Global In­equal­ity: From €150 per month to €3000 per month

Bhutan Times - - Editorial - A.K. Mishra (AK Mishra) Man­ag­ing Di­rec­tor, MHPA, Bhutan

W hen every­body is talk­ing glob­al­iza­tion, let us un­der­stand what is hap­pen­ing on ground as on to­day. The per capita in­come in Sub-Sa­ha­ran, Africa and In­dia it is rang­ing be­tween €150-250 per month but in Western Europe, North Amer­ica and Ja­pan it is in the range of €2500-3000 per month. If you com­pare the 2 in­comes per capita per month then Europe, US and Ja­pan are 10 times higher. The global av­er­age which is near to Chi­nese av­er­age is around €600-800 per month.

Although it is dif­fi­cult to mea­sure in­equal­ity in terms of per capita per month earn­ings due to mar­gin of er­ror but this gives you suf­fi­cient idea of per capita per month earn­ings.

Global in­equal­ity would be sig­nif­i­cantly higher if we use the cur­rent ex­change rates rather than pur­chas­ing power par­i­ties. Let us take as on to­day the ra­tio of Euro/Dol­lar is equal to 1.115 on for­eign ex­change mar­ket. Now if a Euro­pean is hav­ing an in­come of €1000 per month, his pur­chas­ing power shall be around $1115 in the US if he spends his earn­ings there.

I am plac­ing be­low a graph show­ing the ex­change rate and pur­chas­ing power par­i­ties (Euro/ Dol­lar) re­la­tion­ship;

The above re­ferred graph in­di­cates the higher fluc­tu­a­tion in the ex­change rates i.e. Euro/Dol­lar while the pur­chas­ing power par­ity is be­hav­ing in a smooth man­ner. There­fore, it is al­ways ad­vis­able to use the PPP as a bench­mark against ex­change rates. How­ever, the PPP be­hav­ior is lit­tle dif­fer­ent when it comes to African and Asian Coun­tries due to the prices of goods and ser­vices which are al­most half of US and Europe.

In ad­di­tion to above, I am also a plac­ing a ta­ble as be­low show­ing the World GDP, pop­u­la­tion, per capita GDP and equiv­a­lent per capita monthly in­come.

(The writer is the Man­ag­ing Di­rec­tor with Mang­duchhu Hy­dro Project Author­ity

If you look at the ta­ble above, the world pop­u­la­tion was around 7050 mil­lions (base year 2012) and the world GDP es­ti­mated at PPP was around €71200 bil­lion. There­fore, the per capita GDP is around €10100 equiv­a­lent to €760 per month.

Europe (in­clud­ing Rus­sia and Ukraine) alone had con­trib­uted around 25% to GDP (base year 2012) and US (in­clud­ing Latin Amer­ica and Canada) is around 29% to GDP. Africa con­trib­uted around 4% to GDP and Asia (China, In­dia, Ja­pan and oth­ers) con­trib­uted 42% to GDP.

Resur­gence of In­dia in­clud­ing other SAARC coun­tries in eco­nomic growth (if GDP per an­num at the rate 8% for In­dia) next 10 years shall make a huge dif­fer­ence in the pros­per­ity level of the peo­ple of In­dia in­clud­ing SAARC coun­tries.

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