Comaprative Economies

Global poverty and economic inequality have become the source of a great deal of political and social concern in recent times. The co- existence of great wealth and abject poverty, both among and within countries has caused a great deal of controversy amongst world politicians and economists. Both these groups, politicians and economists, have claimed that the central goals of economic policy have always been both efficiency and equity. Unfortunately, despite this, it can be claimed with certainty that a) relative global and national inequality is increasing and b) that relative income of the poorest citizens of the world has declined absolutely.

This rise in global inequality has resulted more so, because of a rise in economic inequality among countries rather than a rise in inequality within countries. As the 1995 (Table 7) World Bank Study on Distribution of Wealth shows, average per- capita income in the U.S is about 152 times greater than in Ethiopia and 62 times greater than India. Compare this with the mean income of the top 10% of the population in Brazil (which has one of the highest degree of national income inequality) as being “only” 50

Step 2) According to theoretical argument it is said that market liberalization should allow money to both, flow in and out of a country. However, what occurs in reality is seen to be quite contrary, especially in these cases where the money simply flows out. Stiglitz calls this the 'hot money cycle’. This is where money is brought in to purchase real estate and currency, and then flows out at the first signs of risk. It is shown by Stiglitz that a nation's reserves can drain literally in days, and when this occurs the IMF enters and then demands that interest rates be raised, thus diminishing property values and draining the national exchequer.

Poor countries’ prime resource is their people, who if invested in will reap future benefits both in terms of the resources that they will be able to command through earning higher incomes, and also through the improvement in their productivity.

Some topics in this essay:
World Bank, According Stigler, W1 W2, Adam Smith’s, United Japan, World Trade, Robinson Crusoe, World Bank-IMF, Invisible Hand, Fund Bank’s, poor countries, rich countries, rich country, poor country, world bank, global poverty, poverty inequality, rich poor countries, financial capitol, poor people, rich poor, global poverty inequality, world trade organization, countries poor countries, utility public welfare,