Due to the Covid-19 Pandemic | journal=Human Rights Watch | date=17 May 2021 | last1=Sheppard | first1=Bede }}</ref> The number and duration of periods of school closures have varied across countries. Inequalities were evident in the extent to which their families and home environments supported their learning. Lack of opportunities, tools, or access to affordable, reliable internet connections were daily problems to deal with.<ref>{{cite journal |last1=Darmody |first1=Merike |last2=Smyth |first2=Emer |last3=Russell |first3=Helen |title=Impacts of the COVID-19 Control Measures on Widening Educational Inequalities |journal=YOUNG |date=September 2021 |volume=29 |issue=4 |pages=366–380 |doi=10.1177/11033088211027412 |s2cid=237308756 |doi-access=free }}</ref> Children from low-income families were more likely to be excluded from online distance learning because of an inability to afford sufficient internet or devices.<ref name="hrw.org"/>

Another dimension of inequality relevant to distance learning is the one between low- and high-achieving students. Education from home entails a high degree of self-regulated learning, in which students must independently acquire and understand academic content without teacher support. This self-regulated learning may be feasible for high-achieving students, but it may be especially challenging for low-achieving students and for students with special needs.<ref>{{cite journal |last1=Grewenig |first1=Elisabeth |last2=Lergetporer |first2=Philipp |last3=Werner |first3=Katharina |last4=Woessmann |first4=Ludger |last5=Zierow |first5=Larissa |title=COVID-19 and educational inequality: How school closures affect low- and high-achieving students |journal=European Economic Review |date=1 November 2021 |volume=140 |article-number=103920 |doi=10.1016/j.euroecorev.2021.103920 |pmid=34602646 |pmc=8474988 }}</ref>

In addition, in some countries, girls have faced widespread discrimination in access to education and to the internet. Society was much more likely to expect them to take on a greater household burden during distance learning than it was to expect boys to. In developing and poor countries, girls who were out of school were at greater risk than boys of facing abuses such as child marriage and other forms of gender-based violence.<ref name="hrw.org"/>

== International wealth distribution == {{see also|List of countries by distribution of wealth}} Between 1820 and 2000, global income inequality increased by almost 50%. However, this change occurred mostly before 1950. Afterwards, the level of inequality remained mostly stable. It is important to differentiate between between-country inequality, which was the driving force for this pattern, and within-country inequality, which remained largely constant.<ref name=":1" />[[File:Countries by total wealth (trillions USD), Credit Suisse.png|thumb|300px|Countries by total wealth (trillions USD), Credit Suisse]] [[File:Global changes in real income by income percentile - v1.png|thumb|right|350px|Change in real income between 1988 and 2008 at various income percentiles of global income distribution, known as the Elephant Curve<ref>[http://heymancenter.org/files/events/milanovic.pdf Branko Milanovic-Global Income Inequality by the Numbers-In History and Now-February 2013]</ref>]]

Global income inequality peaked around the 1970s, when world income was distributed bimodally between "rich" and "poor" countries, with little overlap. Since then, inequality has been rapidly decreasing, and this trend seems to be accelerating. Income distribution is now unimodal, with most people living in middle-income countries.<ref>{{Cite web|url=http://www.voxeu.org/index.php?q=node/4508|title=Parametric estimations of the world distribution of income|date=22 January 2010}}</ref>

{{As of|2000}}, a study by the World Institute for Development Economics Research at the United Nations University found that the richest 1% of adults owned 40% of global assets, and that the richest 10% of adults accounted for 85% of the world's total. The bottom half of the world's adult population owned barely 1% of global wealth. Oxfam International reported that the richest 1 percent of people owned 48 percent of global wealth {{As of|2013}},<ref>[https://www.msn.com/en-us/news/world/oxfam-richest-1-percent-sees-share-of-global-wealth-jump/ar-AA8lc7U?ocid=ansnewsap11 Oxfam: Richest 1 percent sees share of global wealth jump]</ref> and would own more than half of global wealth by 2016.<ref name="NYT-20150119-PC">{{cite news |last=Cohen |first=Patricia |title=Richest 1% Likely to Control Half of Global Wealth by 2016, Study Finds |url=https://www.nytimes.com/2015/01/19/business/richest-1-percent-likely-to-control-half-of-global-wealth-by-2016-study-finds.html |date=19 January 2015 |work=New York Times |access-date=19 January 2015 }}</ref> In 2014, Oxfam reported that the 85 wealthiest individuals in the world had a combined wealth equal to that of the bottom half of the world's population, or about 3.5 billion people.<ref>[http://www.oxfam.org/en/pressroom/pressrelease/2014-01-20/rigged-rules-mean-economic-growth-increasingly-winner-takes-all-for-rich-elites Rigged rules mean economic growth increasingly "winner takes all" for rich elites all over world]. ''Oxfam''. 20 January 2014.</ref><ref>Neuman, Scott (20 January 2014). [https://www.npr.org/blogs/thetwo-way/2014/01/20/264241052/oxfam-worlds-richest-1-percent-control-half-of-global-wealth Oxfam: World's Richest 1 Percent Control Half Of Global Wealth]. ''NPR.'' Retrieved 25 January 2014.</ref><ref>{{cite web|last=Stout|first=David|title=One Stat to Destroy Your Faith in Humanity: The World's 85 Richest People Own as Much as the 3.5 Billion Poorest|url=http://business.time.com/2014/01/20/worlds-85-wealthiest-people-as-rich-as-3-5-billion-poorest/|publisher=Time|access-date=21 January 2014|date=20 January 2014|archive-date=23 January 2014|archive-url=https://web.archive.org/web/20140123232731/http://business.time.com/2014/01/20/worlds-85-wealthiest-people-as-rich-as-3-5-billion-poorest/}}</ref><ref>{{cite web|last=Wearden|first=Graeme|title=Oxfam: 85 richest people as wealthy as poorest half of the world|url=https://www.theguardian.com/business/2014/jan/20/oxfam-85-richest-people-half-of-the-world|work=The Guardian|access-date=21 January 2014|date=20 January 2014}}</ref><ref name="NYT-20140722">{{cite news |last=Kristof |first=Nicholas |title=An Idiot's Guide to Inequality |url=https://www.nytimes.com/2014/07/24/opinion/nicholas-kristof-idiots-guide-to-inequality-piketty-capital.html |date=22 July 2014 |work=New York Times |access-date=22 July 2014 }}</ref>

{{As of|2001}}, the major component of the world's income inequality (the global Gini coefficient) was composed of two groups of countries (called the "twin peaks" by Quah [1997]). The first group has 13% of the world's population and receives 45% of the world's PPP income. This group includes the United States, Japan, Germany, the United Kingdom, France, Australia, and Canada, and comprises 500 million people with annual incomes over 11,500 PPP$. The second group accounts for 42% of the world's population but receives only 9% of its PPP income. This group includes India, Indonesia, and rural China, and comprises 2.1 billion people with an income level under 1,000 PPP$.<ref>Milanovic 2001, p. 38</ref>

In terms of between-country inequality, between 1820 and 2000, Latin America, Africa, and the Middle East almost always had a higher average Gini coefficient than Europe, indicating higher inequality. Asia was usually below average.<ref name=":1">{{Cite journal|last1=van Zanden|first1=Jan Luiten|last2=Baten|first2=Joerg|last3=Földvari|first3=Peter|last4=van Leeuwen|first4=Bas|date=2011|title=The Changing Shape of Global Inequality 1820–2000: Exploring a new dataset|journal=CGEH Working Paper Series}}</ref>

{{As of|2017}}, over 70% of the world's adults had under $10,000 in wealth. Only 0.7% of the world had one million dollars or more in wealth, but this number is increasing.<ref>{{Cite web|url=https://inequality.org/facts/global-inequality/|title=Global Inequality|website=Inequality.org}}</ref> {{As of|2008}}, there were 1,125 billionaires (in US dollars) who owned $4.4 trillion in assets.<ref>http://www.spiegel.de: report from 6 March 2008</ref> {{As of|2006}}, the total value of global assets was about $125 trillion.<ref name="SpieOrf">http://www.spiegel.de: Report at 5 December 2006, www.orf.at: report at 5 December 2006</ref>

The evolution of the income gap between poor and rich countries is related to convergence. Convergence can be defined as "the tendency for poorer countries to grow faster than richer ones and, hence, for their levels of income to converge".<ref>{{cite web| url = http://www.worldbank.org/fandd/english/0696/articles/090696.htm| archive-url = https://web.archive.org/web/20000610175639/http://www.worldbank.org/fandd/english/0696/articles/090696.htm| archive-date = 10 June 2000| title = Forget Convergence: Divergence Past, Present, and Future – Finance & Development – June 1996}}</ref>

China's economic growth led to a major decrease in world inequality.<ref name=":62">{{Cite book |last=Lan |first=Xiaohuan |title=How China Works: An Introduction to China's State-led Economic Development |publisher=Palgrave Macmillan |year=2024 |isbn=978-981-97-0079-0 |translator-last=Topp |translator-first=Gary |doi=10.1007/978-981-97-0080-6}}</ref>{{Rp|page=202}} Since China's Reform and Opening Up, more than 1 billion Chinese people have been lifted out of poverty.<ref name=":62" />{{Rp|page=202}} The majority of global poverty reduction between 1981 and 2008 occurred in China.<ref name=":62" />{{Rp|page=202}} As academic Lan Xiaohuan writes, during that period, "the number of poor people in the world outside China remained more or less unchanged. It can therefore be concluded that achievements in global poverty reduction come mainly from China."<ref name=":62" />{{Rp|pages=202–203}}

==Social welfare spending==

Overall, social spending is lower in the Global South, with some regions registering just a few percentage points of GDP.<ref>{{cite journal|last=Glenn|first=John|title=Welfare Spending in an Era of Globalization: The North-South Divide|journal=International Relations|year=2009|volume=23|issue=1|pages=27–8, 30–1, 36–9, 45–6|doi=10.1177/0047117808100608|s2cid=145077740}}</ref>

== Proposed solutions ==

Potential approaches to decrease inequality include:

* Education and family planning: Many countries with access to education have higher income levels. Part of this is because people are striving for a career and higher education. Countries without access to education have lower incomes. Women who have access to education will have fewer children because they focus on building themselves. * Democracy: Democracy allows people to have a say in where money is spent, such as in social welfare programs. * Government policies: The government can create policies that can aid people experiencing poverty and help provide medicine. * Empowerment of women * Improve agriculture: Poor countries tend to suffer from food shortages. One thing that could be done is to help improve farming grounds and livestock development. Starting the proper groundwork for crops will help provide the nutrition many people need. Livestock can provide milk, eggs, meat, and cheese for consumption. This can also help provide fur and feathers for making clothing and other goods, which could be sold to help with low income. * Volunteers who travel to poor countries to help<ref>{{Cite book|title=Global Issues: Politics, Economics, Culture|last=Payne|first=Richard|publisher=Pearson Education Inc.|year=2017|isbn=978-0-13-420205-1|page=125}}</ref> * A global wealth tax: Thomas Piketty suggests a global and coordinated wealth tax as the remedy to trends of global inequality, saying that only a direct solution to wealth concentration can be successful where other governmental policies have failed. Piketty proposed an international agreement among nations to tax all personal assets at phased rates. The simplest version of the proposal would levy a 1% tax on net worth between $1.3 million and $6.5 million and a 2% tax on net worth above $6.5 million.<ref>{{Cite journal|last=Schuyler|first=Michael|title=The Impact of Piketty's Wealth Tax on the Poor, the Rich, and the Middle Class|url=https://files.taxfoundation.org/legacy/docs/TaxFoundation_SR225.pdf|journal=Tax Foundation|volume=225|page=17}}</ref> This idea has so far failed to gain ground and has been subject to criticism. Schuyler argues that a wealth tax would cause significant declines in investment, salaries, incomes, and national production, making all groups worse off. In addition, he raises the problem of significant administrative and enforcement hurdles, making Piketty's wealth tax impractical to a large extent.{{citation needed|date=October 2021}} * Reducing illicit wealth outflows: From 2003 to 2012, developing countries lost $6.6 trillion to illicit financial flows, with the amount rising at an average of 9.4 percent each year.<ref>{{Cite web|title=Global Economic Inequality–and What Might Be Done About It|url=https://online.norwich.edu/academic-programs/resources/global-economic-inequality%E2%80%93and-what-might-be-done-about-it|access-date=10 April 2021|website=Norwich University Online|language=en|archive-date=10 April 2021|archive-url=https://web.archive.org/web/20210410170325/https://online.norwich.edu/academic-programs/resources/global-economic-inequality%E2%80%93and-what-might-be-done-about-it|url-status=dead}}</ref> Since this could have been used for investments into human capital, infrastructure and economic growth, a strong correlation exists between illicit outflows and the levels of poverty and economic inequality.<ref>{{Cite web|date=9 August 2017|title=Illicit Financial Flows from Developing Countries: 2003–2012 « Global Financial Integrity|url=http://www.gfintegrity.org/report/2014-global-report-illicit-financial-flows-from-developing-countries-2003-2012|access-date=10 April 2021|archive-url=https://web.archive.org/web/20170809095731/http://www.gfintegrity.org/report/2014-global-report-illicit-financial-flows-from-developing-countries-2003-2012|archive-date=9 August 2017}}</ref> * Minimum wage: Minimum wage levels are often described as an important part of the challenge to reduce inequality.<ref>{{Cite web|title=Income Inequality: Time to Deliver an Adequate Living Wage|url=https://socialprotection-humanrights.org/resource/income-inequality-time-to-deliver-an-adequate-living-wage/|access-date=10 April 2021|website=Social Protection and Human Rights|language=en-US}}</ref> * Worker unions: Historically, labor unions have played an important role in reducing inequality, particularly in negotiating better pay for low-wage workers. Income disparity is typically lower in countries with higher union membership and collective bargaining coverage, while inequality tends to worsen in countries with decreasing union membership and coverage.<ref>{{cite journal |last1=Herzer |first1=Dierk |title=Unions and income inequality: A heterogeneous panel cointegration and causality analysis |website=EconStor |date=2014 |url=https://hdl.handle.net/10419/102306 |hdl=10419/102306 |hdl-access=free}}</ref>

Research has stressed the need to address inequality through a multi-pronged approach, including taxation reform and curbing excesses associated with financial deregulation, while accounting for country-specific circumstances and potential trade-offs with other policy objectives.<ref>{{cite book |last1=Jaumotte |first1=Florence |last2=Buitron |first2=Carolina Osorio |title=Inequality and labor market institutions |date=2015 |publisher=International Monetary Fund, Research Department |isbn=978-1-5135-2690-4 |oclc=914159875 }}{{page needed|date=May 2022}}</ref>

==References== {{Reflist}}

==Sources== * Milanovic, Branko (World Bank), True world income distribution, 1988 and 1993: first calculation based on household surveys alone, ''The Economic Journal'', Volume 112 Issue 476 Page 51 – January 2002. Article: [https://web.archive.org/web/20051009052035/http://econwpa.wustl.edu/eps/hew/papers/0305/0305002.pdf]. Actual report on which the article is based: [https://web.archive.org/web/20040707133252/http://econ.worldbank.org/files/978_wps2244.pdf]. News coverage: [https://www.theguardian.com/Archive/Article/0%2C4273%2C4337872%2C00.html] and [http://mailman1.u.washington.edu/pipermail/pophealth/2002-January/000211.html] {{Webarchive|url=https://web.archive.org/web/20051123224306/http://mailman1.u.washington.edu/pipermail/pophealth/2002-January/000211.html |date=23 November 2005 }}. * {{cite journal |last1=Cole |first1=Matthew A. |last2=Neumayer |first2=Eric |title=The pitfalls of convergence analysis: is the income gap really widening? |journal=Applied Economics Letters |date=April 2003 |volume=10 |issue=6 |pages=355–357 |doi=10.1080/1350485032000072361 |s2cid=154633111 |url=https://researchonline.lse.ac.uk/id/eprint/603/ }} * {{cite journal |last1=Quah |first1=Danny T. |title=Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs |journal=Journal of Economic Growth |date=1 March 1997 |volume=2 |issue=1 |pages=27–59 |doi=10.1023/A:1009781613339 |s2cid=55517603 }} * Martin Ravallion, [https://web.archive.org/web/20120708071942/http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000012009_20050505134719 "A poverty-inequality trade-off?"], World Bank, 5 May 2005, Policy Research Working Paper no. WPS 3579, *Martin Ravallion, [http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64216926&entityID=000012009_20041215104739 "Looking beyond Averages in the Trade and Poverty Debate"] {{Webarchive|url=https://web.archive.org/web/20091223032910/http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469372&menuPK=64216926&entityID=000012009_20041215104739 |date=23 December 2009 }}, World Bank, November 2004, Policy Research Working Paper No. 3461 *{{Cite journal | first=Robert | last=Barro | author-link=Robert Barro | title=Inequality and Growth in a Panel of Countries | journal=Journal of Economic Growth | year=2000 | volume=7 | issue=1 | url=http://post.economics.harvard.edu/faculty/barro/papers/p_inequalitygrw.pdf | archive-url=https://web.archive.org/web/20051216151328/http://post.economics.harvard.edu/faculty/barro/papers/p_inequalitygrw.pdf | archive-date=16 December 2005 | df=dmy-all }}. * {{Cite web|url=http://www.wider.unu.edu/research/2006-2007/2006-2007-1/wider-wdhw-launch-5-12-2006/wider-wdhw-press-release-5-12-2006.htm|title=The World Distribution of Household Wealth|access-date=8 December 2006|publisher=World Institute for Development Economics Research of the United Nations University (UNU-WIDER)|year=2006|author1=James B. Davies|author2=Susanna Sandstrom|author3=Anthony Shorrocks|author4=Edward N. Wolff|archive-date=6 December 2006|archive-url=https://web.archive.org/web/20061206232455/http://www.wider.unu.edu/research/2006-2007/2006-2007-1/wider-wdhw-launch-5-12-2006/wider-wdhw-press-release-5-12-2006.htm|url-status=dead}} News coverage: [https://web.archive.org/web/20080705200602/http://www.timesonline.co.uk/article/0,,11069-2488836,00.html] [https://www.cbc.ca/news/business/40-of-world-s-wealth-owned-by-1-of-population-1.577662]

==External links== {{Commons category|Global inequality}} *[http://www.wider.unu.edu World Distribution of Household Wealth] report at United Nations University *[https://web.archive.org/web/20051204045513/http://ucatlas.ucsc.edu/ The UC Atlas of Global Inequality] explores some aspects of inequality using online, downloadable maps and graphics. *[http://www.globalissues.org/TradeRelated/Facts.asp Poverty Facts and Stats] is a well-documented source of comparisons. *[https://www.un.org/esa/socdev/rwss/index.html#2005 UN World Social Situation Report 2005 – Inequality Predicament] *[https://web.archive.org/web/20080312233340/http://www.commondreams.org/headlines05/0826-03.htm Common Dreams – Globalization Driving Inequality, UN Warns] *{{unfit|1=[https://web.archive.org/web/20150331064701/http://www.heritage.org/research/features/index Heritage Foundation – Economic Freedom and Per Capita Income]}}

{{DEFAULTSORT:International Inequality}} Category:Economic inequality Category:Distribution of wealth Category:Global inequality Category:Economic globalization Category:Imperialism studies