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Countries with the biggest income disparity

  • Countries with the biggest income disparity

    Income disparity can be a confusing topic for many readers, eliciting images of complex statistical graphs, talking heads on television, the IRS, even 2020 presidential candidates like Bernie Sanders and Elizabeth Warren. But what is income disparity, and where does America rank versus other world economies?

    Using 2018 data from the World Economic Forum (WEF), we compiled a list of countries with the largest income disparity, also known as "income inequality." From this data, released in 2019, we ranked the 25 countries with the most unequal income distributions.

    The WEF used a metric called the net income Gini index, which measures the extent to which the net distribution of income (after taxes and other income transfers) among a country's population deviates from an equal distribution. In this way, a Gini index of "0" would be a perfectly equal income distribution, whereas an index of "100" would be perfectly unequal. In other words, the higher the number, the higher the income inequality in that country.

    While the countries are ranked based on the net income Gini index, we have also included a few other statistics for each country on the list: the wealth Gini index, median income, and the poverty rate.

    The wealth Gini index, like the net income Gini index, is a measure of inequality. Just like the net income Gini index, a higher number means a higher level of inequality. The difference is that wealth is the total value of a person's assets, whereas income is the amount a person receives for their services. The median income is a way to measure the average daily income per person in that country (all 25 countries on the list are under $20 per day). The poverty rate is the percent of that country's population with less than half of the median income.

    It's important to note that the net income Gini index for the United States is 37.80 (ranked at #50 of 103 countries measured). The United States' wealth Gini index is 85.60 (#6 most unequal of 103 countries).

    Keep reading to see which economies boast the highest income inequality.

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  • #25. Thailand

    - Net income Gini index: 43.7
    - Wealth Gini index: 85.1 (#7 most unequal wealth of 103 countries)
    - Median daily income: $11.20
    - Poverty rate: 1.1%

    A free-market economy with generally pro-investment policies, Thailand is frequently cited as an economic development success story. The agricultural sector, however, employs about one-third of the labor force while only contributing about 10% of GDP. Despite its substantial poverty reduction efforts, including a national minimum wage and tax reform, this economic structure likely accounts for its income disparity.

  • #24. Russia

    - Net income Gini index: 43.9
    - Wealth Gini index: 82.6 (#14 most unequal wealth of 103 countries)
    - Median daily income: $17.10
    - Poverty rate: 0.3%

    Russia's economy continues to be defined by the collapse of the Soviet Union in 1991. The move from communism to a market economy carried with it high public corruption, with a large wealth concentration in the hands of oligarchs and government officials. International economic sanctions and lower commodity prices have combined in recent years to reduce growth rates.

  • #23. Rwanda

    - Net income Gini index: 44.3
    - Wealth Gini index: 73 (#43 most unequal wealth of 103 countries)
    - Median daily income: $1.60
    - Poverty rate: 81.5%

    Agriculture accounts for about 30% of Rwanda's GDP and about 75% of its labor force. The 1994 genocide was a significant setback for attracting external investment, but the country has made strides in recent years in diversifying its economy. But with a poverty rate of 81.5%, inequality is less of an issue than overall development.

  • #22. Guatemala

    - Net income Gini index: 44.5
    - Wealth Gini index: not available
    - Median daily income: $5.60
    - Poverty rate: 25.3%

    Guatemala is the most populous country in Central America, with over 40% of its population being indigenous groups. Despite free trade agreements and an end to its civil war more than 25 years ago, the indigenous population issue continues to be a driving factor in Guatemala's income disparity.

  • #21. Dominican Republic

    - Net income Gini index: 44.6
    - Wealth Gini index: not available
    - Median daily income: $9.80
    - Poverty rate: 6.9%

    Despite a growing diversification in its economy, with services overtaking agriculture as the largest employer, high unemployment and underemployment remain significant obstacles. Although tourism, construction, and free trade have all grown, income disparity is still a defining feature of the Dominican Republic's economy.

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  • #20. Tajikistan

    - Net income Gini index: 44.7
    - Wealth Gini index: 53.5 (#93 most unequal wealth of 103 countries)
    - Median daily income: $5.30
    - Poverty rate: 20%

    As a predominantly mountainous country with weak infrastructure that experienced a civil war in the mid-1990s, Tajikistan is the poorest of the former Soviet republics. Mineral extraction and hydropower are the most important industries, but employment opportunities remain low. Unattractive business policies and narcotics continue to be barriers to external investment.

  • #19. Paraguay

    - Net income Gini index: 44.9
    - Wealth Gini index: 75.2 (#32 most unequal wealth of 103 countries)
    - Median daily income: $11.70
    - Poverty rate: 7.4%

    Paraguay's public corruption and insufficient infrastructure are significant obstacles to external investment. Conversely, cheap labor, corporate tax rates, and energy costs from hydropower have spurred some recent industrialization. However, a large informal sector of re-exports, microenterprises, street vendors, and subsistence agriculture may skew economic statistics.

  • #18. Brazil

    - Net income Gini index: 44.9
    - Wealth Gini index: 83.2 (#12 most unequal wealth of 103 countries)
    - Median daily income: $11.20
    - Poverty rate: 9.3%

    Brazil is the world's eighth-largest economy, but in recent years has been hampered by public corruption scandals reaching to the highest levels of government (President Dilma Rousseff was impeached and convicted in 2016). Unemployment has fallen in recent years due to workforce development policies, mainly at the expense of external investment.

  • #17. Peru

    - Net income Gini index: 45.4
    - Wealth Gini index: 77.8 (#26 most unequal wealth of 103 countries)
    - Median daily income: $10.30
    - Poverty rate: 9.3%

    With varied geography but poor infrastructure, Peru's economic growth in recent decades has not eliminated inequality. Recent economic stimulus packages have included cash transfer policies that reduced poverty, but external investment has continued to fall due to reduced mineral prices.

  • #16. Costa Rica

    - Net income Gini index: 45.7
    - Wealth Gini index: 69.4 (#57 most unequal wealth of 103 countries)
    - Median daily income: $14.50
    - Poverty rate: 4.2%

    Stable economic growth, high foreign investment, political stability, and high education levels (relative to the region) are all positive indicators for Costa Rica's economic future. Conversely, poor infrastructure, structural issues, and the high cost of energy remain barriers to increased diversification. Additionally, entitlements are in jeopardy due to growing public debt.

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