Bryan Collado, Maria Aldrich, Diogenes Rosario
Introduction
In this chapter, a general assessment of the current global economy will be made which will allow for an extrapolation of future trends. More specifically, this chapter will analyze the global economy through topics such as, global income inequality trends, income polarization, investment in developing countries, availability of resources across countries, social mobility, etc…
In the next section, we will review the current state of income inequality from a global perspective. More specifically, trends across advanced economies, in addition to developing and emerging economies, will be examined. Then, key drivers of income inequality will be examined to explain some of the differences between developed and developing nations with respect to income disparities.
Income Inequality
In order to understand income inequality, a breakdown is intrinsic. Income is the flow of cash or cash-equivalents received from work, capital, or land. It can refer to one’s earnings or remaining revenues after expenses and taxes have been deducted. Income consists of wages or salaries, interest or profits, and rent. Income inequality refers to the concentration of income that is unevenly distributed amongst a population. It’s often described as the gap between the richest and the poorest individuals.
Income inequality, measured by the portion of the richest 1 percent and poorest 10 percent of the adult population, has steadily risen since the 1980s (Dervis & Qureshi 1). Income inequality, within nations, has reached levels that have not been seen since the pre-war period. As a result, the topic of income inequality has become one of great debates of current times due to its gained attention and above all, significance. According to a 2016 Global Wealth Report, income inequality is projected to continue rising across the world as a whole. While thevbottom half of the world adult population owns less than 1 percent of all global assets, the richest top 10 percent of adults accounted for about 90% of all global assets (Dervis & Qureshi 1 ). In essence, the world’s richest individuals account for the majority of the world’s wealth. On the other side of the spectrum, the world’s poorest individuals account for a relatively small portion of all global wealth.
Income Inequality Across Developing Countries
In most major developing economies, income inequality has risen over the last 30 years (Dervis & Qureshi 1). Between 1990 and 2010, there was an average of an 11% increase in all developing countries, according to a report released by the UN Development Programme. The largest increases have taken place in the economies of China, India, and South Africa. On the contrary, the region of Latin America has experienced some decline with respect to income inequality, specifically in the economy of Brazil, the largest economy in the Latin American region. Nonetheless, income inequality in Brazil remains the highest in relati