Distribution of Wealth/Income

10.1 HSC Topic One – The Global Economy Investigate the global distribution of income and wealth--

When analysing the specific distribution of wealth and income at a global level, the frequency of the term ‘Inequality’ is quite often brought to attention. This is simply because (and as expanded upon below) the distribution of wealth is anything but equal. To present a proverb or maxim of sorts, “The rich continue getting richer, while the poor; poorer”, generally summing up the current state of the global economy.
Although as time progresses, various international organisations such as the WTO aim to indiscriminately suggest policies or changes required to allow for growth in countries which have been stunted by surrounding/dominant world powers such as; United States of America and the European Union.
The Pyramid below shows how 32 million people, representing 0.7% of the world’s adult, population control $US98.7 trillion or about 41% of the world’s wealth.
On the base of the pyramid we see that 3.2 billion people, representing 68.7% of the world’s adult population, control just 3% of the world’s wealth, or about $US7.3 trillion.
Source: Credit Suisse (via @FGoria)
These statistics have also been backed up by a report by the UN stating that 50% of the population of adults in the world own 1% of global wealth and 1% of adults own 40% of global wealth which is simply staggering figures displaying the distribution (or rather, concentration) of wealth and income at an economically international level.
Some other notable highlights include:
Global household wealth in mid-2012 totaled $223 trillion, equivalent to USD 49,000 per adult in the world. This is a decline of $12.3 trillion mostly due to a $10.9 trillion decline in European wealth, however it is double the $113 trillion in total wealth at the start of the millennium
Losses in Africa, India and the Latin American countries were offset by modest gains in North America (USD 880 billion) and China (USD 560 billion),
CS expects total household wealth to rise by almost 50% in the next five years from $223 trillion in 2012 to $330 trillion in 2017. What CS does not say is that the bulk of this increase is courtesy of Federal Reserve-facilitated wealth redistribution from the lower and middle classes to the upper class.
The number of millionaires worldwide is expected to increase by about 18 million, reaching 46 million in 2017.
China is expected to surpass Japan as the second wealthiest country in the world. However, the USA should remain on top of the wealth league, with $89 trillion by 2017.
Statistics aside, wealth distribution and income inequality are two separate concepts, in the sense that the former refers to the ownership of assets in a particular society shared among its members while the latter exclusively focuses upon the income counterpart. Yet both combine to chart the economic gap with a country’s wealthiest and poorest residents.

The rising inequality of World Income Distribution_

Robert Hunter Wade writes in an article featured in IMF’s quarterly magazine, “Finance & Development” ___
“… a lot is at stake in the question of whether world income distribution has become more, or less, equal over the past twenty years or so. It turns out that there is no single correct answer, because the answer depends on which combination of measures one adopts. It depends on (1) the measure of inequality (a coefficient like the GINI, or quintile or decile (tenth) ratios), (2) the unit of inequality (countries weighted equally, or individuals weighted equally and countries weighted by population), and (3) the method of converting incomes in different countries to a common numeraire (current market exchange rates or purchasing power parity (PPP) exchange rates). Treating these as either/or choices yields eight possible measures, each with some plausibility for certain purposes. Then there is the further question of what kind of data is used—the national income accounts or household income and expenditure surveys.
My reading of the evidence suggests that none of the eight alternative measures clearly shows that world income distribution has become more equal over the past twenty years. Seven of the eight show varying degrees of increasing inequality. The eighth—the one that uses the Gini coefficient, countries weighted by population, and purchasing power parity—shows no significant change in world income distribution.” [1]
Over the last ten years economic inequality has presently been on the increase, specially so for developed countries where it has been contained in the past. This is to show that even within a seemingly wealthy and poor-deprived country such as Europe/UK, inequality is ever present [and increasing].