Who says gaps are closing?

I just wrote about the distribution of wealth in the world. Below you can see the development of agriculture value added per worker. As you can see the gap between the rich countries and the poor countries is increasing a lot. Not even China has kept pace in agriculture productivity with the OECD countries. It has indeed increased value added per worker three times in thirty years, but France increased it 5.5 times in the same period. In Africa it was more or less constant for thirty years.



The development is perhaps better visible in a logarithmic diagram:


Apart from debunking the myth that "business-as-usual" will help the poor, it also puts into question who is benefiting from the increased global competition in agriculture commodities.


Agriculture value added per worker is a measure of agricultural productivity. Value added in agriculture measures the output of the agricultural sector (ISIC divisions 1-5) less the value of intermediate inputs. Agriculture comprises value added from forestry, hunting, and fishing as well as cultivation of crops and livestock production. Data are in constant 2000 U.S. dollars.

Looking at yield per hectare the picture is not as straight-forward. But then again, yield per hectare has never been a strong indicator of development, even if some agronomists are obsessed by it. 
Check here how it looks at Gapminder 

Read also: 

Stop pretending there are only winners in the global market

Agriculture: How cheap energy (and capitalism) increased the gaps between rich and poor

 

iPad: Profit runs wild

the Economist has an interesting article about the trade gap between America and China.  But most interesting is actually what the article was not about. The Economist writes:

The Economist estimates that iPads accounted for around $4 billion of America’s reported trade deficit with China in 2011; but if China’s exports were measured on a value-added basis, the deficit was only $150m.

The point they make is that most of the added value of an iPad is generated in the USA itself and in a number of other countries (e.g. South Korea and Taiwan). Therefore, the US repeated demand that China should appreciate the Yuan is misplaced to correct the imbalance in trade. A 20% increase of the yuan would mean less than 1% on the import price on an iPad. I am with the Economist in this discussion. 

However, the chart the Economist shows points to a much more interesting fact. Forty seven percent of the price of an iPad is actually PROFIT. The total cost of labour is just seven percent of which the Chinese workers get two percent.  I have managed several companies and I know that profits are needed. Yet, there is simply no justification for profits in this range.

And I certainly don't understand why so many "hip" people feel so much for such a greedy company, which also has a bad record on social responsibility.


related posts:
Stop pretending there are only winners in the global market
Capitalism: The right to extract wealth
Winners and losers