The World Inequality Database (WID) provides open access to the most extensive database on the historical evolution of economic inequality. Updated annually by the World Inequality Lab in collaboration with a global network of researchers, it represents the most up-to-date and coordinated effort to measure and track inequality worldwide.
The WID now includes data up to 2023. The key novelty this year is the addition of new data on foreign income, foreign wealth, trade balance, public revenue, and public spending – essential for understanding the dynamics of global inequality, and complementing the regional data. Below are 10 key facts extracted from the WID this year.
1. The world has grown richer, but this masks huge disparities between regions
In 2023, the global average per capita national income (including the in-kind value of public services) stood at about €12,800 per year (PPP), or €1,065 per month. However, this figure hides huge disparities between regions. For example, the average income in Sub-Saharan Africa was just €240 per month, compared to over €3,500 in North America and Oceania, a difference of 1 to 15.
From a long-run perspective, the real growth rate of per capita national income at the global level has been 1.3% per year between 1800 and 2023. This was enough to multiply average income by more than 18 during the past two centuries. However, growth has been uneven. The West has soared past the global average since the 19th century, while Sub-Saharan Africa and South & South-East Asia have lagged behind. There were well-known periods of accelerated growth – for example, 3.1% in Europe 1950-1990, and 4.3% in East Asia 1990-2023.
2. Income inequality within countries remains very large across the globe
Average income data masks inequality within countries, which has been increasing since 1980. The poorest 50% of the population consistently lags behind the top 10% of the population in every region, even though this gap is more pronounced in the Middle East, Latin America, and Africa, compared to Europe.
In some countries, inequality has reached extreme levels. For instance, South Africa ranks as one of the most unequal countries, with the richest 10% capturing 65% of national income. Yemen also exhibits significant inequality, with the top 10% earning 59.5% of income and the top 1% alone claiming 25%.
It’s important to stress that no region is immune to inequality. The United States is the most unequal country in the OECD, with 21% of national income going to the richest 1% – the same as in Mexico (21%), and slightly more than in South Africa (19%).
3. Global income growth has rebounded post-covid
Between 1980 and 2023, the real growth rate of per capita national income at the global level has been 1.6% per year on average. Between 2019 and 2023, the real growth rate has been 1.5% per year on average. While most of the world had largely recovered from the 2019 drop by 2023, growth remained stagnant in Sub-Saharan Africa and, to a lesser extent, Latin America. In contrast, East Asia experienced a relatively mild impact from the initial Covid shock, largely in particular China, which however suffered from a large growth slowdown in 2022 due to a new lockdown.
4. The world’s 10 richest economies in per capita income have small or very small populations and are known for being tax havens
In 2023, the majority of the world’s richest economies – by per capita national income – are small nations with populations under 1 million, or even 100,000 inhabitants, with Singapore being the only exception among the top 10.
Countries or jurisdictions with populations under 100,000 represent only about 0.01% of the world population but have average incomes more than four times the global average. This trend has grown over time. Their average income was equal to 337% of the global average in 1970 and grew to 423% in 2023.
All, except Monaco, receive large inflows of net foreign income. Their residents hold significant wealth abroad but choose to live in these jurisdictions to benefit from an attractive fiscal and legal environment.
5. Rich countries enjoy an “exorbitant privilege” in the global financial system
Excluding countries with a population of less than 10 million, the 10 richest countries all receive positive net foreign income (except of Australia and Saudi Arabia). This is particularly striking because many of them—especially the USA—have significant negative foreign wealth.
This illustrates the “exorbitant privilege” enjoyed by wealthy countries: they pay lower interest on their foreign debts, enabling them to reap greater benefits from their investment returns. This was historically true for the USA, but in recent decades, other rich countries, like those in the G7, including France, have gained this advantage as well. Meanwhile, the BRICS nations, led by China, have built up considerable foreign wealth compared to the rest of the world, but they aren’t receiving as much income from these foreign assets.
6. BRICS are now the world’s largest economies in terms of purchasing power parity (PPP), but not according to market exchange rates (MER)
Four of the nine BRICS countries are among the top 10 largest economies – in terms of aggregate PPP national income. BRICS’ national income, measured by market exchange rates (MER), is much lower than their purchasing power parity (PPP) national income. This means their economies appear weaker in global financial terms than when adjusted for local cost of living.
7. The world’s 10 poorest countries are global debtors
The world’s 10 poorest countries are former colonies, most located in Sub-Saharan Africa, and many have faced or continue to face conflict or instability. They display the opposite trends compared to the richest. They have relatively small populations (less than 35 million inhabitants), except the Democratic Republic of Congo, but none of them are ultra-small nations.
Most of these countries pay significant net foreign income to the rest of the world. In other words, these countries are sending out more money than they are receiving from foreign investments. This drain can limit their capacity to invest in areas such as infrastructure, healthcare, and education – key to lifting them out of poverty.
8. Poor countries spend little on public services, much on debt payments
Poor countries allocate a significant portion of their budgets to servicing debts. In 2023, five countries spent more than 40% of their revenues on interest services (Sri Lanka, Egypt, Ghana, Gambia, and Zimbabwe). Interestingly, 15 countries spent more than 20% of their revenues on interest, all of them are Sub-Saharan Africa, Latin America, or South-South East Asia. Moreover, 16 countries spent more on interest than on education and health, while 52 countries – 44 % of the world’s population – spent more on interest than on either education or health. Such dynamics not only widen the gap between rich and poor nations but also limit the potential for growth and development in countries that need it most.
9. Richest countries tend to have the highest public spending
As countries become wealthier, their public expenditure increases significantly. While the percentage of spending on education remains consistent across different income levels at around 5%, the real growth is seen in health spending and social protection.
In 2023, the richest countries allocated around 13% of their national income to social protection, compared to just 1.5% among the bottom 40% poorest countries. This disparity in spending directly impacts citizens’ quality of life, widening the gap in well-being between poor and rich nations.
10. Despite recent progress in inequality measurement, inequality data remains scarce and inequality reduction is slow
The WID is a collaborative and incremental project. While our research team works continuously to improve the macro and distributional series, we also rely on statistical agencies and governments to publish transparent and robust data. Unfortunately, access to and quality of data is limited in many countries.
Transparency Index, 2022
Finally, efforts to measure inequality need to be matched with awareness-raising and advocacy efforts to reduce it. This includes more research into the institutional, ideological and political conditions under which inequality reduction policies have been implemented in the past and could be implemented in the future. The Global Justice Project will provide a platform to continue research and initiate a much-needed democratic debate in the coming years.
GLOSSARY
- National Income: The total income earned by residents of a country, including the value of in-kind services like education and healthcare.
- Market Exchange Rate (MER) vs. Purchasing Power Parity (PPP): Using PPP allows us to compare countries by accounting for differences in cost of living, rather than just currency exchange rates.
- Net Foreign Income: the income a country earns from assets owned abroad minus what it pays to foreign investors in its own economy. A positive amount means the country earns more from abroad; a negative amount suggests it’s more financially dependent on foreign investments.
- Net Foreign Wealth: The total value of what a country owns abroad minus what foreigners own within it. If positive, the country has more assets than debts abroad; if negative, it means the country owes more to the world than it owns.
MEDIA CONTACT
- Alice Fauvel, Communications Manager, World Inequality Lab, alice.fauvel[at]psemail.eu, +33(0)763918168
