Global Policy Forum

Global Economy Creates Divide

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By R.C. Longworth

Chicago Tribune
July 13, 1999

Chicago -- As the global economy grows, rich nations are getting richer than ever, and poor ones are stuck in shantytowns on the outskirts of the global village. "Global inequalities in income and living standards have reached grotesque proportions," the United Nations Development Program said Monday in its annual global overview, the Human Development Report.

For instance:

  • The three richest officers of Microsoft -- Bill Gates, Paul Allen and Steve Ballmer -- have more assets, nearly $140 billion, than the combined gross national product of the 43 least-developed countries and their 600 million people.

  • The United States, meanwhile, has more computers than the rest of the world combined. This isn't likely to change: The same computer that costs a month's wages for the average American takes eight years' income of the average resident of Bangladesh.

  • The 200 richest people in the world more than doubled their net worth between 1994 and 1998. But in nearly half the world's countries, per capita incomes are lower now than they were 10 or 20 years ago. Some of these are oil-producing nations hit by the long slump in oil prices, but many are in sub-Saharan Africa, where per capita income has fallen from $661 in 1980 to $518 now. The key to solving these problems, the UN program said, is not to stamp out the global economy, but to embrace it with rules and institutions that will ensure that it serves people and communities, not just markets and their manipulators.

    "Competitive markets may be the best guarantee of efficiency but not necessarily of equity," it said. "When the market goes too far in dominating social and political outcomes, the opportunities and rewards of globalization spread unequally and inequitably -- concentrating power and wealth in a select group of people, nations and corporations, marginalizing the others."

    "The challenge," the report said, "is not to stop the expansion of global markets. The challenge is to find the rules and institutions for stronger governance ...to preserve the advantage of global markets and competition but also to provide enough space for human, community and environmental resources to ensure that globalization works for people, not just for profits."

    The gap between people, like the one between nations, also is growing in the global economy, the report said. Inequality is growing both in industrialized nations -- especially in the United States, Britain and Sweden, it said -- and in newly industrializing countries, such as China and the formerly communist countries of eastern Europe.

    One result of globalization, it said, is that the road to wealth -- the control of production, patents and technology -- is increasingly dominated by a few countries and companies. Of all the countries in the world, 10, including the United States, account for 84 percent of global research-and-development spending. Companies and institutions in the same 10 countries control 95 percent of all patents issued by the U.S. government over the past 20 years, the report said. Among corporations, the top 10 countries controlled 86 percent of the telecommunications market, 85 percent of pesticides and 70 percent of computers, the report said. The report said this monopoly of power is cutting poorer nations off from a share of the economic pie and, often, from decent health care and education.

    Many new technologies, "from new drugs to better seeds," are priced too high for poor nations, it said. Global patent laws, intended to protect intellectual property, are blocking the ability of developing countries to develop their own products.

    Even within the Third World, inequality is sharp. Thailand has more cellular phones and Bulgaria more Internet users than all of Africa except South Africa, the report said.

    However, even as gaps between nations grow and some countries slide backward, the quality of life for many of the world's poor is improving, it said. Between 1975 and 1997, life expectancy in Third World countries rose from 53 to 62 years, adult literacy rates climbed from 48 to 76 percent, childhood mortality rates from 149 per 1,000 live births to 85, and some countries "have overcome severe levels of human poverty."

    More Information on Inequality of Wealth and Income Distribution

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