World wealth is the total sum of the value of a nation’s assets minus its liabilities. It refers to the total value of net wealth possessed by the citizens of a nation at a set point in time. It is the most significant component among most developed nations and it is commonly reported as household net worth and it reflects infrastructure investment.
This figure is an important indicator of a nation’s ability to take on debt and sustain spending and is influenced not only by real estate prices, equity market prices, exchange rates, liabilities, and incidence in a country of the adult population, but also human resources, natural resources, and capital and technological advancements, which may create new assets or render others worthless in the future.
The financial concept of wealth is broad, and it can take many forms.
While your wealth is most likely driven by the money in your bank account and the value of your stock portfolio and house, wealth also includes many smaller things, such as the old furniture in your garage or a painting on the wall.
From the macro perspective of a country, wealth is even more all-encompassing. It’s not just about the assets held by private households or businesses, but also those owned by the public. What is the value of a new toll bridge, or an aging nuclear power plant?
In this article, we will perform basic visualization with Microsoft Power BI to explore the wealthiest and poorest countries in the world (2019). The data used in this article was sourced from makeovermonday.
Use the map below to explore a glimpse into wealth distribution in regions and various countries in the world.
Distribution of wealth by Region
The total wealth in the world sums up to be $360.47 Trillion. In the past year, global wealth grew by 2.6% to $360Trillion. Wealth per adult reached a new record of $70,850.
In the visualization above, North America is the wealthiest region with above $115 Trillion, followed by Europe with a total wealth of $90.65 Trillion and the least/poorest region is Africa with less than $5 Trillion total wealth.
This observation could be because most countries in North America and Europe fall into the category of developed nations. Both have rich and varied resources. While most countries in Africa are developing or underdeveloped with high-income inequality and poverty. The United States, Europe, and China control comparable amounts of the world’s wealth, indicating how important trade relationships are to the global economy.
Distribution of wealth by country
The chart above shows the distribution of wealth by countries. The United state remains by far the richest country in the world, controlling about $106 Trillion of wealth followed by China and Japan. Taken together, countries in Asia have a higher net worth than the United States at $141.25 Trillion.
According to Vilfredo Pareto an Italian Civil engineer and economist, a relatively small percentage of countries account for a relatively large percentage of world wealth. The chart above proves the argument of Pareto to be true when looking at wealth distribution between countries. It shows that the top 20% of countries account for over 80% of the World’s wealth (2019).
The 10 wealthiest countries combine for 75% of global wealth. Leading the pack is the United States, which holds above $106 Trillion of the world’s wealth equal to a 29.4% share of the global total. Roughly the same as the next 3 countries combined. Interestingly, the United States economy makes up 23.9% of the size of the world economy in comparison. Behind the United States is China, the only other country with a double-digit share of global wealth, equal to 17.7% of wealth or $63.8 trillion. As the country continues to build out its middle class, one estimate sees Chinese private wealth increasing by 119.5% over the next decade. Impressively, the combined wealth of the U.S. and China is more than the next 13 countries in aggregate and almost equal to half of the global wealth total.
Despite accounting for only about 4.25% of the total world population. United States of America controls 29.4% of total wealth in the world. From the above Visualization, the top 3 wealthiest countries in the world are the United States, China, and Japan. The 3 countries control over 54% of Global wealth.
It is the significant imbalance in the distribution of wealth between individuals, groups, populations, or countries. Income inequality is a major dimension of social hierarchy and class. It affects and is affected by many other forms of inequality, such as inequalities of wealth, political power, and social status. Income is a major determinant of quality of life, affecting the health and well-being of individuals and families, and varies by social factors such as sex, age, and race or ethnicity.
Although North America accounts for only 5% of the world’s population, it holds one-third of the global wealth. India, Latin America, and Africa on the other hand account for 43% of the world’s population, but only 7% of its wealth. This shows the gap in the level of wealth inequality in the world.
The chart above shows the distribution of countries with wealth less than $3 Trillion. Most of the countries that fall into these categories are located in Africa and Latin America. Levels of global inequality remain extreme, with persistent high numbers of people in total poverty. The poverty of under-developed countries is also obvious in our visuals. Africa and Latin America only control 1.14% and 2.75% of the world’s wealth respectively.
According to the World Bank, in 2012 nearly 13 percent of the world’s population received less than $1.90 per day, and some 2.1 billion people, about 35 percent, lived on less than $3.10 per day. Such poverty produces low levels of education, sanitation, nourishment, and medical care and high rates of child labour and exploitation as well as child and infant mortality. Approximately 29,000 children die daily from mainly preventable causes. Wealth is even more unequally distributed. The richest 1 percent of the world’s population owns more wealth than the rest of the world combined. For example, from the world wealth data, the US is the richest country in the world with almost 30% of the entire world’s net worth, and the top 10 countries with the most wealth account for 75% of the world wealth. This shows the disparity in wealth distribution all over the world.
Policy intervention that can address poverty and wealth inequality
Increase minimum wage: Research shows that higher wages for the lowest-paid workers has the potential to help nearly 4.6 million people out of poverty and add approximately $2 billion to the nation’s overall real income. Additionally, increasing the minimum wage does not hurt employment nor does it retard economic growth.
Build assets for working families: Policies that encourage higher savings rates and lower the cost of building assets for working- and middle-class households can provide better economic security for struggling families. New programs that automatically enroll workers in retirement plans and provide a savings credit or a federal match for retirement savings accounts could help lower-income households build wealth.
Invest in Education: Differences in early education and school quality are the most important components contributing to persistent inequality across generations. Investments in education, beginning in early childhood with programs can increase economic mobility, contribute to increased productivity and decrease inequality.
Make the tax code more progressive: It is a great irony that tax rates for those at the top have been declining even as their share of income and wealth has increased dramatically.
Each of these policies, if carefully implemented, has the potential to lift working families out of poverty, support greater economic mobility, and/or reduce the growth of inequality especially in a region such as Africa, Latin America, and India. All of these policies could be enacted at the local, state and federal levels if there is political will.
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