TowardsABetterUnderstandingofthe.doc

Towards A Better Understanding of the Global Distribution of Income This paper describes a new methodological approach and some innovative graphical techniques for presenting consolidated information on income distributions. These techniques are seen to be especially useful in describing regional and global distributional patterns and for assessing the number of people who fall below a predefined income or expenditure threshold, in particular in relation to poverty. This work is still in its early stage and thus it has not been possible in the time available to compile detailed country level data on income distributions over comparable periods to provide a comprehensive statistical perspective. The resulting measures are thus referred to as “quasi-exact.” Work is in progress to obtain a better all-embracing measure of income and to define this on an international comparable basis using purchasing power parities (PPPs) and PPP adjusted GNP per capita data. 1. Introduction There is a substantial and growing body of statistical and circumstantial evidence to show that the global distribution of income is getting worse. Yet, in some sense paradoxically, the latest information available from the World Banks data base, and its Global Economic Projections, as well as from the IMF World Economic Outlook (WEO) indicate that for a number of years now, the real net output of the global economy (world GNP) has been growing faster than the annual increase in the worlds population. In addition, the developing countries of the World have been growing, on average, almost twice as fast as the rich industrially developed countries. On the surface and in principle, therefore, the basic conditions appear to have been established for a potential reduction in total poverty and in the number of people who are poor. In theory, too, if the tenets of market capitalism are believed to hold, then disparities in income should gradually disappear as economic forces move towards greater