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Statistics for Business and Economics: Excel/Minitab Enhanced
Heinz Kohler
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Statistics in the News: Chapter 7 Presenting Data: Summary Measures

Rich Nations Insensitive to World Poverty?

As the text notes, the humble proportion can sometimes tell a dramatic story. The terrorist attacks of September 11, 2001 on the United States provide a case in point. Surely, few would dispute that terrorism and the violent religious fundamentalism that has spawned it, however complex their causes, grow best in the soil of poverty. Thus, these events have again raised an old issue: What role should rich nations play in the economic development of poor nations?

Should the rich pay more attention to the plight of the poor? Despite glowing optimism after the end of World War II, the rich nations' record in raising the poor nations to a minimal level of material well-being has been nothing but disastrous. As recently as 1983, the World Bank predicted that the developing nations' GDP would on average grow 3.3 percent a year over the following 15 years. In fact, it barely grew at all.

The extent of world poverty remains shocking. Despite a modest decline in the proportion of those who are poor, the absolute numbers of the poor have risen sharply. About a third of the world now lives on something like $2 a day. Yet the citizens of the richest nations enjoy per capita incomes 30 times as large. (Over the long run, this discrepancy has widened substantially. In 1820, for example, the per capita income of the richest nations was only 3 times that of the poorest.)

It is a fact that rich nations are shamefully stingy about aiding the poor. Typically, they devote less than 1 percent of their incomes to foreign economic aid. Hardly anyone is stingier than the United States. Look at the proportions of GDP devoted to foreign economic development that are listed in Table A. In 1999, a typical year, U.S. development aid, measured as a percentage of national output, was the skimpiest of all.

TABLE A GDP Devoted to Development Aid, 1999
Country Aid in Billions of Dollars Aid as Proportion of GDP
Netherlands 3.1 0.0079
France 5.6 0.0039
Japan 15.3 0.0035
Germany 5.5 0.0026
Great Britain 3.4 0.0023
United States 9.1 0.0010

Is it time for the rich world to cough up some serious money for the poor? Self-interest alone may well counsel an affirmative answer. The cost of terrorism and of wars to fight it is likely to exceed by far the cost of fighting world poverty effectively. None of this is to say that a determined policy to help the world's poor would be easy. As history has shown, all too often aid is diverted by corrupt and despotic leaders to their own purposes and doesn't reach those it designed to help. But all that is not the main point of this story, which is merely meant to illustrate how simple statistics can dramatically highlight an important issue in our lives.

Source. Adapted from Jeff Madrick, "Economic Scene," The New York Times, November 1, 2001, p. C2. Table based on World Bank data.

Additional Readings:

Amsden, Alice H. The Rise of "the Rest": Challenges to the West from Late-Industrializing Economies. (New York: Oxford University Press, 2001)

Chang, Ha. Rebel Within: Joseph Stiglitz at the World Bank (New York: Anthem Press, 2001)

Easterly, William R. The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (Cambridge, MA: MIT Press, 2001)

Kohler, Heinz. Economic Systems and Human Welfare: A Global Survey (Cincinnati, OH: South-Western , 1997)

Taylor, Lance, ed. External Liberalization, Economic Performance, and Social Policy (New York: Oxford University Press, 2001)

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