2. Number of Poor by Region (millions) at $1.25 Poverty Line
2
* 2010 data for China are from 2009
** 1981 data for India are from 1983
Source: World Development Indicators 2013
835
416
205
1,938
157
400 414
1,274
0
500
1,000
1,500
2,000
China* India** Sub-Saharan Africa World (developing)**
1981
2010
3. Number of Poor by Region (millions) at $2.00 Poverty Line
3
* 1981 data for India are from 1983
Source: World Development Indicators 2013
972
636
288
2,585
395
842
562
2,472
0
500
1,000
1,500
2,000
2,500
3,000
China India* Sub-Saharan Africa World
1981
2008
4. World Inequality
4
• Some countries vastly richer than others. Some level of integration in some
places (EU, USA/CAN/MEX) but still very far from operating as an
integrated global economy
Country/Region GDP (2011, USD Billions) Population (2011, millions)
Sub Saharan Africa 1287 853.9
Switzerland 666 7.8
Sweden 572 9.4
Spain 1536 46.1
17.2 (2.0% of 853.9)
5.4% of 853.9
5. World Inequality in Historical Perspective
Gini coefficient
5
Source: Branko Milanovic
6. Among the Rich Countries: Massive Convergence
6
• There has been a pronounced reduction in the income gap among the richer
countries. By 2000, Ginis were approximately half of their values in 1950
1870 GDP per capita in 1985 PPP $
Japan UK Australia
622 2,740 3,192
• 100 years later gap is gone
• Countries at the center of global capitalism did the most to open their
economies to international trade and investment
7. Divergence Between Rich and Poor Countries
7
Year GDP per Capita ratio:
richest to poorest
1820* 3
1992* 72
2008** 146
• Angus Madison (2008): Since 1820 income per capita in Europe, US,
Canada, Japan, Australia and New Zealand increased 19 times versus a
growth of 5 times in the rest of the world
• 70% of the world’s population receives less than 15 percent of the world PPP
dollar income, while the top 10% of the population receive close to 58% of
total world income.
• Comparing incomes at actual market exchange rates, the top 10% receive
an even larger share of world dollar income
* In PPP 1990 USD. Source: Madison (1995).
** Ratio of the top 5 richest to the 5 poorest, PPP 2011 USD Source: IMF WEO
8. Income Gap – High income vs. Low income
8
Starting point: 2011
High income Average GDP per Capita : USD 41,062
Low income Average GDP per Capita : USD 583
1: Average annual rate of economic growth of high-income countries during the period 1991-2010
High
Income LT
Growth1
Low
Income LT
Growth
Gap
Widens
until:
Gap Peak
(GDP per
capita,
USD)
Year of
Convergenc
e
Scenario I 1.8% 4% 2173 404,160 2210
Scenario II 1.8% 6% 2087 110,506 2116
Scenario III 1.8% 8% 2058 73,256 2083
“ The dirty little secret of development economics”
(Thomas Homer-Dixon, ‘The Upside of Down’, 2006)
9. Income Gap – High income vs. Low income
9
-1,000
-800
-600
-400
-200
0
200
400
2011 2061 2111 2161 2211
GDPperCapita(Thousands)
Income Gap - High vs Low Income
4% LT Growth 6% LT Growth 8% LT Growth
-400
-200
0
200
400
600
2011 2031 2051 2071 2091
GDPperCapita(Thousands)
Scenario III - 8% Low Income Long Term
Growth
High Income Gap Low income
-1,000
-500
0
500
1,000
1,500
2,000
2,500
2011 2061 2111 2161 2211
GDPperCapita(Thousands)
Scenario I - 4% Low Income Long Term
Growth
High Income Gap Low income
-200
0
200
400
600
2011 2031 2051 2071 2091 2111
GDPperCapita(Thousands)
Scenario II - 6% Low Income Long Term
Growth
High Income Gap Low income
10. Energy Subsidies including Taxes & Externalities
10
Totalsubsidy,billionsUSD
• Total post-tax subsidies for the world are equal to 1.90 trillion USD
Source: Arze del Granado and others, 2012 and Energy Subsidy reform: Lessons and Implications, IMF
11. Energy Subsidies including Taxes & Externalities
11
PercentofGDP
Percentof
government
revenue
• Post-tax subsidies are equal to 4% of global GDP and more than 8% of
global government revenue
Source: Arze del Granado and others, 2012 and Energy Subsidy reform: Lessons and Implications, IMF
12. Distribution of Petroleum Product Subsidies by Income
Groups
(% of total product subsidies)
12
Source: Arze del Granado and others, 2012 and Energy Subsidy reform: Lessons and Implications, IMF
13. 13
General Government Gross Debt
2007-11 Forecasts 2012-15 (% of GDP)
0
20
40
60
80
100
120
140
160
180
200
07 08 09 10 11 12 13 14 15 16 17
Southern Europe and Ireland
Greece Italy Portugal Spain Ireland
0
20
40
60
80
100
120
07 08 09 10 11 12 13 14 15 16 17
Selected Advanced
Economies
United States Germany France
UK Sweden
Source: IMF Fiscal Monitor October 2012
14. Distribution of Population by Age Groups
1950 – 2050
14
Source: UN World Population Ageing Report (2009)
15. Environmental Challenges
15
• Energy needs will grow by more
than one third by 2035.
• 60% of this rise in China, India,
MENA
• Oil/gas investment required $15
trillion
• Fossil fuel subsidies were $523
billion in 2011 (six times renewables)
• CO2 emissions will raise global
temperature by 3.6°
Source: IEA World Energy Outlook 2012
16. Environmental Challenges
16
• Carbon emissions from fossil fuel combustion and
cement production were 8.7 Gt (gigatons) in 2008, 41%
higher than 1990
• Developing countries now emitting more fossil fuel CO2
(55%) than industrialized countries.
• Tropical deforestation 1.5 Gt/year, 15% of total
anthropogenic emissions
• Fossil fuel emissions expected to rise to 12-18 Gt/yr by
2050 (2-3 times level in 2000)
• 2°C is the accepted limit for global warming without
significant damage to the planet
• The estimated remaining capacity of the atmosphere to
absorb carbon without going past this limit is 565
gigatons of CO2, which may be reached in 16 years
• According to Sir John Beddington, Chief Scientific
Advisor to the UK, the world faces a “perfect storm” of
problems in 2030 as food, energy and water shortages
interact with climate change.
CO2 Emissions by fuel (GtCO2)
Top 10 emitting countries in 2010 (GtCO2)
Source: IEA World Energy Outlook 2012
17. Opportunities
17
• Key challenge: to identify areas of economic activity that are likely to retrench, and
others that are full of potential. The challenge, of course, when the former may be
more profitable in the short term and out-compete emerging but immature new
technologies, is knowing when to switch, as timing is all-important.
• One line of thought: The fossil fuel industry and associated technologies will
eventually go the way of the horse-drawn carriage, telegram, telex and slide rule, but
when their rising costs will overwhelm their profitability is still a complex question with
many variables (subsidies, inertia, price of carbon, politics, etc.).
• Given the long life of investments in energy infrastructure, renewables are clearly the
technologies of the future. New alternative technologies for transport will also grow in
significance. There is great potential for investments in energy efficiency.
• Prices for food and natural resources will continue to rise as demand exceeds supply,
so investments in restoring the sustainable productive capacity of soils, forests and
fisheries, and developing better-adapted varieties, should generate good returns in the
long-term.
18. Opportunities
18
• There will be a continuing demand for turning waste streams into
resources, recycling scarce metals/minerals, closing product life cycles, and
strengthening industrial ecology by grouping complementary industrial activities.
• Rising costs of transport may work against some parts of global trade, with new
opportunities in more restricted geographic scales of production and
consumption, with associated systems of distribution and marketing.
• With the increase in climate variability and associated natural disasters, there
will be new needs for insurance coverage, and the activities involved in
rebuilding and relocation, with some combination of public assistance and for-
profit insurance.
• On the social side, the excess wealth creation capacity represented by rising
unemployment begs for innovative solutions to put that capacity to work. We
need forms of wealth creation other than material consumption, possibly
through an expansion of education, culture and social services which should be
able to generate both employment and returns on investment.