Economic Disparity Economic disparity – the economic differences between the “haves” and “have nots” or the rich and the poor. While globalization has led to an overall trend of increased wealth in the world, this wealth has not been distributed equally amongst the inhabitants of the world. If the total value of your assets is at least . . . (Can.) $2113 $3439 $6177 $13 854 $59 694 $146 832 $503 220 You are in the world’s richest . . . 50% 40% 30% 20% 10% 5% 1% (This data is for adult individuals, shows the value of assets (real estate, investments, personal property) needed to be included various global wealth levels. Data is from 2000 Disparity Among Nations -By 2006 the world’s 20 richest countries had per-capita GDP’s of more than US$30 000 per year while the 60 poorest countries had per-capita GDP’s of less than US$3000 per year. -The assets of the 3 wealthiest people in the world total the same as the total GDP of the poorest 47 nations. -About 900M people live on less than a US$1 per day (this is extreme poverty). Causes of Economic Disparity Impact of Colonialism – Most poor countries were once colonies. Mother countries took advantage of the colonized people and land and then granted independence when to countries leaving them with debt, little infrastructure and little political training. Lack of Investment – Few nations from around the world invest in Africa due to poverty, a lack of infrastructure and mistrust for government. Population Growth – Poorer countries tend to have significantly higher growth rates. Economic growth therefore provides at best a miserable level of existence for more and more people. The government cannot keep pace in providing social services to its people. Disease – Governments do not have the money to invest into healthcare and therefore disease costs are significant. Celebrity diseases such as AIDS gain much attraction but lesser and curable diseases such as malaria and tuberculosis continue to cause problems and take lives. Foreign Debt – In 1977, the 60 poorest nations owed US$550B for loan repayments. In the following 30 years, they paid back US$540B yet still owe US$523B. In other words, they paid off 13B of the principal!!! As a result, they have little money to invest within their own country. The G8 minus Russia (joined in mid-1990’s) hold most of the 3rd world debt. War – Many poor countries, especially those in Africa, have to deal with the costs of war. In 2000, there were 49 armed conflicts, 31 in full out war. Since 1945, 90% of all wars have occurred in developing countries. Leadership Issues – Many poor nations have leaders who have little interest or skill in improving the economic lot of their citizens. Many have stolen millions to even billions of dollars for themselves and their families. When leaders emerge who put the interests of their country ahead of those of the international business community, they often face opposition. Trade Inequities – The G8 countries (F/C/US/R/UK/J/I/G) (minus Russia) have traditionally used tariff and non-tariff barriers to restrict imports from developing countries even though they usually argue for free trade. Tariffs placed by these countries on African and Middle Eastern clothes and cloth are 4 times as high as tariffs on similar products from G8 countries. Lack of Control – Citizens of the country have little power over their own affairs as many major decisions are made outside of their country by international groups like the UN, World Bank, IMF, MNC’s, and powerful governments of the West.