Income Inequality between Countries
Introduction
This paper asserts that the income inequality between developed and developing countries increases over time. Developing countries will not be able to catch up with developed countries because of differences in technological advancement. Technology has a bearing on the nature of output and skills that a country has for its production. Therefore, developed countries will produce technologically advanced products such as computers because they have both the resource endowment of both physical and human capital in those sectors. On the contrary, developing countries that have abundant unskilled labor will supply unskilled labor intensive goods and agricultural goods that fetch lower prices at the international markets which limit their growth. Secondly, the production efficiency of developed countries increase with technology advancement while that in developing countries increase at a slow pace, and they adopt outdated technologies over time.
The assertion was tested using GDP per capita in 2014 prices. The dataset that was provided was used for analysis. The data was input in excel, and a line graph was used to show the GDP per capita over time.
Discussion
It can be observed that at the beginning countries/country groups are close to each other with developed countries have a small advantage over developing countries. However, over time some countries grow way much faster than others. USA leads the pack with its GDP per capita has increased at an accelerating rate. The growth rate seems to be a function of time. It is common knowledge that the USA has the most advanced technologies in the world. There are many innovations that originated in the USA. The growth rate seems to be highest between 1950 and 2000. This is the period when computers were invented and later on the internet as well as various information and communication technologies. Americans firms have always dominated the global market in ICT will multinational firms such as Dell, Microsoft, Apple, Google, Facebook, and HP among many others. The trend in the USA is closely mimicked by Japan and Western Europe. Japan and Western Europe have also fairly advanced technologies with large multinational firms. For instance, Sony is a Japanese multinational firm that specializes in various electronics and ICT technologies. Japanese cars especially Toyota also dominate the global scene. This explains the rate at which its GDP has grown. Western Europe comprises of technology advanced countries such as Germany. Germany has always been a powerhouse in in the motor vehicle industry, electronics and industrial equipment.
On the other end, we have Africa which seems to be growing but at a pain striking pace relative to the developed countries. Africa mostly exports non-value added agricultural goods such as coffee, cocoa and timber. These goods fetch very low prices in the international markets. Therefore, African economies do not earn a lot of revenues from international trade. A similar trend is reflected in Asia minus Japan. The larger Asia sub-continent also comprises of countries that are still developing. However, in recent years there are a number of Asian countries that have experienced major transformations. For instance, china has dominated international trade in virtually all sectors. South Korea is also becoming a key player with internationally accepted brands such as Samsung. Latin America is growing faster that Africa and Asia but slower than the other developed countries.
Conclusion
The gap between developed and developing countries has been increasing with time. Developing countries need to leap frog and adopt current technologies so that they can catch up with developed economies.
