GLOBAL INCOME

INEQUALITY
BY : RO D C H R I S T I A M AY E A ZA RCO N O ROZC O

Income inequality is a global issue and one that has gained

greater prominence in the last several years. Politicians and
economists have debated solutions to curb the exponentially
growing wealth of the few and improve the economic prospects
of the middle and lower classes. Economist and social scientists
have opposing views on how to solve the dilemma. However, a
few nations, such as Denmark, Slovenia and Czech Republic,
have managed to contain or decrease income inequality.
 WHAT IS INCOME INEQUALITY?
Income inequality is manifested in high level of poverty and
disparities in wealth distribution. According to Inequality.org.
“income inequality refers to the extent to which income is
distributed in an uneven manner among a population.”

INCOME DISTRIBUTION 1970s-2000s

Global income inequalities has existed for millennia,
though its shape has changed overtime.
In 1975, the global income distribution was bimodal. In
other words, the developed world was 10 times richer than
the poor developing world.
INCOME DISTRIBUTION 2000s-PRESENT
Global income inequality among developing nations started
to decrease, while developed nations saw a continued
increase.
According to Christopher Lakner, the increase in income
near the median of the global income distribution was gained
primarily by populations in developing countries, such as
China and India. Conversely, the poor or lower middle classes
in rich countries, such as the U.S., saw incomes stagnate.
 THE CAUSES OF INCOME INEQUALITY
TWO MAJOR CAUSES OF INCREASING
INCOME DISPARITIES WITHIN NATIONS
• Returns to private investments
(in part due to trade) are
greater than overall economic
growth.
• A declining growth rate among
the overall population.
Income inequality occurs when
the rate of return enjoyed by
investors and capitalists is greater
than the overall growth of the
economy.
The 1980s and ‘90s saw a
decrease in economic growth in
developed countries as a result
of declining population growth
and relatively high levels of
return.
 T H E

THIRD WORLD A N D
THE GLOBAL SOUTH
During the Cold War, the term Third World referred to the
developing countries of Asia, Africa, and Latin America, the
nations not aligned with either the First World or the Second
World.
 WHAT IS THIRD WORLD?
Strictly speaking, "Third World" was a political, rather than
an economic, grouping. In the decade following the fall of the
Soviet Union and the end of the Cold War in 1991, the term
"Third World" was used interchangeably with "developing
countries", but the concept has become outdated as it no longer
represents the current political or economic state of the world.

The three-world model arose during the Cold War to

define countries aligned with NATO (the First World), the
Eastern Bloc (or Second World, although this term was less
used), or neither (the Third World).
 WHAT IS GLOBAL SOUTH?
The Global South is an emerging term used by the World
Bank to refer to low and middle income countries located in
Asia, Africa, Latin America and the Caribbean which contrast to
the high income nations of the Global North.

The Global South is one half of the global North–South

divide, and does not necessarily refer to geographical south.
Most people in the Global South live within the Northern
Hemisphere.
The term was first used as an alternative to "third world".
 These nations are often
described as newly
industrialized or in the
process of industrializing,
are largely considered by
freedom indices to have
lower-quality democracies,
and frequently have a
history of colonialism by
Northern, often European
states.
The BRIC countries, Brazil,
India and China, with the
exception of Russia and along
with Indonesia, have the largest
populations economies among
Southern states.
The overwhelming majority
of these countries are located in or
near the tropics and have at least
one neglected tropical disease.