# 12.2: Global, National, Regional and Local Patterns

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# Global, National, Regional & Local Patterns

## How Fast Does the Global Economy Grow and How Much Money Is There in the World?

With 78 of the world’s more than 200 countries and territories categorized by the World Bank as high and 64 are low or lower middle income, it is tempting to believe that wealth distribution might be relatively balanced in the world. After all, more people than ever are connected to the global economy. Instead, inequalities have been exacerbated by global capitalism in recent years. Jeff Bezos, the founder of Amazon, has a net worth of $105 billion, a figure that is larger than the annual GDP of 150 countries! Meanwhile, 800 million people earn less than$2.00 per day. Such click-bait worthy headlines, while fascinating, can also be misleading. Thirty-five percent of the world lived in extreme poverty in 1990. By 2013 that figure dropped to 11%, representing a shift of nearly 1.1 billion people out of extreme poverty. Nonetheless, economic differences between most wealthy countries compared to most poor countries have widened over that same period rather than narrowed.

The number of those entering the formal economy rose dramatically during that time period, so categorizing somebody as not in ‘extreme poverty’ simply because they earn more than $2.00 a day is also quite problematic. The majority of those that rose out of extreme poverty were in just two countries (India or in China), where hundreds of millions of people left unpaid work on subsistence farms and moved to cities, where they earned just a little bit of money. Does that make a country more developed or a person better off? In economic terms, the answer is yes, but in more qualitative terms, the answer is not quite so clear. The global economy has grown persistently since 1960 as evidenced by Figure 9.5, with the most dramatic growth occurring since 2000. As a matter of fact, global GDP nearly doubled between 2002 ($34.6 trillion) and 2016 ($76 trillion)! So it took all of the economies of the planet tens of thousands of years to go from zero to$34 trillion, but then only 14 years to double that figure. Hmmm. Does this represent sustainable development – one that can continue into the future? Moreover, can the planet handle the effects of continued growth, consumption, CO2 emissions, and water pollution across the world at such a persistent growth rate? Such questions are difficult to assess and will be dealt with more substantially in the last chapter of this text. For now, it’s important simply to understand that economic growth is just one of many indicators used to understand development and well-being, and the implications for economic growth come with complications. Finally, economic growth across the planet is uneven and difficult to predict. In spite of what appears to be a fairly even upward movement in global GDP, one can see more clearly the complex nature of GDP growth in Figure 9.5 that shows the wild changes in growth that vary dramatically by place and time. In the 20 years from 1996-2016, Russia (an upper tier country) experienced many years of negative growth, while Rwanda (a lowest tier country) experienced rates of growth up to 14%, much higher than that of any other country. U.S. growth was negative in 2009 and has hovered around 2-3% in subsequent years. China’s annual growth, that had averaged 12% for several years dropped to around 7%, where it is expected to remain into the 2020’s.

Figure Gross Domestic Product 1960-2016 in current US\$ Author | The World Bank Source | The World Bank License | CC BY 4.0

The most basic spatial patterns of wealth and income can be easily observed in the maps and figures presented thus far in this chapter. Wealthier countries tend to be those in the Global North (North America, Europe, Japan, Australia, New Zealand), while poorer countries tend to be in the Global South (everywhere else). However, such generalizations are problematic in truly understanding wealth and well-being around the planet. Let’s take a brief look at Latin America, for example. Mexico, by most accounts, is considered a developing country (another name for ‘less developed country’ that is on a pathway to improving). It falls south of the Brandt line, and is considered poor by most American standards. However, its per capita income places it in the top third of all countries and its economy is the 15th largest in the world. Carlos Slim, once the wealthiest person in the world, is Mexican and its economic performance far outpaces all of its neighboring countries to the south. The difference in economic indicators between Mexico and Haiti, for example, is greater than the difference between Mexico and the U.S. As such, it’s important to be wary of simplistic categorization schemes in terms of wealth and development.

Moreover, in recent decades dozens of newly industrialized countries (NIC’s) have emerged that have reached or approached MDC status. Such places have moved away from agriculture-based economies to more industrial, service, and information-based systems. One example is a group of places known as the Asian Tigers or Asian Dragons (Singapore, South Korea, Hong Kong, and Taiwan), where massive investment in infrastructure and education facilitated an equally massive transformation of the economy in a very short period of time. South Korea, for example, lay in ruins at the climax of its civil war (1953), but has miraculously risen to a level of wealth similar to that of Italy. Another group of countries termed the BRICS (Brazil, Russia, India, China, and South Africa) fall outside of the Global North, but have experienced dramatic economic growth, raising its collective share of the global economy from 11% to 30% in just 25 years. Those countries continue to wield more political power in direct relation to the rise in economic might, and this could shift the economic, social, and political landscape of the world in the coming decades. Another group of NIC’s are the oil-rich Gulf States of Qatar, United Arab Emirates, Saudi Arabia, Kuwait, Iran, and possibly a few others. Such entities have accumulated massive amounts of wealth as a result of absolute advantage, the abundance of rare and high-valued commodities. Other countries enjoy absolute advantage due to climatic conditions for growing coffee, tobacco, tropical fruit, etc. The high price of oil and its concentrated supply, however, have facilitate massive economic growth in places that were traditionally poor and less developed than in recent years. Perhaps you are familiar with some of the recent development projects in this region of the world. The tallest building in the world (Burj Khalifa) and the world’s most ambitious set of artificial island construction projects are both located in the United Arab Emirates (UAE) (Figure 9.6) as evidence of the Gulf States development efforts in the 21st century.

Figure | Annual Growth Rates in GDP, selected countries, 1996-2016 Author | The World Bank Source | The World Bank License | CC BY 4.0

In spite of the obvious wealth benefits that accrue in oil-rich or other resource laden countries, they can also suffer what’s termed the Resource Curse (aka Dutch Disease), as the benefits of a highly valuable commodity do not spread to other members of society and violence/conflict emerge as groups fight over the resource. While income may be very high, millions of workers continue to face horrendous work conditions directly related to development efforts. In Qatar, for example, thousands of workers have died during the massive construction of new stadiums and other infrastructure required to host the World Cup in 2022. Other examples of Dutch Disease can be found in Nigeria (oil), South Africa (diamonds), and the Democratic Republic of Congo (coltan).

Figure | Burj Khalifa, Dubai, United Arab Emirates Author | User “Donaldytong” Source | Wikipedia License | CC BY SA 3.0

Figure | Artificial Island Construction, Dubai, United Arab Emirates Author | User “Lencer” Source | Wikimedia Commons License | CC BY SA 3.0

12.2: Global, National, Regional and Local Patterns is shared under a CC BY-NC 4.0 license and was authored, remixed, and/or curated by LibreTexts.