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problems of LDCs

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Is it possible for the real income of everyone in society to rise even though the income distribution has become more unequal? Prove your answer with a numerical example and show your work.

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Solution:
In 1997, 35 percent of the world's people lived in low income countries, with an average annual income of about £220 per person. In the rich countries, people enjoyed an average annual income of about £ 16000 per person. Most of the world's people live in poverty beyond the imagination of people in rich Western countries. And, of course, not everyone in a country get exactly the average income. Even in some middle-income countries, many people live in great poverty.

Table 1 World welfare indicators, by country group, late 1990's
Low Income Middle Income Rich Industrial
Per capita GNP (£) ...

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