Income inequality is high and rising in many countries as the benefits of economic growth are increasingly captured by wealthy minorities. The official measure of income inequality, the Gini Index, records high rates of income inequality for ten of the world’s most populated countries, including China, the United States, Indonesia, Brazil, Nigeria, Russia, Mexico, the Philippines, Turkey, and the Democratic Republic of Congo. The World Bank reports that the bottom 40% of households in these countries earns less than 20% of national income and the top 10% earn more than 30%. Further, income inequality is rising in many of these countries. The OECD reports that in the last eight years inequality has risen in 15 of the 34 countries, including Denmark, Estonia, France, Greece, Hungary, Israel Italy, Japan, Luxembourg, New Zealand, Norway, Slovenia, Spain, Sweden and the US, causing the overall OECD average to rise.
But the highest levels of income inequality are found in some of the poorest parts of the world, including in sub-Saharan Africa and South America. All ten of the world’s most unequal countries are found in these regions, including the Seychelles, South Africa, Comoros, Namibia, Botswana, Haiti, Zambia, Honduras, the Central African Republic, and Lesotho. Across these countries, the Gini Index ranges from 54.2 in Lesotho to 65.8 in the Seychelles and the richest 10% of the population own more than 40% of national income in all of these countries.
A word of caution. Low levels of inequality are clearly not in and of themselves indicative of thriving societies. A majority of the 28 countries with the lowest levels of inequality (i.e. Gini scores below the OECD average of 32) score poorly on the Human Development Index, including Afghanistan, Albania, Armenia, Belarus, Cambodia, Egypt, Iraq, Kazakhstan, Montenegro, Niger, Pakistan, Romania, Serbia, Tajikistan, Timor-Leste and the Ukraine. But the remaining ten, albeit higher income countries, score very highly and are among the top 50 on the Human Development Index, including Denmark, Finland, France, Germany, Iceland, the Netherlands, Norway, Sweden, the Czech Republic, Hungary and Slovenia. Relatively high levels of income equality combined with relatively high incomes may be a particularly powerful recipe for sustained human development. The new Good Country Index, released by Simon Anholt, also ranks many of these high income and highlly equal countries among the top 20 “Good Countries”.