Countries with the biggest gaps between rich and poor

Home

News

International

Wednesday, 21 October 2009

Bruce Einhorn
Business Week

The U.N. Development Program recently came out with a report looking, among other things, at income inequality worldwide.

The UNDP ranked countries and regions based on a number of factors, including their Gini coefficient, named for Italian statistician Corrado Gini.

We have listed the world's most advanced economies based on their Gini score, with zero marking absolute equality and 100 absolute inequality. Scandinavian countries, Japan, and the Czech Republic have the least amount of inequality. The U.S. is among the most unequal, but it's not No. 1. To see which economy is, read on.

Top 11 countries with the biggest gaps between rich and poor:

No. 1 Hong Kong
Gini score: 43.4
GDP 2007 (US$ billions): 207.2
Share of income or expenditure (%)
Poorest 10%: 2.0
Richest 10%: 34.9
Ratio of income or expenditure, share of top 10% to lowest 10%: 17.8

Renowned for its high concentration of Rolls-Royces, expensive real estate, and posh shops, the Chinese special administrative region has plenty of rich who enjoy showing off their wealth. However, Hong Kong also has one of the largest public housing sectors in the world, with about half the population living in government-supported or -subsidized housing estates. The city has no minimum wage—except for domestic helpers from the Philippines, Indonesia, and other countries.

No. 2 Singapore
Gini score: 42.5
GDP 2007 (US$ billions): 161.3
Share of income or expenditure (%)
Poorest 10%: 1.9
Richest 10%: 32.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 17.7

Singapore is one of the world's most open economies, and it suffered badly following the bankruptcy of Lehman Brothers last year. Recently, though, the city-state's economy has rebounded, with GDP growing an annualized 14.9% rate in the third quarter compared with the previous quarter.

No. 3 U.S.
Gini score: 40.8
GDP 2007 (US$ billions): 13,751.4
Share of income or expenditure (%)
Poorest 10%: 1.9
Richest 10%: 29.9
Ratio of income or expenditure, share of top 10% to lowest 10%: 15.9

The share of income for the top percentile of Americans was 23.5% in 2007, the highest since 1928, according to Emmanuel Saez, a Berkeley economist who won the prestigious John Bates Clark Medal in April. Income for the top 0.01% hit a record-high 6.04%. And the recession may be exacerbating income inequality.

No. 4 Israel
Gini score: 39.2
GDP 2007 (US$ billions): 164.0
Share of income or expenditure (%)
Poorest 10%: 2.1
Richest 10%: 28.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 13.4

Gone are the days when Israel was one of the world's most egalitarian societies. Early Labor Zionist pioneers built kibbutzim for Jewish immigrants, but those collectives have fallen on hard times. The growing number of haredim, or ultra-Orthodox Jews, with large families and men who study the Torah rather than work has worsened the inequality problem.

No. 5 Portugal
Gini score: 38.5
GDP 2007 (US$ billions): 222.8
Share of income or expenditure (%)
Poorest 10%: 2.0
Richest 10%: 29.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 15.0

While Portugal emerged from recession in the second quarter, the unemployment rate tops 9%. The ruling Socialists retained power in elections last month but lost seats to parties on the far left.

No. 6 New Zealand
Gini score: 36.2
GDP 2007 (US$ billions): 135.7
Share of income or expenditure (%)
Poorest 10%: 2.2
Richest 10%: 27.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 12.5

According to the OECD, New Zealand had the biggest rise in inequality among member nations in the two decades starting in the mid-1980s. The country's economy emerged from recession in the second quarter, but with growth of just 0.1%, the central bank is likely to keep interest rates low until well into 2010.

No. 7 (tie) Italy
Gini score: 36.0
GDP 2007 (US$ billions): 2,101.6
Share of income or expenditure (%)
Poorest 10%: 2.3
Richest 10%: 26.8
Ratio of income or expenditure, share of top 10% to lowest 10%: 11.6

Italians are focused now on the melodrama surrounding embattled Prime Minister Silvio Berlusconi. The political crisis comes at a time when the economy is still mired in recession even as countries like Germany and France are growing again.

No. 7 (tie) Britain
Gini score: 36.0
GDP 2007 (US$ billions): 2,772.0
Share of income or expenditure (%)
Poorest 10%: 2.1
Richest 10%: 28.5
Ratio of income or expenditure, share of top 10% to lowest 10%: 13.8

According to Britain's Institute of Fiscal Studies, a government-funded think tank, the average national income, adjusted for inflation, grew 0.5% between 2004 and 2008. In contrast, the same figure for the top 90% income bracket jumped 1.2% over the same period. That was predominantly driven by large salaries and bonuses from the financial services sector in the pre-credit crunch era.

No. 9 Australia
Gini score: 35.2
GDP 2007 (US$ billions): 821.0
Share of income or expenditure (%)
Poorest 10%: 2.0
Richest 10%: 25.4
Ratio of income or expenditure, share of top 10% to lowest 10%: 12.5

While developed economies elsewhere fell into recession, the Lucky Country's good fortune held out, with Australia continuing to grow thanks in part to strong demand from China for its resources. This month the central bank raised interest rates, making Australia a leader among countries moving away from monetary easing.

No. 10 (tie) Ireland
Gini score: 34.3
GDP 2007 (US$ billions): 259.0
Share of income or expenditure (%)
Poorest 10%: 2.9
Richest 10%: 27.2
Ratio of income or expenditure, share of top 10% to lowest 10%: 9.4

Put aside the old comparisons to Asia's tiger economies. Ireland's workers are suffering badly from the recession; the unemployment rate soared in August to 12.5%. That's the second-worst in the EU, behind only Spain.

No. 10 (tie) Greece
Gini score: 34.3
GDP 2007 (US$ billions): 313.4
Share of income or expenditure (%)
Poorest 10%: 2.5
Richest 10%: 26.0
Ratio of income or expenditure, share of top 10% to lowest 10%: 10.2

Newly elected Prime Minister George Papandreou's government faces potential disciplinary action from the European Union, which has reprimanded Greece for a budget deficit of 6% of GDP, twice the EU limit. The IMF projects the economy will shrink 0.8% this year.

http://finance.yahoo.com/banking-budgeting/article/107980/countries-with-the-biggest-gaps-between-rich-and-poor

Share this article:

Comments (8)

Wed 21 Oct 2009 10:49 AM | BryanT - The Socio-politico-economic Hypothesis

Looking down the list of distinguished democracies (less one or two, based on SDP's stringent definition) rounded up under this ignominious ranking, I suppose the underlying socio-politico-economic hypothesis one can draw is that there is [b]HARDLY[/b] any link between income inequality and degree of democratization of a nation.

Provided, that is, if we believe that there is no semblance of democracy in Singapore (as SDP proclaims.... or hypothesizes).

[b]Perhaps, just perhaps, the old-man is not senile after all.[/b]

Wed 21 Oct 2009 6:09 PM | GlobalMan

Have been meaning to post my comment on this and a whole range of issues:

I stay all over tha world so am not concerned with any particular country's conumdrum...etc.

However, as a human mind, I must say that it is too simplistic to equate a dog having two eyes as either male or female, it could be so only if you tie it to other verified indications...the same with democracy & poor or rich, e.g. India is the largest democracy in the world but has many poor etc...

Wed 21 Oct 2009 6:15 PM | shamszee

prolly they were not allowed to report the actual findings since spore has brought many mag's like Newsweek, Times etc to court for reporting negative stuffs abt spore...?

Wed 21 Oct 2009 7:25 PM | greyheyn

Yes there is a price you pay for living in a democracy. But let's not forget that many world leaders of the past like Hitler, Stalin, Saddam Hussein tried to create a "perfect society" and look what they became.

Certainly any kind of democratic institutions are better than none. This is both comforting and unnerving. Comforting for a time because citizens can benefit from a limited level of freedom. On the other hand, because these permitted freedoms breed complacency, this in turn invites attacks on democracy from within.

Wed 21 Oct 2009 10:00 PM | quantum

BryanT:

You think you are clever but you are not, for coming with this kind of stupid third rate fallacy.

In the socialist democracies you mentioned, the rich are taxed very highly in order to support the poor. So the high incomes turns out helping the low incomes.

Mao is not senile, he is dead.

Wed 21 Oct 2009 10:54 PM | BryanT - Clarifications please

Moderator, please allow me a short clarification with quantum as to which "socialist democracies" I mentioned.

I have also failed to understand the part on Mao. Was China perhaps on the ranking shown in the article too?

Thu 22 Oct 2009 5:47 PM | GlobalMan - It's all relative

As a billionaire, I would be very happy to stay in Singapore; but if I was a small-time worker or professional worker, thisd would be tough times going forward...

Mon 26 Oct 2009 5:55 PM | Seelan Palay

To BryanT,

Contrary to your claim, there is a strong correlation between inequality and democracy.

In countries where there is democracy, not the sham version that is propagated by autocrats such as Lee Kuan Yew and the Burmese junta, democracy has brought into sharp focus the income inequality in societies.

Democracy is where the voices of the people are heard loud and clear through a free and pluralistic media coupled with periodical elections conducted by a truly independent elections commission. In such a democratic governance, the government of the day works towards narrowing the income inequality among the various classes of people. Such governments make sure that the income inequality does not widen and exasperate the situation to the extent of their losing power in the next election whose outcome is decided by an informed populace.

But in Singapore, the PAP does not depend on the mandate of the people to continue its stranglehold on power. So, it doesn’t bother to address the widening income inequality and neither is it interested in introducing minimum wages as is the case in all the other First World countries.

Studies that have led to winning Nobel Prize for economics have shown there is a strong link between democracy (not the sham one though) and poverty alleviation. Countries that practice democracy have not experienced famine whereas colonial, dictatorial and authoritarian regimes have had famines resulting in widespread starvation and deaths.

In a democracy that depends on the mandate of the people, the response of the government is immediate in the event of any shortage of basic necessities. Democracy, through the voice of the voters, makes sure the people do have a decent living and the income inequality is further reduced and not allowed to deliberately escalate as is the case in Singapore under an authoritarian regime that doesn’t give two hoods about the people’s welfare.

On the question of Gini coefficient, it’s a far better way to measure the income inequality than the deceptive GDP based on the law of averages. Singapore’s GDP, propped up by the influx of abundant supply of cheap labour, is being used to hoodwink the people and justify the hefty, astronomical salaries of the PAP ministers and their bureaucrats while the workers, who form the majority in our country, are made to depend on the crumbs.

In Singapore, the democracy that one wants to see is neither Western, Asian nor whatever region. For Singapore, democracy has been clearly spelt out in our National Pledge. That's what one likes to see flourish in independent Singapore, together with freedom and basic human rights well enshrined in our Constitution.. No more and no less.