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World: Analysis From Washington -- When National Incomes Diverge

  • Paul Goble

Washington, 24 May 2000 (RFE/RL) -- The gap in per capita incomes between the citizens of rich and poor nations -- now at its highest level in history -- is increasing so rapidly that it is sparking concern about the future stability of the international system.

One of those speaking out on this danger is United Nations Secretary-General Kofi Annan. In a commencement address at the University of Notre Dame on Sunday, Annan warned of dangers ahead and sharply criticized the United States for not spending more on foreign assistance to help the poorest of the poor.

His comments appear to have been provoked less by American behavior than by data generated by the UN's World Institute for Development Economics Research and analyzed by experts at the United Nations Development Program.

According to these findings (available online at, average individual income of those in the richest fifth of the world's countries relative to that same measure in the poorest fifth rose from a ratio of 30 to one in 1960 to 60 to one in 1990 and to 74 to one as of last year.

Moreover, according to the UNDP's Richard Jolly, "today, more than 80 developing and transition countries have per capita incomes lower than ten or more years ago," with 20 of them now having per capital incomes lower than they did in 1960. And these 80 countries include "nearly a quarter of the world's population."

Compounding this divergence of incomes among countries has been growing differences in incomes within them, a pattern that means the difference between the wealthiest and the poorest is even greater than these UN figures suggest.

Many analysts and political leaders, especially in the wealthier countries, have argued that this growth in income differentials within and among countries is inevitable in an era of technological change and the globalization of trade. And they have implied that in time, economic development will cure the very problem it is causing now.

But other analysts and political figures, especially in the poorer states, reject that view. They point out that the data do not support such a conclusion. On the one hand, income inequality has not developed at the same rate within or among countries. And on the other, they note that economic gains over the past 40 years have made the problem still worse.

And they suggest that unless something is done soon to alleviate these growing income differentials, deteriorating conditions may lead to a sharpening of class struggles between the rich and the poor within countries and also to open conflict between wealthier countries and poorer ones at the international level.

But among those who are concerned about the likelihood that economic differences will trigger political controversies, there is little agreement on what should be done to help the poor and those who are becoming poorer still so that their suffering does not provoke a political crisis.

Some like the UN's Annan argue for expanded assistance, for the transfer of funds from the richest to the poorest countries. Such transfers can and do alleviate immediate suffering, but as other analysts point out, they do little or nothing to address the underlying sources of growing income divergences.

Among the people in this camp is the UNDP's Jolly. In the current issue of the World Institute for Development Economics Research journal, "Wider Angle," he argues that "the primary long-run solution must be accelerated rates of pro-poor growth by developing countries themselves."

Such a strategy, he continues, would include large-scale investment in primary education and basic health care, with international organizations like the IMF and the World Bank picking up part of the tab for this "poverty reduction" approach.

Securing international support for fighting poverty, Jolly argues, will not be easy. But the consequences for everyone, both rich and poor, of not providing it could present challenges that the rich countries would find even more difficult to face.