Rich are getting richer and poor are getting poorer....?

In fact, the richest two percent of adults control more than half of the world's household wealth. In 2000, the wealthiest one percent of the world's adults owned 40 percent of its assets. The richest ten percent of adults controlled 85 percent of global wealth, according to a recent study by the United Nations University's World Institute for Development Economics Research in Helsinki. And if you look at just the richest one percent of households, the United States accounts for 40 percent of that. Another third is in Europe. And another third is in the rich Pacific-Asian region, Japan, Australia and so on. And the rest of the world has only about ten percent of the world's wealth. That actually includes today China, India, Latin America and Africa.

According to the World Bank, 1.1 billion of the world's 6.5-billion people live on less than a dollar a day. People in developed countries earn, on average, an annual per capita income of more than $17,000. Currently, the disparity between incomes in developing countries with respect to income in rich countries is 16 percent.

Most analysts agree that some of the reasons for the disparities in wealth and income are historical. Other causes include political, cultural and economic dynamics, such as high productivity levels in industrialized countries, which typically lead to higher per capita incomes. Secondarily is the fact that different countries have different savings behaviors. In the United States, for example, families have accumulated a lot of wealth. They have very advanced financial markets. They have a well-developed housing market. But most countries in the world don't have financial markets. They don't have housing markets. So it's a combination of differences and income levels, plus the availability of savings instruments. That plays a big role.
Many economists agree that regardless of a country's savings rate, the poorest families need all of their income just to meet basic needs and are unlikely to save. In J M Keynes’s words, the marginal propensity to consume for the poor is very high. Some experts say globalization is helping narrow the gap as more and more people from poor countries seek better-paying jobs in the industrialized world. But the same technological advancement that creates some of these jobs also contributes to wealth and income disparities. Those who are capitalizing from the growing pie of globalization are that those have those who have skill and accessibility to the system. In other words rich people have enough means to be part of the changing developments in the world and getting richer again.

I am not of the opinion that the rich people are like that because they took money from everybody else. For the most part, the rich countries are rich because they had a particular history of industrial development. And the real question is how they can help the rest of the world go through that same process so that they too can become much better off, which in turn will help further the industrial development of rich countries in the form of sustainable markets elsewhere. But even if the gap between rich and poor countries begins to narrow, many experts warn that a bigger problem may be the widening income disparity within rich and poor countries themselves.

For example in India, Rich are getting richer and poor are becoming poorer! is now a common refrain in India in any discussion on economic reforms. Since 1991, India has undergone a great deal of liberalization internally andexternally. Many feel that the gains of this liberalization and globalization have not accrued to the poor mainly because of the knowledge gap.
Wealth amassed by Indian billionaires is estimated to be at $340.9 bn according to Forbes and is nearly 31% of GDP of India. The worth of billionaires in China is just 3% of GDP. The USA’s billionaires hold an equivalent of 11% of GDP of USA. The wealth of Indian billionaires has gone up may fold during last four years. Unequal distribution of Economic Freedom is at the basis of India's uneven development. The reason is simple; the areas in which the middle and upper classes make their living have seen the highest degree of liberalization, while the areas in which the poor earn their livelihood have seen the fewest reforms. Countries with high levels of economic freedom enjoy higher levels of prosperity and greater individual freedoms. Countries at the bottom of the index are often mired in poverty and governed by totalitarian regimes and have few individual rights or freedoms. As the higher level of economic freedom is sustained and the more rapid growth persists, poverty rates will fall.
The analogy also holds because money is like energy, in that it has to be conserved. "It's like a fluid that flows in interactions, it's not created or destroyed, only redistributed," says Yakovenko.