Wealth inequality widening worldwide

January 4, 2007

Free Market Foundation

The world’s richest two per cent of adults own more than half of global household wealth, while half the world’s population own only one per cent, according to a new report from the United Nations.

According to the World Institute for Development Economics Research of the United Nations:

In 2000, the top 1 per cent of the world’s population some 37 million adults with a net worth of at least $515,000 accounted for about 40 per cent of the world’s total net worth, according to the report.

The bottom half of the population owned merely 1.1 per cent of the globe’s wealth.

The net worth of the world’s typical person whose wealth was above that of half the world’s population and below that of the other half was under $2,200.

The widening gap between the global haves and the have-nots in large measure reflects the failure of less-developed countries to develop, while rich countries have experienced fast economic growth and a spectacular build-up of assets, according to the UN. For example:

The United States accounted for 4.7 per cent of the world’s population but 32.6 per cent of the world’s wealth; nearly 4 out of every 10 people in the wealthiest 1 per cent of the global population were American.

By contrast, the average Chinese had a net worth of roughly $2,600, at the official exchange rate, and while home to more than a fifth of the world’s population, had only 2.6 per cent of the world’s wealth.

India, with 16.8 per cent of the world’s people, accounted for only 0.9 per cent of the world’s wealth.

However, global inequality in wealth may well be somewhat lower today. The data in the report is six years old. Fast growth and wealth accumulation in China and India since 2000 are likely to have closed the average gap between the rich world and the poor.

Source: Eduardo Porter, Study Finds Wealth Inequality Is Widening Worldwide, New York Times, December 6, 2006; based upon: James B. Davies, Susanna Sandstrom, Anthony Shorrocks and Edward N. Wolff, The World Distribution of Household Wealth, World Institute for Development Economics Research of the United Nations, December 5, 2006.

For text (subscription required): http://www.nytimes.com/2006/12/06/business/worldbusiness/06wealth.html?adxnnl=1&adxnnlx=1165837474-w5NLA/eQz0RV3AuXN2Igqw

For study text: http://www.wider.unu.edu/research/2006-2007/2006-2007-1/wider-wdhw-launch-5-12-2006/wider-wdhw-report-5-12-2006.pdf

For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26

FMF Policy Bulletin/ 19 December 2006