Friday, November 12, 2004

Asia's purchasing power

Many westerners still think that Asia is an extremely poor continent. For them, its low development level helps to explain why it still hasn't much influence in the world's affairs.
Fortunately, many of these westerners are also aware that Asian standards of living are fast catching up with Western ones. Off-course, the gap still exists.
Traditional explanations for poverty or wealth are: How many people work among all the population (employment level), how "hard" do they work (work hours per year), "physical capital" (machines, tools, plants, stores, highways etc.), "human capital" (education, on-the-job training, learning by doing, and natural ability), "natural resources" (land, minerals, water, oil etc.) and "technological knowledge" (best ways of producing something).

Low Income Countries: GDP/Capita is less than PPP$2,600
Lower Middle Income Countries: GDP/Capita is in between PPP$2,600 & PPP$6,800
Upper Middle Income Countries: GDP/Capita is in between PPP$6,800 & PPP$15,100
High Income Countries: GDP/Capita is more than PPP$15,100

On average, the population from East Asia & Pacific has "upper middle income" (PPP$7,200). That means many Asian people have too little purchasing power to afford buying cars or owning their own house. However, this is only an average: The Chinese (PPP$5,300), the Indonesians (PPP$3,500) and the Filipinos (PPP$4,500) have "lower middle income": many of them still live "in poverty" (earning just enough to buy the food they need). The Japanese (PPP$28,300) and the Koreans ($18,400) have high income, meaning their standards of living are so high that every household has at least one car and spend a lot of money on leisure activities and holidays. The Vietnamese (PPP$ 2,500) and the Burmese (PPP$1,400) have low income: most of them live in poverty with under-nutrition affecting part of the population (however, the prevalence of the underground economy means they are not that poor in reality). The Thais (PPP$7,400) have upper middle income.

People living in South or West Asia tend to have "lower middle income" (PPP$2,900). The Indians (PPP$2,800) now have "lower middle income" with a significant part of their population out of poverty - They used to be extremely poor 15 years ago. The Pakistanese (PPP$2,300) and the Bengladeshis (PPP$1,800) still have "low income". The Iranians (PPP$7,300) have "upper middle income".

All Western countries have "high income" (PPP$31,700): The Americans (PPP$38,000), the Germans (PPP$28,100), the French (PPP$27,000), the British (PPP$27,800), the Italians (PPP$27,500) as well as the Spanish (PPP$22,800).

People in Sub-saharan Africa have "low income" (PPP$1,800). The Nigerians (PPP$900), the Ethiopians (PPP$700) and the Congolese (PPP$600) are really poor. Almost alone in this part of the world, the South Africans (PPP$10,300) have "upper middle income".

The population of Latin America & the Caribbean have "upper middle income" (PPP$7,600). Brazilians (PPP$8,300) and Mexicans (PPP$9,400) have upper middle income. Columbians (PPP$6,500) have lower middle income.

People living in Central & Eastern Europe have "upper middle income" (PPP$8,900). The Russians (PPP$9,600) and the Turkish (PPP$6,900) have upper middle income. The Ukrainians (PPP$5,700) have lower middle income.

The Arab population have "lower middle income" (PPP$5,200): The Egyptians (PPP$3,900) have lower middle income. The Sudanese (PPP$2,100) have low income.

The population of Central Asia also have "lower middle income" (PPP$3,300).

On average, the world population has upper middle income (PPP$8,400)

Is the population of the poorest countries getting richer and richer compared to the richest countries?

As a whole, the purchasing power of the world population have increased by roughly 1/4 for the past 10 years.
Off-course, this is an average. On one hand, the purchasing power of people living in East Asia & Pacific have increased by half (+48%), on the other hand, the Africans remain almost as poor as 10 years ago (+7%).

Among the fast-growing areas, people living in South & West Asia have a 45% higher purchasing power. The Westerners managed to enjoy a 23% increase since 1994. People in Latin America don't have a much better standard of living (+9%). People living in Central & Eastern Europe enjoyed a +36% improvement in their "real income". The Arab population's purchasing power increased by only 15%, whereas people from Central Asia enjoyed a 45% increase.


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