International inequality


International inequality refers to the idea of inequality between countries. This can be compared to global inequality which is inequality between people across countries. This may refer to economic differences between countries. As well as medical care and education differences.
According to the United Nations Human Development Report 2004, the gross domestic per capita in countries with high, medium and low human development was 24,806, 4,269 and 1,184 PPP$, respectively. The wealthiest people in the world, especially those with over $100,000 in assets, 1.8% of the global population, own 86.4% of the overall wealth.

Proposed explanations

In economics and political science, a variety of explanations have been advanced to explain the magnitude of the disparity in economic growth and development between nations.

Causes

1. Geography: The location of some countries may affect their economy. Apart of this would be that there are some countries who are able to gain access to certain medicine and medical practices.
2. Colonialism: "Inequality breeds inequality" This being in the sense that as our ancestors travelled to new lands, they would settle in these countries. However, this did not change their economic level. This meant that they would just be bringing their inequality to another location.
3. Structure of Economy: Colonialism and historical experiences are widely perceived as creating an unfair global economy that keeps poor countries poor and rich countries rich.
4. Population Growth: Poor countries have had a large increase in population over the years. This causes a lack of resources. More people mean more resources being used.
5. Government Policies: Some eastern countries have policies where the people must rely on religion and not science. This may leave the people to not receive the medical treatment they need, due to the medical care not being a part of the religion.
6. Political Instability: Countries that have no governmental structure have problems with deciding how to use resources. For example, Angola has an abundance of resources. However, due to not having a stable political system, they are suffering from a poor economy and low life-expectancy.
7. Natural Disasters: Earthquakes, droughts, hurricanes, and many other disasters play a role in the inequality within countries.

Differences in economic institutions

Economic institutions such as competitive markets, credible contracts and systems of property rights allow economic agents to pursue the economic activities which form the basis of 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 is in turn determined endogenously by competing social forces.

In the colonial setting

Pointing to European colonization as a "natural experiment," Daron Acemoglu, Simon Johnson and James A. Robinson argue that colonizers who encountered dense populations with developed economies such as in Central America and India were incentived to impose extractive economic institutions, while colonizers who encountered sparse populations with few natural resources such as in North America were more likely to institute broad-based property rights. This resulted in a "reversal of fortune" around 1800 as regions which were under-developed at the time of colonization were able to industrialize more effectively. By instrumenting the strength of property rights in colonized nations with European settler mortality, the authors conclude in a widely cited paper that the majority of present-day inequality among former European colonies can be attributed to the persisting role of economic institutions.

Path dependence

In the context of development, path dependence encapsulates the idea that certain decisive moments in history may have an outsized and persistent impact on the long-run economic and political character of nations. These moments, known as critical junctures, may produce outcomes that induce positive feedback and thereby set nations on patterns of development that are difficult to reverse.

In Central America

Political scientist James Mahoney has examined the political consequences of a period of liberal reform that swept Central America in the 19th and early 20th centuries. As an example of path dependence, the author argues 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 to progressive democracy.

Other explanations

A multitude of other explanations have been propounded including:

Economic inequality in Industrial revolution

The Industrial Revolution had a big impact on the inequality between people and countries, giving the new parameters of what is a rich or poor country. The Industrial Revolution gives a new sense to the word "Powerful country" and this was if you are an industrialized country you have power and if you are non-industrialized you are weak. To keep the factories, machines and workers in a good state the countries needed primary material so one of the industrialized countries, England had an idea, to extract these primary materials from the non-developed countries, then other industrialized countries like Japan, the United States and Russia did the same strategy as England, they used the poorest countries to their own benefit, and the imperialism began in this point: this was the practice extending the power of powerful countries in the poorest ones, controlling the economy, production and politics, making the wealthy nations more wealthy and the poorest nations poorer. Inside the countries, the tight gap between the social classes became bigger, and the powerful people started to make the technologies of machines, doing the process faster and cheaper, so many workers lost their jobs because the machines could replace them, creating more inequality between the social classes.

International wealth distribution

A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. The bottom half of the world adult population owned barely 1% of global wealth. In 2013, Oxfam International released a report to The World Economic Forum that the richest 1% owns 48 percent of the global wealth. In 2014, Oxfam reported that the 85 wealthiest individuals in the world have a combined wealth equal to that of the bottom 50% of the world's population, or about 3.5 billion people. More recently, in January 2015, Oxfam reported that the wealthiest 1 percent will own more than half of the global wealth by 2016.
The major component of the world's income inequality is comprised by two groups of countries.
Economic inequality often closely matches a lognormal or Pareto distribution both across economies and within them.
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". Convergence is a matter of current research and debate, but most studies have shown lack of evidence for absolute convergence based on comparisons among countries.
According to current research, global income inequality peaked approximately in the 1970s when world income was distributed bimodally into "rich" and "poor" countries with little overlap. Since then inequality have been rapidly decreasing, and this trend seems to be accelerating. Income distribution is now unimodal, with most people living in middle-income countries.

Global Poverty

Global poverty is when people within certain countries are living on less than a dollar a day.
There are six different aspects that can attribute to global poverty.

Six Dimensional Aspects

1. Hunger: Countries without the proper amount of food to survive.
2. Mental state: This is where people or the country as a whole are feeling powerless, ashamed, or humiliated. This is connected to the fact that they must rely or ask other countries for help and are unable to survive on their own.
3. Poor groundwork: Lack of roads, clean water, transportation, etc. meaning that they do not have a stable foundation in order to provide these things.
4. Education: People do not have access to proper education or any education at all.
5. Health: Countries are unable to provide the proper health care that many people need in order to survive.
6. Lack of income: People within a poor country tend to put income aside and focus on their family, physical, and environmental assets.

Lack of Decline in Global Poverty

Along with these six-dimensional aspects, there are also some more things preventing the decline of global poverty. One reason is because of the ongoing armed conflicts going on throughout countries. Some countries who are suffering from poverty, and are not receiving aid from other countries due to not wanting to be a part of the conflict. Countries do not want to cause problems with other countries, so they decide to stay neutral and not help.
A second reason for number of countries in poverty not declining would be that there is not a lot of support from other countries. Many rich countries, such as the United States, do not give a lot of support to countries in poverty. Again, this can connect to the sense of not wanting to get involved with countries in conflict.
The final reason has to do with certain organizations not knowing where and what to start with. These organizations can see that there are a lot of countries who are in poverty and need help. However, it can be a challenge deciding who gets what money and how much they get. These organizations do not have unlimited funds and need to be careful where money is being used.

[Global Poverty Project]

The Global Poverty Project is an organization that works to help reduce the global poverty percentage. They have currently contributed $35 billion in order to help provide the care many people need. This money has been earned through fundraisers and donations.
This organization has provided clean water and sanitation stations for people in countries like India. Sanitation stations help avoid contaminating clean water that can be used for drinking or cooking. They have also helped with providing education in countries where education has taken a back seat.
The Global Poverty Project was started in 2008 and has headquarters in Canada, The United Kingdom, and Australia. There is also an office in New York. They project that by 2030, there will be a major decrease in those who are living in poverty and an increase in education, healthy living, and the global economy.

Comparisons

Some of the economic disparities among nations can be better appreciated when rich and poor countries or societies are contrasted. For example, with regard to income inequality, according to some estimates by Branko Milanovic from the World Bank:
With regard to wealth inequality, a 2006 report with data from 2000 concluded that:
James Davies, Professor of Economics at the University of Western Ontario, and one of the authors of the report, said: "Income inequality has been rising for the past 20 to 25 years and we think that is true for inequality in the distribution of wealth." "There is a group of problems in developing countries that make it difficult for people to build assets, which are important, since life is so precarious."
Other disparities can be better appreciated when rich individuals are compared against poor individuals. According to some estimates, for instance:
As of 2017, over 70% of the world's adults have under $10,000 in wealth. This can be seen through the bar graph on the right.
This bar graph also shows that as the value rises, the total percentage of adults falls. This is because there are not a large percent of people who make a lot nor have a lot. Only.7% of the world has one million dollars or more in wealth.
However, looking at the wealth share, this number continues to rise. This is because those few people who have higher assets in wealth, typically hold a larger percentage of the world's wealth.
Wealth:
Income:
Welfare spending: If East Asia and southern Latin American countries are taken out of the equation, the differences in government spending between the industrialized and developing is as follows:
Therefore, in contrast to the North, the developing states are far more vulnerable to the pressures arising from economic globalization. Overall, social spending is far lower in the South, with some regions registering just a few percentage points of GDP. However, some people argue that decrease in welfare spending is not an issue of global inequality but rather a common phenomenon in an era of globalization.

Potential Solutions

Some potential solutions to help with decreasing the inequality levels are:
Education and Family Planning: Many countries with education access have higher income levels. Part of this is because people are striving for a career and are striving for higher education. Countries that do not have access to education have lower incomes. Women who have access to an education will have fewer children because they are focusing on building themselves.
Democracy : Democracy offers people the opportunity to vote on people in power or specific issues. This can help with people having a say in what goes on and what happens within their country, making decisions on where money is spent and programs that can help provide for the poor.
Government policies: The government could play an important role on the economy and poverty. The government can create policies that can aid the poor and help provide proper medicine to those in need.
Pay attention to women: Women play a large role in inequality through the raising of children. They help with children's education and they encourage their children to reach their potential. If women are feeling good about themselves, then they can take that positive attitude in order to help raise their own children for success.
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. By starting the proper groundwork for crops, it will help provide the nutrition that many people need. Livestock can provide milk, eggs, meat, and cheese for consuming. This can also help provide fur and feathers for making clothing and other goods, which could be sold to help with low income.
Think Small: Having volunteers travel to poor countries in order to help can make a large difference to those countries. Going to help build homes, do studies on the area, or even to help provide food/clean water can make a large difference to developing countries.

Views on economic inequality

There are various schools of thought regarding economic inequality. Marxism favours an eventual society where distribution is based on an individual's needs rather than social class or other such factors. Meritocracy favours an eventual society where an individual's success is a direct function of contribution reflecting an individual's skills and effort, and detrimental inasmuch as it represents inherited or unjustified wealth or opportunities. Classical liberals and libertarians generally do not take a stance on wealth inequality but believe inequality under the law regardless of whether it leads to unequal wealth distribution. Arguments based on social justice favour a more equal distribution making claims economic inequality weakens societies, although counter-arguments are made that inequality might benefit societies.