 By ESTANISLAO OZIEWICZ Toronto Globe and Mail December 05, 2006
The richest 2 percent of adults own more than half of global household wealth, and almost all of the well heeled live in North America, Europe and richest Asia-Pacific countries.
While previous global surveys have studied income, this is the first wide-ranging analysis of the international distribution of wealth, defined as the value of physical and financial assets minus liabilities. "We find there's a lot of inequality, which is what we expected and is not that surprising," said University of Western Ontario economist James Davies, who was a co-author of the study, conducted by the Helsinki-based World Institute for Development Economics Research of the United Nations. "But it turns out, the world distribution of wealth (assets minus debts) is more unequal than the world distribution of income." The United States is the richest country, with a mean wealth in the year 2000 of $144,000 (U.S.) per person. Canada has a mean wealth of $89,000 per person. "Wealth in this sense represents the ownership of capital," the study says. "While only one part of personal resources, capital is widely believed to have a disproportionate impact on household well-being and economic success, and more broadly on economic development and growth." The study estimates that the richest 1 percent of adults alone owned 40 percent of global assets in 2000, and that the richest 10 percent of adults accounted for 85 percent of the world total. By contrast, the bottom half of the world adult population owned barely 1 percent of global wealth. The research finds that assets of $2,200 per adult place a household in the top half of the world wealth distribution. To be among the richest 10 percent of adults in the world required $61,000 in assets, and more than $500,000 was needed to belong to the richest 1 percent. The latter figure, according to the study, is surprisingly high since it represents 37 million adults and is "therefore far from an exclusive club." Not surprisingly given its massive economic surge and the size of its population, China is a rising star and accounts for 8.8 per cent of world household wealth. At the same time, the distribution of wealth within China is getting more unequal. A small number of countries account for most of the wealthiest 10 percent in the world. One-quarter are Americans and another 20 percent are Japanese, who tend to have a very strong preference for liquid savings, according to the research. The two countries feature even more strongly among the richest 1 percent of individuals in the world, with 37 percent living in the United States and 27 percent in Japan. Davies said he was particularly struck by one result of the study, which undermines the notion that poor people in low-income countries are mired in debt. "It's true that there are people heavily indebted in poor countries. But for a couple of reasons there is not that much use of debt and borrowing there as in high-income countries. ... "The other aspect is that a lot of people in poor countries are leading very precarious lives. One way to react to that is to try to build up your assets as a buffer against things that can go wrong," he said, giving as an example the hoarding of small quantities of gold. A piece of the pie By taking into consideration
total assets minus total debts, the first-ever study of global
wealth distribution finds that a net worth of $2,161 is enough
to belong to the top half of the world's wealth, but to be a
member of the top 10 percent requires at least $61,000 and membership
of the top 1 per cent requires more than $500,000 per adult. Scripps Howard News Service, http://www.shns.com Publish A Letter on SitNews Read Letters/Opinions
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