1. Global Economic Disparities

2. ▪Enormous economic disparity exists in the world ▪The situation has been described as a race to the bottom ▪The U.N. reports that in 100 countries the per capita income has dropped from the maximum level they reached ▪Many countries reached their maximum in the 1960's and 1970's

3. Global Economic Disparities ▪By the end of the 1990's the 13 richest countries had per capita GDP’s of more than U.S. $20 000 per year ▪The 26 poorest countries have a GDP less than U.S. $ 350 per year

4. Global Economic Disparities ▪200 million people saw incomes drop between 1965 and 1983 ▪Between 1980 and 1995 five times as many saw a decline ▪At the same time some have enjoyed remarkable success ▪The traditional “fat cats” - most members of the OECD (Organization for Economic Co-operation and Development) - have maintained or increased their growth X 5 = + =

5. Global Economic Disparities ▪The “Asian Tigers” - Taiwan, South Korea, Singapore and Hong Kong have a model for growth and prosperity that the developing world has tried in vain to copy ▪Much of the growth in these regions is fueled by foreign investment (Hong Kong) or by taking advantage of significant trade barrier reductions (Taiwan, South Korea) ▪Hong Kong has experienced reduced growth since the Chinese reclaimed the territory in 1999

6. Global Economic Disparities ▪Less than 20% of the global GDP is produced in the developing world but there are 80% of the people there

7. Global Economic Disparities ▪Over the next 25 years the world population will grow by 2 billion ▪97% of this growth will be in the developing world ▪The vast majority of the people in the developing world will be poor ▪This will lead to a great reduction in opportunity for human development ▪The gap between rich and poor will grow steadily

8. Global Economic Disparities ▪Income disparities can be measured using a statistical tool called the GINI INDEX ▪Gini values can range from 0 (income is perfectly distributed amongst everyone) to 1 (all the income is held by one person) ▪The index is sometimes given as decimals and sometimes as whole numbers ▪In 1988 the world Gini index was 0.625 but by 1993 it was 0.66

9. Global Economic Disparities ▪The Gini Index can also be used to show disparities within each nation ▪Many countries exceed 0.6, creating a concentration of wealth in the hands of a few ▪The U.N. uses a Gini value of 0.4 as a warning that a country’s economic disparities are becoming excessive ▪Canada’s Gini Index in 1994 was 0.315, the U.S. had a value of 0.408 ▪By 2006 the Canadian Index grew to 0.326 while the American index was stable

10. Global Economic Disparities ▪Dire poverty is defined as a per capita income of less than $1US per day ▪India, an emerging economy still has 47% of its population living in dire poverty ▪A further 40% live on $1-$2 per day ▪Zambia, an African nation wracked by civil war for many years has 85% of its population living in dire poverty and another 13% living on $1-$2US per day

11. Global Economic Disparities ▪The causes of disparity are very complex ▪Many nations remain in dire poverty because they can not fund an economic takeoff ▪The population explosion caused by reducing the death rate has not been accompanied by a similar decline in the birth rate which leaves more people to provide for with limited funds ▪The effects of colonization are continuing to disrupt many countries

12. Global Economic Disparities ▪Foreign debt creates a barrier to economic growth as well ▪In 2000 developing nations owed a conbined 2.5 trillion dollars to creditors in developed nations ▪Debts are so high that after paying interest on the loans there is little left for economic development, education or health care

13. Global Economic Disparities ▪Poor nations are often dealing with war and/or civil unrest arising from tribal conflicts or the presence of competing warlords ▪Africa is very vulnerable to this given the arbitrary borders created by European colonists ▪The poorest countries often have to deal with leaders who have little interest or skill in improving the economic situation of their people

14. Global Economic Disparities ▪The Group of Eight (G8) nations, excluding Russia, have traditionally used tariffs and non- tariff barriers to restrict imports from developing countries ▪For example, tariffs on cloth and clothing from Africa and the Middle East are 4 times higher than those levied against other G8 countries

15. Global Economic Disparities ▪Most developing nations rely on foreign capital and investment to develop their economies, either as private corporations or in the form of foreign aid ▪This means that many critical decisions are being made by the U.N., the World Bank, the I.M.F., governments of first world nations and by the management of transnational corporations