Some nations in the world are rich, while others are very poor. The gap between them seems to grow ever wider. Measured by the average income earned by people in the richest and poorest fifth of the world’s nations, the gap has grown from 30 to 1 in 1960 to nearly 80 to 1 today. Within both rich and poor countries, there are also great contrasts in wealth.
The wealthiest countries are those that have developed industries and services which can supply their own populations with all their needs. They do this either by producing these products and services themselves, or by importing them from other countries, paying for them by exporting goods. In poorer developing countries, people may produce only enough food to feed their families. Disease and climatic disaster may prevent even this.
The population of developing nations has grown greatly in recent years. Their high birth rates means even more mouths to feed.
South America has some of the fastest-growing cities in the world. They include the Brazilian super cities of Sao Paulo and Rio de Janeiro, both with populations of more than 10 million. People from the countryside flock to these cities to find work but there is nowhere for them to live. They build their own shantytowns (locally known as favelas) just outside the city by building shelters and shacks from any material that comes to hand. People who live in shantytowns cannot find work easily and so they are forced to work for very low wages.
The wealth of a nation can be measured by its gross domestic product (GDP).This is defined as the value of all the goods and services produced there, including those produced by foreign-owned firms. The Group of Seven (G7) are the seven leading industrial nations of the world. These nations – the United States, Japan, Germany, France, the United Kingdom, Italy and Canada – account for more than 60% of the world’s GDP. The country with the highest GDP per person in 1996 was Switzerland ($46,000). In the same year, the figure for Rwanda in Africa was $100. More than 1.3 billion people around the world live on less than one dollar a day.
Wealthy nations such as the G7 lend money to developing countries. However, the developing countries often find that, because of their low GDP, they cannot repay the loans and a big debt burden builds up. The largest foreign aid donor in 1996 was Japan with aid amounting to more than $15,000 million.
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