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