Tuesday, December 05, 2006

40% of world's wealth owned by 1% of population

The richest one per cent of the world's population owns 40 per cent of the total household wealth, while the bottom half of the world makes do with barely one per cent, according to a research report released Tuesday.

The study, which further underlined the continuing disparity between rich and poor, is by the Helsinki-based World Institute for Development Economics Research, part of the United Nations University.

'Income inequality has been rising for the past 20 to 25 years and we think that is true for inequality in the distribution of wealth.'-Canadian economist James Davies, an author of the report

It took more than $500,000 US to be among the richest one per cent of adults in the world, according to the report. The richest 10 per cent of adults needed $61,000 US in assets.

In contrast, 50 per cent of adults owned barely one per cent of the household wealth.

Wealth was defined as the value of physical and financial assets minus debts. The study differentiates between wealth and income. The authors note that "many people in high-income countries — somewhat paradoxically — are among the poorest people in the world in terms of household wealth" because they have large debts.

The bulk of the wealthiest adults (almost 90 per cent) are concentrated in North America, Europe and Japan, the researchers said. For example, North America accounts for only six per cent of adults, but held 34 per cent of the globe's household wealth.

"Income inequality has been rising for the past 20 to 25 years, and we think that is true for inequality in the distribution of wealth," said James Davies, one of the report's authors and a professor of economics at the University of Western Ontario in London.

"There is a whole group of problems in developing countries that make it difficult for people to build up assets, which are important, since life is so precarious," Davies said.

Having assets worth just above $2,200 US would be enough to put an adult into the top half of the world's wealth distribution.

Canadians averaged $70,916 US in assets

Canada's net worth per capita came in at $70,916 US, putting it just ahead of Denmark.

Average net worth in the United States amounted to $143,867 per person in 2000, while it reached $180,837 in Japan.

At the bottom end of the scale were Ethiopia with per-capita wealth of $193 and Congo at $180.

Global household wealth amounted to $125 trillion in 2000, roughly three times the value of total global production, or $20,500 per person.


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