Malaysia 's Income Inequality Trend Essay

Why are Some Nations Rich and Others Poor? Introduction Over the years, a nation’s economy will change drastically and, due to a large variety of factors, there are now countries who are significantly wealthier than others. These factors range from lack of education, to lack of natural resources and all of them notably effect the economy of a country.

The issue of income inequality in the United States is complicated and does not have a definite answer. Income inequality can be measured in a few different ways. The first measurement for the income inequality in a country is to look at the percentages on households and group them into income categories, called distribution by income category. The second measurement for income inequality is called distribution by quintiles or fifths. This is when you divide the total number of people, households, families into five groups called quintiles to examine the percentage of total before tax income received by each quintile. Each quintile would then be ordered by income and households in the category.

Japan has a HDI rank of 17th determined by its $US 36,332 GDP per capita whereas Australia’s HDI rank is 2nd and has a GDP per capita of $US 61,219. These rankings and GDPs are determined by Japans 0.933 HDI, 83.6 age life expectancy and 11.5 mean years of education. Australia’s ranking and GDP are determined by its 0.890 HDI, 82.5 age life expectancy and 12.8 mean years of education.

Furthermore Australia’s largest sector is in services whereas Indonesia’s is in industry. This could reflect the lack of tertiary education available in Indonesia as the workers will mainly be unskilled or low skilled. The GDP per capita is also drastically different and this would represent the average income in each economy, hence also reflecting the quality of life experienced.

As you can see in figure 2, the Indonesian GDP grew 144% from 2006, in monetary value this equates to $364 Billion to

Indonesia is now the 15th largest economy on the planet with a global output of just under 1.5% but is expected to rise in the coming years. Manufacturing is the largest single component of Indonesia’s economy with its main exports including crude petroleum and natural gas as well as rubber, coffee, cocoa and palm oil while Australia mostly benefits from exporting mineral fuels, gems, precious metals and meat. Indonesia received $187.3 billion USD from exports in 2012 ranking it 27th in profit from global exports but Australia placed 22nd and profited a total of $257.9 billion USD from its exports leaving Indonesia in the dust. Although Indonesia has showed significant growth recently their quality of life is still worse than Australia’s due to a lower Gross Domestic Product or GDP. GDP is the total value of goods produced and services provided within a country in the duration of a year and determines the strength of a countries currency.

There are many challenges in comparing data between economies, or in a single economy in different years. Examples of challenges include:

Recently, studies have shown that income inequality has many connections that have caused the gap in the United States. According to the research I found, income inequality is connected to corruption, trade, wages of workers, and education. The world income inequality had declined since the twentieth century according to the studies found (Clark). Corruption falls increasing on low income individuals more than higher income individuals. Additionally, the trade theory suggests that the free trade might have level up the income inequality higher within countries by the different patterns of wages and demand for workers who are skilled and unskilled (Silva and Leichenko). Moreover, the education of wealthier people has it easier because the

Income inequality is universally known as the divide in acquisition of wealth between the elites of the world and the poorest of the world. As far as developed nations go across the world, the United States holds most of the differences between the rich and the poor. Ray Williams outlines in his paper that “the richest 20 percent of American society [control] about 84 percent of the country’s wealth” which is a huge abundance of wealth to be held by such a small percent of citizens in one country

Indonesia is fourth country after with high population of elderly. It is estimated the population of elderly will increase

Concerning Singapore and Japan, both countries are developed. But their immigration admissions are different, which may result in different perceptions and impacts. According to a report from The Economist Intelligence Unit, regarding of democracy countries ranking list in 2012, Japan had a high score 8.08, in the 20th position of 167 countries. Singapore ranked at number 75. (Economist Intelligence Unit, 2013) In 2013,The International Monetary Fund estimated Singapore’s GDP was $78,762 per capita, and Japan had $36,208 per capita.(World Economic Outlook Database, 2014, ) Both countries obtain high democracy and economy level, but their net migration rates are totally different. The World Factbook found out that Singapore permits around 14.55 migrants per 1000 population but Japan was closely to 0.00. (World Factbook, 2012) In the past decades, Singapore encouraged foreigners to immigrate that affected nearly 5.5 million people move into Singapore. In 2009, an estimated 40% of foreigner residents are in Singapore who contributed up to 80% of the construction industry and 50% of the service industry. The immigrants play a significant role for Singapore development especially the rapid growth of the GDP. (World Factbook, 2012) There is a statistic project that predicts the population of Japan will drop to 95 million by 2025. (Statistics Bureau, 2014) In 2002, there was

The Republic of Singapore celebrated its 42 years of independence in year 2007. Situated at the southern tip of Malaysia, Singapore currently holds a population of 4.68 million as of June 2007. At 704.0km2, it is ranked 4th in the world for its population density. During the past four decades, the economy as measured by real Gross Domestic Product (GDP), multiplied by over 20 times (Ghesquiere, 2007, p.11). As a small and extremely open economy, Singapore long term survival is very much dependent on the ability to maintain its viable position and remain afloat in the sea of global competition (Mun Heng et al, 1998, p.14).

The crisis spread to many neighbouring countries such as Indonesia and Philippines who were believed to have similar unstable economic situations. Although Singapore did not demonstrate similar economic situations such as current account deficits, Singapore 's geographical proximity with its neighbouring countries and economic dependence resulted in Singapore being hit by the crisis too. Evidence of current account surplus in Singapore is shown in Table 1. The current account balance to GDP ratio of Singapore was a 15.7% surplus in 1997, as compared to most of the other crisis-affected countries which experienced deficits.

Malaysia’s GDP Annual Growth Rate since 2000 till present. Notice the sharp contraction after the 2008 Financial Crises.

Continuous rapid economic growth has raised Malaysia from an agricultural and commodity-based low-income economy to a successful middle-income economy. As a mixed economy, Malaysia has elements of a free market economy nevertheless with intervention government. Malaysia's economic activity consist of a mixture of sectors whereas mixed of capitalism and socialism The strong economic performance has helped improve the quality of life for Malaysians and supported advances in education, health, infrastructure, housing and public amenities and others.