Ab­so­lute in­come gains ver­sus global in­come dis­tri­bu­tion

Bhutan Times - - Editorial - AK Mishra Man­ag­ing Di­rec­tor, MHPA

These days, almost ev­ery­where, we all talk about glob­al­iza­tion of econ­omy, prob­a­bly hav­ing a no­tion that growth in econ­omy through glob­al­iza­tion, will help in re­duc­tion of poverty around the coun­try. But, we do not know in the back­ground that what has hap­pened in other coun­tries that are almost glob­al­ized.

I would like now here to share some of the truths re­gard­ing glob­al­iza­tion of econ­omy which an av­er­age ci­ti­zen of a coun­try may not be even aware-off.

A study was con­ducted with re­spect to global in­come be­tween the pe­riod 1988 – 2008. Some of the facts which came to light are very fright­en­ing. It was in­di­cated in the study that 44% of the ab­so­lute gain (real wealth gen­er­ated) had gone in to the hands of the rich­est 5% of the peo­ple around the globe. Around 1/5 that is 20% of the real wealth gen­er­ated got accu- mu­lated in the top 1% rich gi­ants around the globe.

In con­trast to above, so call “Emerg­ing Global Mid­dle Class” could re­ceive only 2-4% of the ab­so­lute gain.

Now, imag­ine how it has hap­pened with re­spect to dis­tri­bu­tion of real wealth around the earth. If we an­a­lyze, you will find that there is an enor­mous gaps in the real in­come that ex­ist be­tween the top, the me­dian and the bot­tom of the global in­come dis­tri­bu­tion.

In 2008, the av­er­age per capita dis­pos­able (af­ter tax) in­come of the global top 1% was just over $71,000 per year, in­come at the me­dian level was around $1,400 and the peo­ple who were the poor­est had the an­nual in­come un­der $450.

We must not for­get that the glob­al­iza­tion alone will not solve the prob­lems of poor coun­tries as more in­te­gra­tion of economies cre­ates lot of pres­sure on the poor coun­tries to gen­er­ate and en­hance the ex­ports. With the very high ex­port also, the real gain in terms of cur­rency, is not much due to the value of the cur­rency with re­spect to the value of cur­rency of the coun­try to which Ex­port has been made.

It is to be noted for ex­am­ple that the real in­come growth due to glob­al­iza­tion was greater in ur­ban China and In­done­sia than ru­ral China and In­done­sia; this ex­plains that the ur­ban­rural gap re­mains wide open. In­ci­den­tally, there is al­ready a large gap in both the coun­tries which kept on widen­ing.

There­fore, we must not take the global-view as it is when it comes to glob­al­iza­tion/in­te­gra­tion of economies as ev­ery­thing is not that rosy.

Newspapers in English

Newspapers from Bhutan

© PressReader. All rights reserved.