The Widening Gap of National Wealth -Part I (original) (raw)

This paper will examine the commonly accepted mantra concerning the widening gap of national wealth. The proxy for national wealth will be the gross domestic product (GDP) per capita in constant US dollars of all countries, as provided by the World Bank, using 1960 as the starting point. It must be pointed out that the names of countries is in constant flux, with new nations arising out of independence movements, other nations ceasing to exist as such, and some nations – noticeably Venezuela in recent years – simply not reporting. An important thesis in this paper is grouping the nations of the world into " quintiles ". A quintile is defined as groups of 20% each of the countries of the world. Thus five quintiles are measured for each half decade. As a simple example, if there are 100 countries reporting in that half decade, the first quintile are the 20 countries with the lowest GDP per capita; the fifth quintile, those 20 countries with the highest GDP per capita. It becomes in essence a comparison among peer groups. Other measurements can be done, such as the same analysis by continent. The fine granularity of such careful subdivision masks the purpose of this study, namely to take a first look at the widening gap of national wealth in an analytic, rigorous, and systematic way. The study will look at the absolute data, namely average GDP per capita, the rate of change of each quintile, and the variability within quintiles. The first look is the world GDP per capita for all countries in the world. The data measured in each half decade clearly shows a rise in national wealth per capita, with the dotted line showing the trend. Averaging the GDP per capita for each country, we see the GDP per capita rising from 245peryearin1960to245 per year in 1960 to 245peryearin1960to5,456 in 2014. This is roughly a twenty-twofold increase over a little more than half a century, approximately a 5.9% compounded annualized growth rate over the same period. Part II of this study will address the acceleration seen in the 1970's and the 2000's decade. Again, this is the average of all the national GDP's: it is not the global GDP divided by the global population. Appendix I discusses the mathematics and methodology of this study. The next step is to divide the countries of the world in five quintiles and looking more closely at their respective GDP's per capita. We begin by looking at the first quintile, those nations that