Economic Inequality between Countries

Inequality can be traced as far back as possible. It can also be described as disparity. This disparity can be in terms of income, wealth, class etc. Economic inequality can be described as the disparity between income of individuals or household within and outside a country. When “income inequality” is mentioned, most people think about it in a within the country context, but in a world that is becoming more integrated, economic inequality between countries is becoming more relevant. In a world where other people’s income and wealth affect our perception of life, one might ask the question, “is economic inequality the biggest issue of our time”.

The history of economic inequalities between countries can be traced back to the 18th century and has taken different forms since then, especially, in the 19th century till date. Firstly, the Lorenzo curve. This is a model use for measuring inequality. It was developed by Max Lorenz in 1905. The Lorenz curve is usually in a form of graph on which the cumulative proportion of income is plotted against the cumulative proportion of population on the in which their axes ranges from [zero (0) to one (1)] or [0% to 100%]. The Gini index, another method of measuring inequality is derived from the Lorenz curve. The Lorenz curve is shown in the graphical illustration (figure 1) below. The first calculation of inequality across world citizens were done in the early 1980s (Berry, Bourguignon and Morrisson, 1983; Grosh and Nafziger, 1986). This is because in order to calculate global inequality, one needs to have data on (within country) national income distributions for most of the countries in the world, or at least for most of the populous and rich countries. But it is only from the early to m...

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...ries. Points explained under this topic include the history, current information, trends and its future directions and with these points explained above, one might still ask, “is economic inequality the biggest issue of our time?” and if so, how can we solve this?.

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Milanovic, B. (2006a). Global Income Inequality: What It Is And Why It Matters. DESA. Retrieved from http://www.un.org/esa/desa/papers/2006/wp26_2006.pdf

Milanovic, B. (2011b). Global income inequality: the past two centuries and implications for 21st century. Retrieved from http://www.ub.edu/histeco/pdf/milanovic.pdf

Milanovic, B. (2012c). Global Income Inequality by the Numbers: in History and Now. The World Bank. doi:10.1596/1813-9450-6259