Is our world poor?

In the light of per capita income of all the countries of the world 1

CHAPTER 1: INTRODUCTION

1.1 Overview:
Every country has their own economy and the stability and trend is different in all the countries. To find out the distribution of wealth around the globe we have taken per capita income of all countries as a comparative tool. The countries were sorted down according to their continents and each country is compared with countries of that respective continent. Findings have given an overall picture of the distribution of wealth in a particular continent. Per capita incomes of forty years of all the countries were evaluated and analysed.

1.2 Problem Statement:

Is our world poor? In the light of per capita income of all the countries of the world.

1.3 Hypothesis:
H1: The per capita income of Asian countries is less than Median value of per capita income of Asian countries. H2: The per capita income of European countries is less than Median value of per capita income of European countries. H3: The per capita income of Australian countries is less than Median value of per capita income of Australian countries. H4: The per capita income of African countries is less than Median value of per capita income of African countries.

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H5: The per capita income of South American countries is less than Median value of per capita income of South American countries. H6: The per capita income of North American countries is less than Median value of per capita income of North American countries.

1.4 Outline of the Study:

This study is conducted to extract the poor side of the world, and how many countries are living hand to mouth and how they are struggling to stable their economy. Per capita income is the main component and plays a great role in building up the economy of country.

1.5 Definition:
Independent Variables : Per capita income Dependent Variable: Median

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CHAPTER 2: LITERATURE REVIEW

In the light of per capita income of countries their expenditure is more than their income. This logic applies to the third world countries struck with economic and political instability where prices of basic necessities are high and corruption is at it all time high. Considering the daily rise in population family sizes are expanding and worker per family arent enough to earn much to keep the whole family satisfied. People arent earning for the work they are doing leading to poverty in a nation what makes this level worse is that societies in many nations have developed classes between people; society is divided into lower upper and middle classes. The upper class comprises of the elites of the country that earn huge amounts that can live in luxury and can spend to their hearts contentment. Middle class is the working class that works in jobs and small time business owners that earn for their family and the lower class earn to satisfy their family in giving them the basic necessities. Agriculture can help reduce poverty by direct and indirect effects. Directs effect are that people adopt agriculture and indirect effects are the results produced by the adopter that progress in agriculture leading to reduced prices in food supplies, creating employment for others and creating future prospecting employments in growing agriculture. The world surface is 2/3rd covered with water; agriculture is the source that can be helpful to reduce poverty in all third world countries. To reduce poverty a methodology in the context of computable general equilibrium modeling context and can be applied to the arc type models for Africa, Asia, South East Asia and Latin America where most of the population on an average is below the poverty line. The dominant effects of technology on poverty is because of the direct effects in Africa and indirect effects in Asia and South East Asia because of agricultural employment and a mix of both effects the economy throughout Latin America. Study investigations bring forth three factors these are Pro Just world, Anti Just World and Cynical or Reserved Just World. Further four poverty factors are Blame the poor, blaming the

Is our world poor? In the light of per capita income of all the countries of the world 4

poor people for the conditions developing in a country. Blame the third world government, blaming the governments of third world countries of the economic conditions of a country. Blame Nature, blaming the nature for not having enough resources in the territory of a country and lack of foreign trade. Blame exploitations, blaming people that have high power and influence that exploit all the resources and rewards. (Nkanta, 2005) Considering two different scenarios, the first is a suburban family of New York City surrounded by all of their material belongings. It is a family of four with two children standing in front of their luxury home compared to world class standards, outside their home two luxury cars and a minivan, in their house their property of hundred items of every nature. Second scenario of average poor family who has all the possession they have combined in a corner of their hut and with all they have are a goat and a couple of chickens. World bank Defines extreme poverty as living on less than 1 dollar per day as extreme poor, similarly moderate poverty is defined as living on less than 2 dollars. In contrast to this a person earning 3 dollars per day or 90 dollars per month is not poor. Nevertheless over a billion people in the world live on less than one dollar per day. For significant years the North South divide was the main answer defining the world poverty. North comprising of the worlds developed and wealthy countries collectively together known as the north and the least developed countries or the poorer countries known as the south. Most of the countries in the north are located in the northern hemisphere with the exception of New Zealand and Australia. The Soviet Union and China representing the developing East and the USA and its allied nations representing the developed west this paradigm then came to know as First world ( the west ) and the second world ( the east ) and the less developed countries eventually made up the third world. Some countries joined the first world nations other went into the third world category. On the basis of this classification a new and simpler

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classification was created the first world knows as the North and the second world know as the south. (Carl B., 2008) Per capita is an important factor which is taken under consideration in economics and the economic sector in the country around the world. For theoretical and explanatory notions, per capita income is considered of great value while describing and analyzing the income status and economy of the country. Per capita income is also of great value for the economist because it helps a great deal in the analysis and extended research and holds and significant value in the field of economics. The per capita income focuses on the household and per person or per capita unit. This theory can create problems for the economists also in such a way that the per capita unit, or the earning members cannot be same or be compared within all the households and the level of earning also cannot be compared because everyone does not have the same level of earning. The earnings and the members also have no relationship as such because it can vary from member to member household to household and per capita unit to per capita unit. It is seen that the income level and the per capita income has a great effect on the poverty level and the economic growth because all the factors pertaining to the economy are inter related one way or the other. (Sudhakar, 2010) The distribution of the income level affects the economy of the country because per capita income plays a significant role in the economy, its stability, growth and the poverty level of the country. Many researches have been under taken to find out what is the trend of the poverty level of the world. Whether the country is facing an economic downfall or the economic situations are improving and whether the countries are focusing on the economic stability or not and what measures are they taking to keep the economy stable. Poverty is now the main issue under consideration around the world because it the main issue that has a great impact on everyone, not only the per capita unit, household, country but also the entire world. Since the world is

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going through an economic downfall and instability, still, all the nations are trying to at least come over the poverty line and if unable to do so then at least be at the par level. Economist have tried to find the cause of the poverty which occurs in the third world country, and the affect that it has on the economy of the nation which indirectly effects the GDP and not only the nation but also around the world. For the poverty of the country, the government blames the poor people and the poor people blame the government for their poverty. The economic instability has a great impact on this poverty issue. The poverty count around the major countries around the world pertains to the measurement of the proportion of the population of the country earning or living on less than a dollar per day. If the level of the income and the proportion of the population increase, that means that the poverty level of the country is decreasing and vice versa if the level is decreasing. (Paitoon, 2009) According to a headcount for the poverty in America, the poverty rate has fallen as per the information and data provided by the World Bank. Many other researches and studies conclude that inequality of the income has an adverse effect on the poverty level. Because the inequality of the income level has a more sensitive effect on the poverty level. The poverty level and its responsiveness are determined because of the inequality in the income level and the distribution of income. Many other theories of economy share the light on this matter that the poor share of the effect of inequality on income has on the growth and stability of the economy, and other economy related matters such as inflation and hyper sensitivity towards cost. World is divided into different sections like richest, upper class, middle class, lower middle class and poor. Peoples have set their mind in defining their status by the earning power, and they are ready to do anything to reach the upper class of the society. This had increased the competition but the opportunities are very low at rate. As world population is increasing day by day so in order to come up with good and great jobs people are ready to do everything.

Is our world poor? In the light of per capita income of all the countries of the world 7 Now a days poor countries are suffering from great disaster as they are having hindrance in their developing policies and they world is not ready to accept them. Poor countries are getting aids allocation but the allocation interest is so high that the country is getting poor and poorer. They are getting aid on their resources and the resources are getting lower and lowered. If talks about the African countries they are getting much aid then other countries do but the peoples who are living there are fighting for their lives because they are totally in danger situation of many diseases. The Unemployment rate is so high and per capita income rate is too low. (Parjiono, 2009) If talks about the Middle Eastern countries, unemployment rate is getting higher day by day. The increase in competition is and they recession face which is being faced all over the world causing an increase of general expenses and firing sessions in industries is empowering the poor condition of state. This is causing in lowering the per capita income and increasing the cost of goods. Could also say that our world is getting poor and Richest is getting richer because at certain level the inequality is so high that it is one of the prospects which are playing a big role for empowering poor to poorest and richer to richest. But there are certain countries that are fighting against the poverty and getting their self above in developing state as India is one of the example among them. They are working on the policies on which they are not compromising the opportunities for their state and they are availing all the opportunities to get their self above. On another hand China is globalizing its self and offer the world to manufacture their product or to assemble their product at the cheapest labor cost. But the per capita income is to low at China another reason for this is that the population of state. The competition level in china is too high. (Giannaros, 2008) Per capita income is most often looked upon as an indicator of the wealth of the population of a nation, especially in comparison with other nations. It is usually expressed in terms of a

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global currency such as the US Dollar or the local currency of the country in question. Can make significant observations in regard to the level of economic well being globally. Furthermore, it can also give an insight to parts of the world where the people are more prosperous as compared to other parts of the world. (Oudan, 2011) A look at the trend of per capita income level in Asian countries, see that the average per capita income for all Asian countries, for the last 40 years, is around $1965. Take Japan out of the equation then the mean value drops to $905.92, which is a significant drop suggesting that Japan is a large contributor to the Asian continents overall prosperity. The situation in Asian countries is not so encouraging otherwise. Looking at Europe, can see that it is the most prosperous part of the world where people across the continent have a average per capita income level of $20429. Almost all the countries in the European continent show good levels of income with Scandinavian countries like Sweden and Denmark showing impressive average levels of income of $29950 and $ 38543 respectively. Almost all the countries have encouraging figures indicating that no single country is responsible for the rise or fall in the overall prosperity of the continent. (Paula, 2006) The North American continent has a very strong average of $31541 as both the major countries The United States of America and Canada are countries with high levels of income. South Americas situation is not as encouraging as its northern neighbors as the level of mean income across this part of the world is $ 3927. Most of the countries have low per capita income levels. African countries have the lowest average earning level of $ 1007. This is due to the severe level of poverty and unavailability of resources in northern part of the continent. Continent of Australia has also emerged as a very competitive and prosperous region in the world with average per capita income level of $19914. Both the major countries of the continent, Australia and New Zealand, have mean per capita income level of $ 26106 and $ 19721 respectively. (Ramezzana, June 2000)

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Although most divisions of the world support healthy per capita income levels but the areas where most of the population is present is going through a low level of income. If we look at the figures globally, well see that the global per capita income level, on average, is just $ 5704.

CHAPTER 3: RESEARCH METHODS

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The Research method is important to derive the correct information from the data. Therefore choosing the correct method is important.

3.1: Method of Data Collection:

We have used secondary data in this research. The data used for this study is of per capita income of different countries. 40 year data has been used for the study.

3.2: Sampling Technique:

One- Sample T-Test.

3.3: Sample Size:

As this study is about the relationship of different countries around the world therefore we have taken the data of 6 continents. (Asia, Europe, Australia, Africa, South America, North America).

3.4: Instrument of Data Collection:

Secondary data of the last forty years of reported per capita incomes of the countries around the world.

3.5: Research Model development:

Per Capita Income

Mean

The variable involved is per Capita income and Median of the countries. Per Capita income signifies the independent variable and Median signifies the dependent variable.

3.6: Statistical Techniques:

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The mean of the countries' per capita incomes was taken. The countries were then sorted out according to their continents. Once the countries were sorted out in their continents with their means calculated, the next step was to take a generalized continent-wise mean of the means of all the countries with respect to their continent. Along with it, the continentwise minimum, maximum and median was also taken out of the mean. Once done with that, now comparing every continent's median and minimum value with the mean value. The significance level and mean difference were observed and evaluated in relation to the median and minimum test value of the respective continent. In case the median or minimum value indicates significance and positive mean difference, the related hypothesis is accepted and if not, it is rejected.

CHAPTER 4: RESULTS

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4.1: Findings and Interpretation of the Results

On the data collected 40 years data of per capita incomes of over 100 countries in the world; conducted the one sample t test and concluded the following results. In the test conducted on the data compared the means of the per capita income of 40 years along with the values of median and minimum and maximum. The difference in the value of mean showed the results and results were the main point in concluding the data that which continent is poor and have a low per capita income and which continent has above par per capita income. Which continent is considered poor or rich on the basis of the results of the data we also concluded the GDP status of the continents as well. When conducted tests on the largest continent which is Asia, the results concluded that by comparing the Mean of the continent with the Test value of Median it clearly shows that the continent is stable in form of per capita Income. And by comparing the mean and test value we found that the mean difference was positive therefore we can easily conclude that Asia is not a poor country. The data for Europe concluded after one sample test that Europe is also not a poor continent as the Mean difference is lower but it shows the result in positive figures. So can conclude that Europe is not a poor country but the result also shows that the continent is having hard time to stabilize their economy. Australia as all know is progressing day by day and their economy is stable. Which conducting tests on the data of Australia we had a lot of difficulty in concluding the results because Australia is expanding its self and opening new states but when conducted the test, the values the data gave for the one sample test, the results showed Australia as a poor continent showing below par per capita income. This was due to the small islands which are part of the Australian continent which do not have stable or progressive economies. The per

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capita income is low; therefore they show Australia poor as a continent. But look other way around Australia is expanding its self so the small countries dont have much population. Africa as all know is a poor continent and many NGOs and organizations are working over it to make its economy stabilized. In our one sample test the Significance value of Median and Minimum are above 5% therefore the conclusion of the data the shows that Africa is a poor country. South Americas per capita income shows that it has a stable economy. When conducted results on its data, the minimum values compared with the test values, the mean of the continent and its significance level shows that the country is not poor and its economy is stable. North Americas results shows after the comparison of their mean, median and minimum values, the North American continent is not poor and the result of the minimum values are meeting the criteria and showing the lower significance level. One-Sample Statistics Std. Continent Asia Europe Australia Africa South America North America N 65 44 4 10 27 17 Mean 5218.025 18578.042 17070.302 1838.776 3362.870 11463.918 Deviation 8306.124 13688.036 10131.032 1215.755 2668.785 12518.655 Std. Error Mean 1030.248 2063.549 5065.516 384.455 513.608 3036.220

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4.2: Hypothesis Assessment Summary

H1: The per capita income of Asian countries is less than Median value of per capita income of Asian countries.

H1 is accpeted as the median value of Asia is less than the mean value. And this relation is showing that Asia is not a poor continent.

H2: The per capita income of European countries is less than Median value of per capita income of European countries.

H2 is accepted as the median value is lesser than the mean of the continent and it shows that Europe is not a poor continent. H3: The per capita income of Australian countries is less than Median value of per capita income of Australian countries.

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H3 is rejected as the median value is higher than the mean of the continent and it show that Australia is a poor continent. This hypothesis is rejected because some of the countries in Australia have per capita income less than $1000. H4: The per capita income of African countries is less than Median value of per capita income of African countries.

H4 is rejected because the median value of the continent is higher than the mean value of the continent and it show that Africa is a poor region. H5: The per capita income of South American countries is less than Median value of per capita income of South American countries.

H5 is accepted as the median value is lower than the mean value of the continent and it show that South America is not a poor continent. H6: The per capita income of North American countries is less than Median value of per capita income of North American countries.

H6 is accepted as the Median value is lesser than the mean value and it show that North America is not a poor continent.

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CHAPTER 5: CONCLUSION, DISCUSSION, IMPLICATIONS AND FUTURE RESEARCH

5.1 Conclusion
As a result of our study, can come to the conclusion that our world is not poor, in general. The parts of the world, which are not doing so good, are because of the inability to take advantage of the resources and lack of developmental work. As the tests run clearly suggest, Asia, Europe, North America, South America and Australia are all rich and well to do parts of the world. The overall picture of all these continents of the world is encouraging with the majority of the people living a healthy life supported by a healthy per capita income level on average. On paper, these continents cant be termed as poor places. The continent of Africa stands out as the only continent with a poor situation. The per capita income level is low and the countries are not doing very well even on an individual scale. No single country showed extra ordinary figures to support the continents case. Africa remains a struggling and probably the only poor region in the world. Though there are many organizations which are working in order to remove its poverty level and make it a rich country. Africa is proven poor in the light of per capita income as it does not use its resources effectively and stands out in a poor condition due to other different reasons are shown in the report. Other than that, all the other remaining continents are rich and in a good condition. Therefore, the research on the topic "Is Our World Poor? In the Light of Per Capita Income" proves that our world is not poor and some countries should make more effort to increase the level of effectiveness and efficiency so have better results and make Africa a rich continent.

5.2 Discussions
As a result of our findings, a number of issues have come up to the surface. Despite the fact that our findings suggest that most parts of the world are doing well in terms of

Is our world poor? In the light of per capita income of all the countries of the world 17 prosperity but the wide spread of poverty and deprivation of basic necessities is in everyones common knowledge. One may become curious that if the world is prosperous statistically, then why the majority of the world complains about prosperity. That is because of concentration of wealth in certain parts of the world. As an example, we can look at Asia. Although it indicates itself as a well to do continent in numbers, in reality it is mainly because of the huge economies in the East Asia, like Japan, Singapore, South Korea and others, and Middle Eastern Economies such as Saudi Arabia, Kuwait, Qatar and others. These parts of Asia are rich but you have a large number of third world developing countries, such as Bangladesh, Pakistan, Nepal, Sri Lanka and others, and even the war struck economies of Afghanistan and Iraq are also in Asia. Therefore, it can be established that prosperity is there but it is just not evenly distributed. Same can be said with Australia and South America. We, as people sharing the same planet, need to address this issue and do efforts to bring it to the lime light so that the prosperity and stability can be enjoyed worldwide, not in mere parts of the world.

5.3 Implications
Implications are very straight forward. There is enough wealth in the world to make a difference in peoples lives worldwide; there is just an absence of a proper mechanism to make it happen. Countries should be cooperating with one another to resolve this problem and to develop a road map to bring the standard of living of the people up to a certain level globally. There is an absence of a body which acts as an effective agent of prosperity among the countries.

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5.4 Future Research

In the light of our discussion, future research can be done on problems relating to the distribution of wealth. Keeping an eye on the problem of concentration of wealth in certain parts of the world, research work can be, and should be, done through which practical solutions can be proposed to form a system to channelize the wealth and resources to developing parts of the world. What factors are contributing as obstacles in development and is there a need to overhaul the economic system worldwide to achieve global prosperity, these questions should be addressed in future research work.

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Sri Devi Deepak, James L. Seale, Jr., and Charles B. Moss, (2003), Per Capita Income, Humana Capital and Inequality Convergence: A Latent Variable

Is our world poor? In the light of per capita income of all the countries of the world 20 Subhani, Dr. Muhammad Imtiaz,(2010) Impact of Fiscal Policy on the Economy of Pakistan Iqra University Tarasov, Alexander, (Nov 2008), Per Capita Income, Market Access Costs, and Trade Volumes University Of Munich.

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APPENDIX: