FACTOID # 15: A mere 0.8% of West Virginians were born in a foreign country.

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Encyclopedia > International inequality
Per capita income ratio (PPP) around the world in the year 2000. Each color represents the ratio of income in the country to the world mean. Countries colored red have less than one quarter of the world mean income. Countries colored dark blue have more than four times mean world income. The remaining colors indicate incomes between these extremes: dark pink (0.25-0.75), light pink (0.75-1.25) and light blue (1.25-4). Source: UC Atlas of Global Inequality.
Log-lin graph showing an exponential pattern in the GDP per capita ranking. Countries were ranked from the richest to the poorest in the x axis. The y axis uses a logarithmic scale. (Calculation based on data from list of countries by GDP (PPP) as of May 2005).

The major component of the world's income inequality (the global Gini coefficient) is comprised by two groups of countries (called the "twin peaks" by Quah [1997]). The Gini coefficient is a measure of inequality developed by the Italian statistician Corrado Gini and published in his 1912 paper VariabilitÃ  e mutabilitÃ . It is usually used to measure income inequality, but can be used to measure any form of uneven distribution. ... Danny Quah is Professor of Economics at the London School of Economics and Political Science. ...

• The first group has 13% of the world's population and receives 45% of the world's PPP income. This group includes the United States, Japan, Germany, France and the United Kingdom, and comprises 500 million people with an annual income level over 11,500 PPP\$.
• The second group has 42% of the world's population and receives only 9% of the world PPP income. This group includes India, Indonesia and rural China, and comprises 2,100 million people with an income level under 1,000 PPP\$. (See Milanovic 2001, p.38).

Economic inequality is generally considered to be approximately exponential as one traverses the strata of national and world societies from top-to-bottom. More sophisticated models of income distribution may apply (see Pareto distribution). The exponential function is one of the most important functions in mathematics. ... The Pareto distribution, named after the Italian economist Vilfredo Pareto, is a power law probability distribution found in a large number of real-world situations. ...

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" [1]. 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 (with regard to this debate see for instance Cole and Newmayer (2003) or [2]).

# Comparisons

Some of the economic disparities among nations can be better appreciated when rich and poor countries or societies are contrasted. For example, according to some estimates by Branko Milanovic from the World Bank: Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means...

• "An American having the average income of the bottom US decile is better-off than 2/3 of world population." (Milanovic 2000, p.50)
• "The top 10 percent of the US population has an aggregate income equal to income of the poorest 43 percent of people in the world, or differently put, total income of the richest 25 million Americans is equal to total income of almost 2 billion people." (Milanovic 2000, p.50)

Other disparities can be better appreciated when rich individuals (or corporations) are compared against poor individuals. According to some estimates, for instance:

• "The richest 1 percent of people in the world receive as much as the bottom 57 percent, or in other words, less than 50 million richest people receive as much as 2.7 billion poor." (Milanovic 2000, p.50)
• The three richest people possess more financial assets than the poorest 10% of the world's population, combined. [citation needed]
• As of May 2005, the three richest people in the world have assets that exceed the combined gross domestic product of the 47 countries with the least GDP, (calculation based on data from list of countries by GDP (PPP) and list of billionaires). However, the three richest individuals' wealth consists largely of stock in their own companies. The value of these assets was largely created by the economic conditions in their respective countries.
• As of May 2005, the 125 richest people in the world have assets that exceed the combined gross domestic product of all the least developed countries (calculation based on data from list of countries by GDP (PPP) and list of billionaires).

Finance studies and addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks entailed in their projects. ... These are two lists of countries of the world sorted by their Gross domestic product (GDP), the value of all final goods and services produced within a nation in a given year. ... Forbes magazine annually lists the worlds wealthiest individuals: The Worlds Billionaries. ... The category of least developed countries (LDCs) is a social/economic classification status applied to around 50 countries around the world by political scientists and economists through the United Nations. ... These are two lists of countries of the world sorted by their Gross domestic product (GDP), the value of all final goods and services produced within a nation in a given year. ... Forbes magazine annually lists the worlds wealthiest individuals: The Worlds Billionaries. ...

# Causes of international inequality

There are many hypotheses about what may cause international inequality. For example, poor countries may have been subjected in the past or present to exploitation, colonialism, neocolonialism or imperialism. In this context, the dependency theory, the Marxian point of view on imperialism and even the anti-globalization movement may be relevant. New institutional economists, like Douglass North, emphasize the role of certain institutions, like those protecting property rights, in the development of rich nations. Other economists think that internal national inequality and corruption may also be important factors in underdevelopment. Many other causes may play a role, as it is case in poverty. With very limited success, even national mean IQ differences have been proposed as hypothetical causes (see IQ and the Wealth of Nations). The term exploitation may carry two distinct meanings: The act of utilizing something for any purpose. ... World map of colonialism at the end of the Second World War in 1945. ... Definition from Oxford English Dictionary: The use of economic, political, cultural, or other pressures to control or influence another country; esp. ... Imperialism is a policy of extending control or authority over foreign entities as a means of acquisition and/or maintenance of empires, either through direct territorial conquest or through indirect methods of exerting control on the politics and/or economy of other countries. ... Dependency theory is the body of social science theories by various intellectuals, both from the Third World and the First World, that create a worldview which suggests that the wealthy nations of the world need a peripheral group of poorer states in order to remain wealthy. ... Imperialism is a policy of extending control or authority over foreign entities as a means of acquisition and/or maintenance of empires, either through direct territorial conquest or through indirect methods of exerting control on the politics and/or economy of other countries. ... Wikipedia does not have an article with this exact name. ... New institutional economics is a school of heterodox economics, which builds on old institutional economics arguments about the embeddedness of economic activity in social and legal institutions, using Ronald Coases fundamental insight about the critical role that transaction costs play in determining economic structures and peroformance. ... Douglass Cecil North (born November 5, 1920) is co-recipient of the 1993 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. ... Underdevelopment is the state of an organism or of an organisation (e. ... A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows his find. ... IQ and the Wealth of Nations is a controversial 2002 book by Dr. Richard Lynn, Professor Emeritus of Psychology at the University of Ulster, Northern Ireland, and Dr. Tatu Vanhanen, Professor Emeritus of Political Science at the University of Tampere, Tampere, Finland. ...

This article needs to be cleaned up to conform to a higher standard of quality. ... Development economics is a branch of economics that deals with the study of (i) macro - the causes of long term economic growth, and (ii) micro - the incentive issues of individual households and firms, especially in developing countries. ... Development geography is the study of the Earths geography and its relationship with economic development. ... A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows his find. ... The Millennium Development Goals are eight goals that all 191 United Nations member states have agreed to try to achieve by the year 2015. ...

# References

Books
Papers
• Milanovic, Branko (World Bank), True world income distribution, 1988 and 1993: first calculation based on household surveys alone, The Economic Journal, Volume 112 Issue 476 Page 51 - January 2002. Article: [3]. Actual report on which the article is based: [4]. News coverage: [5] and [6].
• Cole, Matthew A. and Neumayer, Eric. The pitfalls of convergence analysis: is the income gap really widening? Applied Economics Letters, 2003, vol. 10, issue 6, pages 355-357 [7]
• Quah, Danny (1997), "Empirics for growth and distribution: stratification, polarization and convergence clubs", London School of Economics and Political Science, Center for Economic Performance Discussion Paper No. 324, pp. 1-29. [8]
• Martin Ravallion, World Bank, 5 May 2005, Policy Research Working Paper no. WPS 3579, A poverty-inequality trade-off?
• Barro, Robert (2000), "Inequality and Growth in a Panel of Countries", Journal of Economic Growth, vol. 7, no. 1.

Richard Lynn is a professor of psychology in Northern Ireland. ... Tatu Vanhanen is a Professor Emeritus of Political Science at the University of Tampere, Tampere, Finland. ... IQ and the Wealth of Nations is a controversial 2002 book by Dr. Richard Lynn, Professor Emeritus of Psychology at the University of Ulster, Northern Ireland, and Dr. Tatu Vanhanen, Professor Emeritus of Political Science at the University of Tampere, Tampere, Finland. ... Danny Quah is Professor of Economics at the London School of Economics and Political Science. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means... May 5 is the 125th day of the year in the Gregorian Calendar (126th in leap years). ... Robert Barro Robert Barro (born 1944) is an influential macroeconomist and the Wesley Clair Mitchell Professor of Economics at Columbia University. ...

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