In 1990, 36% of the world’s population (nearly 2 billion people) lived in absolute poverty. This high rate of poverty and other issues of global stratification prompted the United Nations to develop a set of goals and policies at the turn of the 21st century called the Millennium Development Goals (MDGs). The main objectives of these goals were to reduce poverty, hunger, disease, illiteracy, discrimination against women and environmental degradation by 2015 (World Health Organization, 2018). While progress was made as a result of these goals, including cutting the rate of global poverty by half, further work was needed. As 2015 drew near, the United Nations reestablished its commitment to these goals and more with a new set of objectives called the Sustainable Development Goals (SDGs), to be achieved by 2030. Ending poverty in all its forms is the first of the seventeen SDGs (United Nations, n.d.).

As discussed, programs tied to the MDGs and SDGs reduced global poverty significantly. By 2015, only 10 percent of the world’s population (734 million people) were in absolute poverty, and by 2019, that percentage had fallen again to 9%, a remarkable decline when compared to the 1990 figure of 36% (United Nations, n.d.; The Borgen Project, 2020). Unfortunately, this trend is now reversing. A World Bank Press Release from October 2020 read, “COVID-19 to Add as Many as 150 Million Extreme Poor by 2021” (World Bank, 2020). Projections from the United Nations and World Bank indicate that, in the face of the COVID-19 pandemic, the progress made in reducing poverty since the turn of the millennium will be set back years. Especially hard hit will be countries in sub-Saharan Africa and south Asia. Additionally, the World Bank estimates that by 2030, between 68-132 million more people could be pushed into poverty due to climate change induced flooding (World Bank, 2021). The goal of achieving a poverty free world by 2030 now looks unattainable. While we can see that genuine progress to reduce global inequality can be made through a concerted and organized effort, the impact of climate change and the COVID-19 pandemic demonstrates how rapidly this progress can be unwound. In this respect, the ups and downs of global poverty tells us much about global stratification and demography, the subjects of this chapter. We first discuss the dimensions and extent of global stratification before turning to its impact and associated theoretical explanations. We will see that many nations around the world are in, and have long been in, a dire situation made worse by ongoing crises, but we will also examine possible strategies, such as the establishment of the MDGs and SDGs, for improving their situation.

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Global Stratification

Stratification within the United States was discussed in Chapter 7. As we saw then, there is a vast difference between the richest and poorest segments of American society. Stratification also exists across the world. Global stratification refers to the unequal distribution of wealth, power, prestige, resources, and influence among the world’s nations. Put more simply, there is an extreme difference between the richest and poorest nations. Similar to a social class structure, when comparing the world’s nations, we find a few nations are very wealthy, while others are mid-range with a modicum of well-being and still others are poor. Reflecting this latter fact, as we discussed, approximately 9% of the world’s population lives on less than $1.90 per day and are considered poor (The Borgen Project, 2020). Further, nearly half of the world’s population lives on less than $5.50 per day, or just over $2000 per year, meaning that 3.4 billion people struggle each day to meet their basic needs (World Bank, 2018). This is in comparison to the 7% who are high-income, with incomes of $50 per day or more at their disposal (Alberti, 2015).

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The world’s poor are concentrated regionally in sub-Saharan Africa and south Asia. For instance, several countries in sub-Saharan Africa, such as Madagascar, Democratic Republic of Congo, South Sudan and Burundi have more than 70% of their total population classified as poor, living on $1.90 per day or less (World Bank, n.d.). Conversely, in Northern Europe and North America, few experience this level of poverty, and the majority of these populations are considered high-income on the global income scale discussed above. The country of Norway has the highest percentage of its population considered high-income, with 77.2% of Norwegians in this category (Alberti, 2015).

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Classifying Global Stratification

One way to conceive of these disparities is to examine how income is distributed by quintiles. The richest fifth of the world’s population controls approximately 70% of the world’s income, while the poorest fifth of the world’s population have only 2% of the world’s income, and the poorest two-fifths together have only 6.2% of the world’s total income (Ortiz and Cummins, 2011). Figure 8.1 “Global Income Distribution (Percentage of World Income Held by Each Fifth of World Population)” helps visualize the degree of inequality related to global income distribution.

Figure 8.1 Global Income Distribution (% of World Income Held by Each Fifth of World Population)

Source: Data from Ortiz, Isabel and Matthew Cummins. (2011). Global Inequality: Beyond the Bottom Billion. New York, NY: United Nations Children’s Fund. https://childimpact.unicef-irc.org/documents/view/id/120/lang/en

As these figures make clear, the world is indeed stratified. To understand global stratification, it is helpful to classify nations into three or four categories based on their degree of wealth or poverty, their level of industrialization and economic development, and related factors. Over the decades, scholars and international organizations such as the United Nations and the World Bank have used various classification systems, or typologies.

One of the first typologies came into use after World War II and classified nations as falling into the First World, Second World, and Third World. The First World was generally the Western capitalist democracies of North America and of Europe and certain other nations (e.g., Australia, New Zealand, and Japan). The Second World was the communist nations belonging to the Soviet Union, while the Third World was all the remaining nations, almost all of them from Central and South America, Africa, and Asia. This classification was useful in distinguishing capitalist and communist countries and in calling attention to the many nations composing the Third World. However, it was primarily a political classification rather than a stratification classification. This problem, along with the demise of the Soviet Union by the end of 1991, caused this typology to fall out of favor.

Today a popular typology simply ranks nations by their level of economic strength into groups called high-income nations, middle-income nations, and low-income nations. These categories are based on measures such as gross domestic product (GDP) per capita (the total value of a nation’s goods and services divided by its population). This typology has the advantage of emphasizing the most important variable in global stratification: how much wealth a nation has. At the risk of being somewhat simplistic, the other important differences among the world’s nations all stem from their degree of wealth or poverty.

Typologies based on GDP per capita or similar economic measures are very useful, but they also have a significant limitation. Nations can rank similarly on GDP per capita (or another economic measure) but still differ in other respects. One nation might have lower infant mortality, another might have higher life expectancy, and a third might have better sanitation. Recognizing this limitation, organizations such as the United Nations Development Programme (UNDP) use typologies based on a broader range of measures than GDP per capita. A very popular typology is the UNDP’s Human Development Index (HDI), which is a composite measure of a nation’s income, health, and education. This index is based on a formula that combines a nation’s GDP per capita as a measure of income; life expectancy at birth as a measure of health; and the adult literacy rate and enrollment in primary, secondary, and higher education as measures of education. Figure 8.2 “Human Development Index Map” shows how nations rank according to their HDI values. The closer the HDI number is to 1.0, the greater the well-being, and closer the HDI number is to 0.0, the lower the level of well-being.

Figure 8.2 Human Development Index Map

JackintheBox – CC BY-SA 4.0 – Wikimedia Commons

As demonstrated above, countries with similar HDI scores tend to be geographically concentrated. For instance, in 2020, the countries ranked in the top 10 were all found in Europe, with the exception of Hong Kong (#4), while all countries ranked in the bottom 10 were found in sub-Saharan Africa. Table 8.1 “Human Development Index Data” shows the countries with the highest and lowest HDI values and some of the variables used to determine these values.

Table 8.1: Human Development Index Data

Source: data from “Human Development Reports.” | Human Development Reports, hdr.undp.org/en/composite/HDI. Retrieved from http://hdr.undp.org/en/content/latest-human-development-index-ranking

The HDI has been widely used since the 1990s and reminds us that nations differ dramatically not only in their economic well-being but also in their social well-being. However, because health, education, and other social indicators do depend so heavily on wealth, our discussion of global stratification for the remainder of this chapter will use the familiar classification of high-income, middle-income, and low-income nations. We now highlight the basic differences among these three categories of nations.

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High-Income Nations

High-Income nations are typically post-industrial, and they consist primarily of the nations of North America and Western Europe; Australia and New Zealand; and certain other nations in the Middle East (e.g., Kuwait, Qatar and the United Arab Emirates) and Asia (e.g., Japan and Singapore). Many of them were the first nations to become industrialized starting in the 19th century, and their early industrialization certainly contributed to the great wealth they enjoy today. Yet it is also true that many Western European nations were also wealthy before the Industrial Revolution, thanks in part to the fact that they had been colonial powers and acquired wealth from the resources of the lands and people they colonized. Due to this fact, one of the explanations for the establishment of global stratification is the fact of colonization (discussed further in 8.3 Explaining Global Stratification).

Although high-income nations constitute only about one-sixth of the world’s population, they hold about four-fifths of the world’s entire wealth. They are the leading nations in industry, high finance, and information technology and exercise political, economic, and cultural influence across the planet. As the 2007-2009 Great Recession illustrates, when the economies of just a few wealthy nations suffer, the economies of other nations and indeed of the entire world can suffer. Although each of the world’s wealthy nations is internally stratified to a greater or lesser degree, these nations as a group live a much more comfortable existence than middle-income nations and, especially, low-income nations. People in high-income nations are healthier and more educated, and they enjoy longer lives. At the same time, high-income nations use up more than their fair share of the world’s natural resources, and their high level of industrialization causes them to pollute and otherwise contribute to climate change to a far greater degree than is true of nations in the other two categories.

High income nations are estimated to have an ecological footprint on average five times that of low income nations. This is due to the high levels of extraction and use of natural resources, contributing to an outsize share of land, water and air pollution, carbon emission and climate change. Chris LeBoutillier – Pexels

Middle-Income Nations

Middle-income nations are generally industrialized, although the level of industrialization ranges significantly. They consist primarily of nations in Central and South America, Eastern Europe, and parts of Africa and Asia, and constitute about one-third of the world’s population. Many of these nations have abundant natural resources but still have high levels of poverty, partly because corrupt leaders sell the resources to wealthy nations and keep much of the income from these sales for themselves.

There is much variation in income and wealth within the middle-income category, even within the same continent. In Central America, for example, the gross national income per capita of the middle-income neighboring countries of Costa Rica and Nicaragua in 2020 were $18,670 and $5,700 respectively (Population Reference Bureau, 2020). Many international organizations and scholars thus find it useful to further divide middle-income nations into upper-middle income nations and lower-middle income nations. Not surprisingly, many more people in the latter nations live in dire economic circumstances than those in the former nations. In Nicaragua, for example, 46.2% of the population live in poverty, compared to 26.2% in Costa Rica.

Haiti, a lower middle-income nation with a gross national income per capita of $2930, has a high rate of poverty, much political corruption and has experienced numerous natural disasters from which it has struggled to overcome. Kelly L – Pexels

Low-Income Nations

Low-income nations are the least industrialized and most agricultural of all the world’s countries. This category consists primarily of nations in Africa and parts of Asia and constitutes roughly half of the world’s population. They have some natural resources that political leaders again sell to wealthier nations while keeping much of the income they gain from these sales. Many of these nations rely heavily on one or two crops (known as monocropping), and if weather conditions render a crop unproductive in a particular season, the nations’ hungry may experience famine. By the same token, if economic conditions reduce the price of a crop or other natural resource, the income from exports of these commodities plummets, and these already poor nations become even poorer. An example of this latter problem occurred in Vietnam, a leading exporter of coffee, and at the time a low-income nation. As coffee prices rose during the 1990s, Vietnam expanded its coffee production by greatly increasing the amount of acreage devoted to growing coffee beans. When the price of coffee plummeted in the early 2000s, Vietnam’s coffee industry, including the farmers who grow coffee, suffered huge losses. Many farmers destroyed their coffee plants to be able to grow other crops they thought would be more profitable (Huy, 2010). Because farmers in poor nations often change their crops in this manner for economic reasons, it is difficult for these nations to sustain a stable agricultural industry.

Access to clean water is a major concern in low-income nations.  United Nations Photo – Maslakh Camp for Displaced, Afghanistan – CC BY-NC-ND 2.0

By any standard, many people in these nations face grave challenges. They may suffer from HIV/AIDS, malaria and other deadly diseases, are often malnourished, and lack indoor plumbing, electricity, and other modern conveniences that most of us take for granted.

Test Yourself

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Global Poverty

In addition to classifying nations according to their ranking on a stratification typology, scholars and international organizations also determine the level of poverty in each nation. This determination provides valuable information beyond a nation’s GDP per capita or similar measure of wealth. Wealth and poverty are, of course, highly correlated: generally speaking, the wealthier a nation, the lower its level of poverty. However, this correlation is not perfect, and considering nations only in terms of their wealth may obscure important differences in their levels of poverty. For example, two nations, which we will call Nation A and Nation B, may have similar GDP per capita. In Nation A, wealth from its GDP is fairly evenly distributed, and relatively few people are poor. In Nation B, almost all wealth is held by a small number of incredibly rich people, and many people are poor. A nation’s level of poverty thus tells us what proportion of the population is living in impoverished conditions, regardless of the nation’s level of wealth.

Although it is important, then, to measure the poverty level of the nations of the world, it is rather difficult to do so. One problem is that the different nations have different standards of living. If an American woman who has a family to feed earns $10 per day, or about $3,650 per year, she and her family are very poor by American standards. However, a woman who earns the equivalent of $10 per day in many poor nations may be well off by those nations’ standards, and she would be able to afford many more goods and services than her American counterpart.

Another problem was first encountered in Chapter 7 in the discussion of poverty in the United States. No matter what income level might be used as an “official” poverty line for the nations of the world, this level is inevitably an arbitrary number. An individual or family whose income is just a bit above the official poverty line is not counted as being officially poor, even though they are still poor for all practical purposes. Moreover, the most common measures of official global poverty ignore episodic poverty. Individuals and families may move into and out of poverty within a given year or two, often more than once. Measures of global poverty (as well as measures of U.S. poverty) determine the number of poor people at one point in time and thus provide an underestimate of the number of people who are poor at least once in a given year.

A third problem concerns exactly what is meant by poverty. Although poverty is usually thought of in monetary terms, some analysts emphasize that poverty involves things in addition to money, such as inadequate nutrition and illiteracy. These analysts favor using measures such as calorie consumption or level of malnutrition as indicators of poverty.

How, then, is global poverty measured? A very common and popular measure is one used by the World Bank, an international institution, funded by wealthy nations, that provides loans, grants, and other aid to help poor and middle-income nations develop their infrastructure and thus reduce their poverty. The World Bank puts the official global poverty line (which is considered a measure of absolute poverty) at income under $1.90 per person per day (updated in 2015), which amounts to about $694 yearly per person or $2,774 for a family of four. Absolute poverty is the level of poverty at which an individual struggles to meet basic needs, such as having adequate nutrition and shelter. As was discussed at the beginning of this section, in 2019, 9% of the world’s population were in absolute poverty, which equated to 691 million people. It is estimated that in 2020, due to the COVID-19 pandemic, an additional 100 million people fell into absolute poverty (World Bank, 2021). People in absolute poverty mostly live in rural communities, they are disproportionately young, female, poorly educated and employed in agriculture.

Poverty Indexes

In addition to the Human Development Index discussed earlier in this chapter, the United Nations Development Programme (UNDP) also developed a similar measure to determine global poverty called the Multidimensional Poverty Index (MPI). This measure reflects the UNDP’s belief that poverty means more than a lack of money and that measures of poverty must include nonmonetary components of social well-being. Accordingly, the MPI incorporates a range of deprivation measures applied to each nation’s households. Households are considered poor according to their composite score on three categories of indicators of deprivation, including health (child mortality and nutrition), education (school completion and enrollment) and standard of living (electricity, drinking water, sanitation, cooking fuel, flooring and other assets). A person is considered poor if he or she experiences deprivation in any of the following combinations of indicators:

• any two health and/or education indicators, or
• all six standard of living indicators, or
• one health/education indicator plus three standard of living indicators.

When the MPI is used to measure poverty, of the 107 developing countries examined in 2020, 22% of the population of these nations, or 1.3 billion people, live in multidimensional poverty. Half of individuals who are multidimensionally poor are children under age 18, and multidimensional poverty is concentrated in sub-Saharan Africa and south Asia, where 84.3% of the multidimensionally poor live. A full half of poor people on the planet, according to the MPI, live in south Asia, and one-fourth live in Africa (Alkire, et. al., 2020). The six poorest nations according to the MPI are all African, including Niger, South Sudan, Ethiopia, Chad, Burundi and Mozambique, where between 73% and 92% of their populations live in poverty.

Global Inequality

As first discussed in Chapter 7, another dimension of stratification is economic inequality, which refers to the gap between the richest and poorest segments of society. We saw then that the United States has more economic inequality than other Western democracies, as the income and wealth difference between the richest and poorest people in the United States is greater than that in these other nations.

As this discussion suggested, to understand stratification it is important to understand economic inequality. Global economic inequality (hereafter global inequality) has two dimensions. The first dimension involves the large economic gap between the high- and low-income nations of the world, as discussed earlier in this chapter. The second form of global inequality involves comparisons of the degree of economic inequality found within each nation. This type of information adds a valuable complement to measures of wealth (e.g., GDP per capita) and measures of poverty (e.g., the World Bank’s $1.90 per person per day). For example, Nation A and Nation B may have similar levels of poverty. In Nation A, however, poverty is evenly distributed throughout the population, and almost everyone is poor. In Nation B, a small segment of the population is very rich, while a much larger segment is very poor. Nation B would thus have more economic inequality than Nation A.

Around the world, inequality is generally highest in agricultural nations (or those that are low-income) and lowest in post-industrial nations (or those that are high-income). In agricultural societies, a small elite usually owns most of the land and is very wealthy, and the masses of people either work for the elite or on their own small, poor farms. Industrial and post-industrial societies have lower inequality because they have higher literacy rates and more political rights and because they generally provide more opportunity for people to move up the socioeconomic ladder (Nolan & Lenski, 2009).

Figure 8.3 Gini Coefficients, 2018

DennisWikipediaWiki- CC BY-SA 4.0 – Wikimedia Commons

The most popular measure of economic inequality, and one used by the World Bank, is the Gini coefficient. Its calculation need not concern us, but it ranges from 0 to 100, where 0 means that income is the same for everyone (no economic inequality at all, or perfect equality), and 100 means that one person has all the income (perfect inequality). Thus, the nearer the Gini coefficient is to 100, the higher the degree of a nation’s economic inequality. Figure 8.3 “Gini Coefficients, 2018,” above, shows Gini coefficients around the world; economic inequality is indeed higher in the agricultural regions of Latin America and the Caribbean, Africa and South Asia than in the industrial and post-industrial regions.

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Test Yourself

 

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Section 8.1 References

Alberti, Danielle. (2015, July 8).  World Population by Income. Pew Research Center’s Global Attitudes Project. https://www.pewresearch.org/global/interactives/global-population-by-income/.

Alkire, Sabina, Pedro Conceição, Cecilia Calderón, Jakob Dirksen, Maya Evans, Rolando Gonzales, Jon Hall, Admir Jahic, Usha Kanagaratnam, Maarit Kivilo, Milorad Kovacevic, Fanni Kovesdi, Corinne Mitchell, Ricardo Nogales, Anna Ortubia, Mónica Pinilla-Roncancio, Natalie Quinn, Carolina, Rivera, Sophie Scharlin-Pettee and Nicolai Suppa.  (2020).  Charting Pathways out of Multidimensional Poverty:  Achieving the SDGs.  United Nations Development Programme and Oxford Poverty and Human Development Initiative.  Retrieved from http://hdr.undp.org/sites/default/files/hdr2019.pdf

The Borgen Project.  (2020, April 1). Global poverty reduction from 2000 to 2020. The Borgen Project. Retrieved from https://borgenproject.org/global-poverty-reduction/.

Central Intelligence Agency. (n.d.). World Factbook.  Central Intelligence Agency. Retrieved from https://www.cia.gov/the-world-factbook/.

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Human Development Reports. (n.d.).  New York, NY: United Nations Development Programme. Retrieved from http://hdr.undp.org/en/content/latest-human-development-index-ranking.

Huy, N. Q. (2010). Coffee production and consumption in Vietnam. Retrieved from http://www.docstoc.com/docs/ 27139628/COFFEE-PRODUCTION-AND-CONSUMPTION-IN-VIETNAM-Prepared-by-Nguyen.

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Nolan, P. and G. Lenski (2009). Human societies: An introduction to macrosociology (11th ed.). Boulder, CO: Paradigm.

Ortiz, Isabel and Matthew Cummins.  (2011, April).  Global inequality: Beyond the bottom billion.  UNICEF.  New York, NY: United Nations Children’s Fund. Retrieved from https://childimpact.unicef-irc.org/documents/view/id/120/lang/en.

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World Bank. (2018, October 17). Nearly half the world lives on less than $5.50 a day. World Bank. Retrieved from https://www.worldbank.org/en/news/press-release/2018/10/17/nearly-half-the-world-lives-on-less-than-550-a-day.

World Bank. (2020, October 7). Covid-19 to add as many as 150 million extreme poor by 2021. World Bank. Retrieved from https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021.

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World Health Organization. (2018, February 19.). Millennium development goals (mdgs). World Health Organization. Retrieved from https://www.who.int/news-room/fact-sheets/detail/millennium-development-goals-(mdgs).

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