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GOLBAL ECONOMY AND
ECONOMIC DISPARITY

World Development Report 1999, released by the World Bank last month, reveals disturbing trends in world economy. The 1998 economic indicators once again reaffirm clearly that the rich continues to grow richer while the poor grows poorer. Economic disparity between developed and developing countries has reached a new height and is still growing.

ECONOMIC HARDSHIPS

Recent figures show that the per capita income of the highest income country is 400 times greater than that of the lowest income country. The difference between Switzerland’s per capita income of $40,080 and Ethiopia’s $100 is striking, to say the least.

Statistics also show that 13 economies have per capita income exceeding $20,000, (Table 1) compared to 26 countries with per capita income less than $350 (Table 2). Indeed the gap between the affluent and deprived economies in the global economy is so great that if one were to add the per capita GNP of 50 Least Development Countries (LDC), it does not exceed half of the per capita income of one of the developed countries.

It is not difficult to realize that behind the recent economic figures lie untold miseries of hundreds of million of living souls. To give the reader a sense of the magnitude of the hardship experienced by the Least Developed Countries, additional statistics may help.  47% of the population of the second most populous nation on earth lives under the international poverty line of $1 a day, and 87% below $2 a day. This adds up to over 700 million human beings.

In Kenya, 50.2% of the population lives below $1 a day poverty line, while 78.1% below $2 a day. In Zambia, the figures are even more dramatic. 84.6% live below $1 a day and 98.1% below $2.

EXCESSIVE INEQUALITY WITHIN

The above figures do not reveal the whole story of the extreme difficulties and hardship visited onto the bulk of humanity. The global economic disparity among nations is accompanied by equally devastating inequality within the nation-state. In 31 countries, less than 20% of the population controls more than 50% of the national wealth. In Thailand, for instance, 20% of the Thai population controls 52.7% of economic resources. The situation is even more sever in 20 other countries. In Brazil and South Africa, the richest 20% control 64.2% and 64.8% respectively, while the richest 10% control 47.8 and 45.9%. (Table 3)

 Even in impoverished countries such as Kenya, Madagascar, and Senegal, the richest 20% have disproportionate control over the economy that amounts to 50%, 52%, and 57.9% of national resources respectively. 

GROWING GAP

All economic indicators concerning the performance of the global and globalzing economy lead to unmistakable conclusion: economic disparity among and within nation states is on the increase. While one can find every now and then success stories of developing countries that were able to develop economically against all odds, the fact of the matter remains that such countries (e.g. South Korea, Taiwan, Singapore, etc.) are the exception rather than the rule.

The bulk of the developing countries continue to experience slow economic, even negative, growth. Twenty-five countries experienced negative growth in private consumption, including countries that are already classified as Least Developed Countries (LDC). Private consumption in various LDCs, such as Angola, Nicaragua, Ethiopia, and Mali have experienced negative rate of growth between 1997 and 1998 that amounted to -7.8%, -2.6%, -2.2%, and -0.3% respectively.

ECONOMIC DISPARITY AND HUMAN
MISERY ARE NOT INEVITABLE

It is very vital—if we are to have a positive impact on the process of globalization—to realize that the growing economic disparity does not stem from natural forces inherent in social conditions, but is the result of structural distortions and erroneous policies, and are hence open to reversion and corrections.

While the sources of the growing economic gap are multifarious, policies and decisions made by developed countries are one important and crucial source. For example, despite solemn promises to give most-favored-nation (MFN) concessions, both tariff and non-tariff, to LCDs, developed countries—particularly the G-7 countries—continue to use tariff and non-tariff measures to bock import from LDCs. This is particularly so with regard to products that originates in Africa and the Middle East. Tariff average on textile fibers and garments produced in African and Middle Eastern countries are four times higher than those imposed on similar products from G-7 countries.

For globalization to bring about a stable global economy and political cooperation, the G-7 in general, and the United State in particular, must adopt more positive trade policies toward developing countries. G-7 countries should not insist on achieving free trade in the sense of forcing developing economy to open their market to products produced in by international capital, but must pursue a fair trade policy that ensure mutual benefits for both developing and developed courtiers.

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Rank

Table 1

Highest Income Countries
Based on Per Capita GNP
1998

 

GNP
Per Capita
(Dollars)
Economy
1
2
3
4
5
6
7
8
9
10
11
12
13
Switzerland
Norway
Denmark
Japan
Singapore
United States
Austria
Germany
Hong Kong
United States
Australia
Italy
Canada

Source: World Development Report 1999/2000,
World Bank, Washington, DC, 1999.

40,080
34,330
33,260
32,380
30,060
29,340
26,850
25,850
23,670
21,400
20,300
20,250
20,020

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Rank

Table 2

Least Income Countries
Based on Per Capita GNP

 

GNP
Per Capita
(Dollors)
Economy
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Ethiopia
Democratic Republic of Congo
Burundi
Sierra Leone
Niger
Mozambique
Nepal
Chad
Rwanda
Burkina Faso
Mali
Madagascar
Malawi
Cambodia
Central African Republic
Nigeria
Republic of Yemen
Uganda
Lao PDR
Togo
Vietnam
Zambia
Bangladesh
Kyrgayz Republic
Tajikistan
Tanzania

Source: World Development Report 1999/2000,  World Bank, Washington, DC, 1999.

100
110
140
140
190
210
210
230
230
240
250
260
260
280
300
300
300
320
330
330
330
330
350
350
350
350

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Rank

Table 3

Income Destribution within National Economies

 

Survey Yr. Economy Percentage Share of Income
Hightest 20% Highest 10%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
1995
1994
1990
1995
1995
1994
1989
1995
1987
1995
1991
1996
1996
1994
1989
1993
1996
1989
1994
1996
1992
1995
1993
1995
1993
1996
1996
1991
1994
1994
1993
Brazil
South Africa
Zimbabwe
Paraguay
Colombia
Chile
Sierra Leone
Panama
Lesotho
Mexico
Senegal
Honduras
Paua New Guinea
Mali
Dominican Republic
Nicaragua
Zambia
Malaysia
Ecuador
Russian Federation
Thailand
Ukraine
Madagascur
Niger
Venezuela
Peru
Costa Rica
Jordan
Kenya
Philippines
Nigeria
64.2
64.8
62.3
62.4
61.5
61.0
63.4
60.4
60.1
58.2
57.9
58.0
56.5
56.2
55.7
55.2
54.8
53.7
52.6
52.8
52.7
52.2
52.1
53.3
51.8
51.2
51.8
50.1
50.1
49.6
49.3
47.9
45.9
46.9
46.6
46.9
46.1
43.3
43.8
43.4
42.8
42.3
42.1
40.6
40.4
39.6
39.8
39.6
37.9
37.6
37.4
37.1
36.8
36.7
35.4
35.6
35.4
34.7
34.7
34.7
33.5
31.4
 

Source: World Development Report 1999/2000,  World Bank, Washington, DC, 1999.

 

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