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Trends in inequality
Inequality is a concept with many facets which can be measured in different ways, and
for which data on trends over time are available for fewer countries and are less reliable
than data on the incidence of poverty. Looking at inequality within countries, regions,
and the world, there are some results on which there appears to be broad agreement.
- Inequality is very high in many countries (see Table 7
for examples).
At the country level:
- Trends in inequality within countries show no overall statistical pattern. The major
exception is the sharp, systematic worsening in Eastern Europe and Central Asia since the
transition. In the rest of the developing world, there is increasing evidence of forces
tending to increase inequality. However, these are often offset by countervailing forces,
especially from the expansion of education.
- Countries that experienced the largest decreases in Gini coefficients are Korea,
Indonesia and Malaysia between the early 1980s and the late 1980s-early 1990s.
- Countries that experienced the largest increases in Gini coefficients over roughly the
same period are China, Russia, and Thailand (and Malaysia's decline was reversed in the
early 1990s). Generally, the increases experienced by all FSU countries are quite large.
- Countries as diverse as Brazil, Bangladesh, China, Malaysia and Thailand have
experienced increases in inequality over the past decade or so (for Brazil between 1981
and 1990).
- There is no necessary link between crises and rising inequality: in past Latin American
crises inequality often rose; in Indonesia inequality appears to have actually fallen with
a collapse in incomes of the top half of the distribution
Table 7. Percentage share of income (poorest and
richest 20 percent of the population) a
| High Inequality Countries |
Lowest 20% |
Highest 20% |
|
Low Inequality Countries |
Lowest 20% |
Highest 20% |
| Guatemala |
2.1 |
63.0 |
|
Slovak Republic |
11.9 |
31.4 |
| Paraguay |
2.3 |
62.4 |
|
Czech Republic |
10.5 |
37.4 |
| Panama |
2.3 |
60.4 |
|
Austria |
10.4 |
33.3 |
| Brazil |
2.5 |
64.2 |
|
Norway |
10.0 |
35.3 |
| Colombia |
3.1 |
61.5 |
|
Finland |
10.0 |
35.8 |
Note: a Latest available survey year. Source:
World Bank, World Development
Indicators 1999.
At the regional level:
- Data up to the mid-1990s show increases in inequality in Eastern Europe and Central Asia
and possibly in Africa, declines in South Asia, and not much change elsewhere.
World-wide:
- World inequality is mainly driven by differences between countries; this has risen
sharply over the long haul.
- The ratio of income per capita in the richest countries over that in the poorest
countries has increased from eleven in 1870 to thirty-eight in 1960, and to fifty-two in
1985. The world distribution of income appears to have continued to widen over the recent
decade, mainly due to rising inter-country differences.
- There is some evidence of an increase in the Gini of the world distribution between the
mid-1980s and the mid-1990s.
- The ratio between average income of the world top 5 percent and world bottom 5 percent
increased from 78 to 1 in 1988, to 123 to 1 in 1993.
Next: Social Indicators
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