Explaining Income Disparity among the OIC Member Countries Date : 22 February 2012
There is a widening income and productivity gap between the rich and poor countries. According to the World Bank statistics, output per worker in the United States was more than 102 times higher than output per worker in Democratic Republic of Congo in 2008. In OIC member countries, output per worker in Qatar was almost 26 times higher than output per worker in Niger. The average worker in the United States produced in just over 3.5 days as much as an average worker in Democratic Republic of Congo produced in an entire year. The value produced by the average worker in Qatar in just 14 days was equal to the value generated by an average worker in Niger in an entire year.
The statistics shows that some countries are extremely richer than others and there is not a strong convergence among these countries, at least during the last two decades. This raises the questions of why there are such large differences in income across countries and why they are not converging. Explaining such huge differences in economic activities is one of the major challenges of economics. Various theoretical models are developed and empirical studies are conducted to understand the factors leading to income divergence. As a result, differences among countries are generally attributed to differences in wide range of factors including human capital, physical capital, and productivity.
This report focuses on the case of OIC countries and tries to encompass the major determinants of income disparity among the OIC member countries. In so doing, the simple association between income growth and main determinants of growth is investigated. In line with the outcomes of this investigation, some recommendations are listed at the end of the report.
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Explaining Income Disparity among the OIC Member Countries (English)