Inequality Within Countries

Inequality exists within regions of countries, both developed and developing.

Brazil and Turkey are among the world’s largest and most populous countries. At the national scale, the two countries fall somewhere in the middle of the pack in HDI. Among the 188 countries with HDI scores, Brazil ranks 79 and Turkey 64.

The extent of inequality within these countries can be seen in two ways. First is the difference between the HDI and IHDI. The two countries have similar HDI scores, but the gap between HDI and IHDI is much higher in Brazil than in Turkey, indicating that Brazil has a higher degree of inequality than does Turkey.

Inequality can also be seen through differences in GDP per capita among states or provinces within the countries. In both Turkey and Brazil, the GDP per capita is around $20,000 in the wealthiest areas and only $4,000 in the poorest areas. This is a much larger difference among regions than is found within developed countries. Brazil’s wealthiest regions are clustered in the southeast coast, including the country’s two largest cities, São Paulo and Rio de Janeiro.

Inequality Within Turkey

Inequality Within Brazil

Inequality can also be seen in contrasts among neighborhoods within the largest cities of developing countries (see Chapter 13). Wealthy people may live in modern high-rise apartments or single-family homes while poor people live in improvised structures made of inexpensive or reused materials.

Inequality Within Brazil

Tourists in Rio de Janeiro take photos with a background of slum housing (known in Brazil as favelas).

Regional Inequality Within Developed Countries

Developed countries also have regional internal variations in GDP per capita. In the United Kingdom, for example, incomes in Central London are twice as high as in some northern communities. In the United States, the GDP per capita is 22 percent above the national average in the wealthiest region (New England) and 10 percent below the national average in the poorest region (Southeast). This gap is much lower than in the twentieth century. Per capita income in the Southeast is now 90 percent of the national average, compared with 60 percent in 1950.

Inequality Within Great Britain

Median household income is higher in the south than in the north.

Inequality Within the United States

(a) In 1950, southern states had much lower average incomes than the north and west. (b) In 2015, regional differences in income are lower.

Widening Inequality Within Developed Countries

While regional inequality has been reduced in the United States, the overall gap between rich and poor has increased. Inequality was reduced in the twentieth century, because developed countries used some of their wealth to extend health care and education to more people, and to provide some financial assistance to poorer people. Since 1980, however, inequality has increased in most developed countries, including the United States and the United Kingdom.

Inequality in the United Kingdom

Local newspapers in London contrast bonus payments to bank executives and modest cash prize.

Widening Inequality in the U.S. and U.K.

The graph shows changes in the percent of total national income received by the richest 1 percent. The share held by the wealthiest 1 percent declined in the United States and the United Kingdom for most of the twentieth century but has increased in recent decades.

Pause & Reflect 10.2.2

Even though regional inequality in the U.S. has diminished, what probably explains why inequality overall has increased considerably?