Global inequality

Measuring inequality also requires understanding poverty levels. Absolute Poverty is a fixed global standard, currently defined by the World Bank as surviving on less than $2.15 per day. In contrast, Relative Poverty changes based on local living standards, typically meaning an individual earns less than 50% to 60% of their nation's median income. This often leads to Social Exclusion, where people cannot afford to participate in normal societal activities.

Worked Example

A geographer is analyzing a hypothetical data set of 150 nations to find the wealth gap between the highest and lowest quintiles. The top quintile holds 78.5% of the wealth, and the lowest holds 1.8%. Calculate the size of each quintile and the wealth gap between the extremes.

Step 1: Calculate the number of countries per quintile.

• $\text{Total countries} = 150$
• $\text{Countries per quintile} = 150 \div 5 = 30$ countries

Step 2: Identify the wealth held by the extreme quintiles.

• $\text{Richest quintile} = 78.5\%$
• $\text{Poorest quintile} = 1.8\%$

Step 3: Calculate the gap.

• $\text{Gap} = 78.5\% - 1.8\% = 76.7\%$

Physical and Environmental Causes of Inequality

Why does being surrounded entirely by land automatically make a country poorer? Geography plays a massive role in economic potential. Landlocked countries (e.g. Chad) lack coastlines, meaning they do not have direct access to oceans and are entirely cut off from cheap seaborne container trade.

Furthermore, hostile Topography (such as steep mountain ranges or vast deserts) makes building roads, railways, and communication infrastructure prohibitively expensive. Tropical climates also hinder progress because they are breeding grounds for diseases like malaria, which severely reduces workforce productivity and drains healthcare budgets.

When a country is physically vulnerable to natural hazards, frequent disasters destroy infrastructure. This forces governments to spend their limited budgets on emergency relief rather than long-term development. As nations struggle to survive, they often over-exploit their environment (e.g., rapid deforestation). This destroys Ecosystem Services and Natural Capital, costing the global economy between $2 trillion and $5 trillion annually. For example, severe air and water pollution currently costs China roughly 5.8% of its GDP each year.

Historical, Political, and Economic Causes

The borders of many modern African nations were drawn with rulers on a map by foreign empires, completely ignoring the ethnic groups who actually lived there. This highlights the long-lasting impact of Colonialism. Between the 1700s and 1900s, European powers occupied and exploited territories, extracting raw materials and exporting over 10 million enslaved people, which devastated local human resources. Those straight-line borders later triggered civil wars and instability.

Today, Political Corruption continues to stall development; leaders misuse funds for personal gain rather than public services. For instance, under Robert Mugabe's mismanagement, Zimbabwe's life expectancy plummeted to 59 years. Meanwhile, Neo-colonialism allows wealthy nations and Transnational Corporations (TNCs) to maintain indirect control over developing countries through aggressive trade terms and corporate influence.

Economically, developing nations suffer from a reliance on Primary Products (raw, unprocessed materials like cocoa or copper). Developed countries dictate the Terms of Trade, purchasing these raw goods cheaply, processing them, and selling the high-value finished products back at a massive markup. Many developing nations also face a Debt Crisis, particularly HIPCs (Highly Indebted Poor Countries). For example, in 2005, Malawi spent 9.6% of its GNI on debt interest payments—double its total expenditure on healthcare.

Furthermore, a high Resource Endowment (an abundance of natural assets like oil or minerals) does not guarantee wealth. Many countries suffer from the Resource Curse, where a boom in one resource (like oil in Nigeria) can spike the national currency, making other exports uncompetitive and concentrating wealth in the hands of a corrupt elite, rather than diversifying the economy.

Conversely, countries that diversify their economies and invest in educating girls experience a positive Cycle of Wealth. Educated women enter the workforce, fertility rates drop, tax revenues increase, and the government can reinvest that money into further infrastructure.

Comparing Development Theories: Rostow vs Frank

Is there a single, guaranteed ladder to wealth, or is the global economy rigged so that some countries can never climb up? Geographers use two contrasting theories to explain why countries develop at different rates.

Walt Rostow's Modernisation Theory (1960) is a capitalist, linear model based on the history of Europe and the USA. It argues that all countries pass through five distinct stages:

1. Traditional Society: Based on Subsistence Agriculture and bartering, with no surplus for trade.
2. Pre-conditions for Take-off: Transport infrastructure begins to form and entrepreneurship emerges.
3. Take-off: Massive industrial growth occurs; manufacturing investment reaches at least 10% of GDP.
4. Drive to Maturity: Technology improves and wealth spreads to all sectors.
5. High Mass Consumption: A consumer-led society dominated by the tertiary (service) sector.

In contrast, Andre Gunder Frank's Dependency Theory is a socialist critique. It argues that the world is divided into a wealthy, industrialised Core and an exploited, resource-rich Periphery. Frank stated that poverty is not a natural phase; rather, the core actively creates the "development of underdevelopment" by constantly pumping surplus value (profits) out of the periphery.

Development Strategies: Top-down vs Bottom-up

When trying to fix poverty, is it better to build a multi-billion-dollar dam, or give thousands of rural farmers a simple water pump?

Top-down development involves large-scale, highly expensive projects managed by national governments or IGOs (like the World Bank). Examples include high-speed rail networks or mega-dams. While they can rapidly boost national GDP, they frequently displace local communities and saddle the country with massive debt.

Conversely, Bottom-up development involves small-scale, grassroots projects run by NGOs or local communities. They rely on Intermediate Technology—simple, affordable tools that locals can easily maintain. An example is a micro-hydro dam in a remote Peruvian village. While highly sustainable and tailored to community needs, bottom-up projects often lack the scale to transform an entire national economy.

Assessing the Causes and Consequences

To evaluate global inequality, we must weigh the relative importance of different causal factors and judge whether the initial causes or the ongoing consequences are the biggest barriers to progress.

1. Evaluating the Relative Importance of Causes: While physical/environmental factors (like being landlocked) provide a significant initial handicap to trade, historical and political factors are often more influential. Colonialism created the structural "gap" by depleting human resources and drawing unstable borders. Today, political factors (governance and corruption) often determine if a country can overcome its physical geography. For example, nations with high resource endowment such as Nigeria often remain poor due to the resource curse, where reliance on a single export and political mismanagement prevent economic diversification.

2. Causes vs. Consequences: Historical causes, primarily colonialism, undeniably created the initial wealth gap. However, the modern consequences of that inequality—such as the debt crisis (where interest payments outweigh social spending), massive environmental degradation, and brain drain—now act as self-sustaining traps. Therefore, while historical causes built the foundation of inequality, the modern economic and environmental consequences have a far greater impact on preventing future development today.