Getting Better

Most people know that there is not only an income gap within economies but also across different countries. But do you know how large this gap actually is?

Here’s a fact that’ll shock you: around 1 billion people in the world live on less than a dollar a day.

But how is this possible when Western countries have developed so much over the past fifty years?

One reason is that there has been a forty-year stagnation in African incomes since the 1960s. For example, Senegal had an income per capita of $1,776 in 1960 and $1,407 in 2004. The gross domestic product (GDP) per capita in the United States, in contrast, was around seven times greater than in Senegal in 1960 and around twenty-six times larger in 2004. And while the average rural Zambian can expect to earn an approximate lifetime income of about $10,000, the average resident of New York City will earn $4.5 million.

Another reason why the gap is so large is that rich countries have always grown more rapidly than poor countries have.

In fact, the richest-poorest gap between countries grew from around thirty-three-fold in 1950 to around 127-fold today.

For example, in 1850, the Netherlands was the richest country in the world, with an income per capita of $2,371. In 2008, income per capita in the Netherlands was $24,695, while in that same year, in Congo-Zaire, income per capita was only $249. Or consider India in the 1990s: in 1993, India's bottom 40-percent had an income comparable to that of an English peasant in the 1400s!

Now that you know more about the actual gap between the richest and poorest countries in the world, you understand how lucky you are if you live in one of the richer countries.