World View : Rich-Poor Gap Widens Around the Globe : About 20% of the Earth's people now control nearly 85% of its wealth.

By ROBIN WRIGHT

June 14, 1994 12 AM PT

TIMES STAFF WRITER

SANA, Yemen —

The 20th Century, an era of unparalleled economic progress and improved living conditions, may ultimately be judged instead by a starkly different trend: the staggering gap between rich and poor.

The latest numbers reveal painful divisions. At the close of the century, the richest 1 billion people--or 20% of world population--control almost 85% of global wealth, while the poorest 1 billion command less than 2%, according to the new Human Development Report, a survey by the U.N. Development Program.

The disparity means the top layer of society earns 60 times the income of the bottom, a gap that has doubled--from 30 to 1--in just three decades.

The bottom line: In the mid-1990s the meek show no signs of inheriting the Earth.

Nowhere are the dimensions of the gap and its impact more egregious than here on the Arabian Peninsula. Despite modest oil discoveries in the 1980s, Yemen is growing poorer compared to its oil-rich neighbor Saudi Arabia. The paltry per capita income in the Arab world’s poorest country plummeted 14% between 1989 and 1992, to $1,374.

Even before a civil war erupted in Yemen last month, poverty permeated Sana, the capital and legendary city reputedly founded by Noah’s son Shem. A downtown section has been transformed by hovels made of plastic cartons and large tin cans held together by baked mud. “Night City,” where cinder-block homes were illegally erected overnight, has sprouted on the capital’s hilly outskirts. And across from the Yemeni president’s home, squatters have pulled together a vast camp from bits of old tin, plastic sheeting, wood and stones.

The ominous gap between rich and poor is evident around the globe.

“The underlying factor in all this world disorder is the sheer power of uncontrolled great wealth in the hands of a few nations, coexisting with the absolute poverty everywhere. The laws of the jungle operate,” former Tanzanian President Julius K. Nyerere has written of the post-Cold War world.

“The rich developed countries continue to get richer and more developed while the poor stay poor--not always only relatively. In the last decade the peoples of Latin America and of Africa, as well as in many parts of Asia, have seen their desperately low standard of living decline even further. The income and technology gap between North and South gets geometrically wider all the time.”

According to U.N. figures, poverty is the most acute problem of the developing world. More than a third of the people in these countries live below the poverty line. Worldwide, more than 1 billion people are surviving on the equivalent of $1 a day.

Disparities between the prosperous and poor are visible in myriad ways:

* In California, sixth-graders work on computers in air-conditioned classrooms while kids in Mozambique use sticks and bark to learn to write in open-air classes. One of four South African children does not go to school at all.

* A designer handbag in Paris costs $1,500, more than the annual per capita income in more than 40 countries.

* Media conglomerates merge in New York to open an information superhighway while 40% of the population in Russia, so recently a superpower, plummets below the poverty line.

* Rival British and American shipping companies vie to build the world’s largest and most luxurious cruise liners while hundreds of thousands of homeless live atop massive garbage dumps in Mexico City and Manila.

The poverty gap will affect both rich and or poor on every continent.

Some regions now face being so powerless, so marginalized by poverty, that they will fall off the world’s political and economic map for generations. Other areas can expect an explosive backlash in a world where the communications revolution makes comparative living conditions highly visible.

“Poverty is the greatest threat to political stability, social cohesion and the environmental health of the planet,” warns the new U.N. report. “These disparities . . . deserve the urgent attention of policy-makers.”

The gap may even threaten the patterns of change. Shortly before his election as U.N. secretary general in 1992, Boutros Boutros-Ghali said bluntly in an article in the Mediterranean Quarterly: “Democracy cannot take root unless certain minimal institutions and an adequate living standard exist.”

In the post-Cold War world, where equality and empowerment are catchwords, the poverty gap is also a symbol of division. It is rapidly becoming a barometer of global trouble.

“A new Iron Curtain between North and South . . . will be reinforced as a result of the gap between the standards of living in the rich and poor countries,” Boutros-Ghali predicted. The result will be a “process of marginalization” that “practically leaves no place for the Third World or Africa, except where humanitarian aid is concerned,” he concluded.

The prospects for progress are not uniformly bleak. Between 1960 and 1992 “all countries have made substantial progress in human development,” the UNDP report notes. Over the past half a century, world income increased sevenfold (in terms of real gross domestic product) and income per person more than tripled. The human development index--calculated on the basis of income, life expectancy, literacy and education--doubled in developed countries and increased by 80% even in the poorest countries.

“But this gain has been spread very unequally--nationally and internationally--and the inequality is spreading,” the report says.

In the United States, Europe and Japan, for example, living conditions made unprecedented strides in 25 years. Average life expectancy increased from 51 to 63 years. Average per capita consumption of goods and services increased by 70%. And enrollment in primary education neared 90%, according to the World Bank.

Yet worldwide, all but the richest 20% saw their share of world income drop between 1960 and 1991. And poverty drags down the quality of life. In the squatter camps of Sana, the Yemeni capital, many toilets are no more than holes in the ground, and water must be bought from trucks. Few kids are in schools, and thousands of men with paintbrushes, shovels or squat daily on street corners hoping to be hired.

Up to 40% of Yemen’s labor force is unemployed, and more than one in five Yemenis lives in absolute poverty. Yemen’s crisis is all the more conspicuous in context.

Across the border in Riyadh, the Saudi capital, construction costs for the new airport, the world’s most modern, ran more than half of Yemen’s annual gross domestic product. The Saudi airport boasts an indoor oasis, 3,000 square feet of stained-glass windows, walls of marble quarried in Italy and etched with Koranic verses in England, and a bronze-domed mosque for 5,000.

But facilities like this tell only part of the story.

On average, Saudis live 17 years longer than Yemenis, and only one-fifth as many Saudi children die before age 5, according to the UNDP report. The average Saudi has three years more education resulting in 23% higher literacy.

Petrodollars may have skewed the gap, but Saudi Arabia--which ranks 67th on the UNDP’s human development index--is far from the top rank. And at 142nd of 173 countries surveyed, Yemen is not the worst. However, the impact on the two Arab neighbors is symptomatic of the poverty gap and its dangerous effects.

“Yemen has its own peculiar problems, but a lot of what is happening here is like what is happening in the world,” said Amat Alim Sowswa, Yemen’s deputy minister of information and its highest-ranking female official.

“As it gets worse, we’re going to witness a kind of revolution of the poor in all forms of unrest that is eventually bound to spill over into rich areas too,” she said.

The lower end of the global gap is represented by the abysmal poverty in Africa, where many countries are worse off in the 1990s than they were at independence in the 1960s. In 1965, Ghanaians were better off than South Koreans or Thais. The UNDP index now ranks South Korea 32nd, Thailand 54th--and Ghana 134th.

World Bank data suggests that even the most productive African countries--Ghana, Nigeria, Tanzania and Zimbabwe--are unlikely to reduce poverty for at least another generation. At optimistic growth rates, others could take decades to return to income levels of the 1970s--and another half a century to turn the tide. With twice the U.S. population, Africa’s total wealth is just slightly above Belgium’s.

The gap is not limited to income. In health services, industrial countries average one doctor per 400 people, while developing countries average one per 7,000--and some African states have only one per 36,000, the UNDP reports.

Wealth is most heavily concentrated in Latin America. The inequities are the greatest in Brazil, Guatemala and Honduras. In Brazil, the top 20% earn 32 times more than the poorest 20%--up from 26 to 1 in just two years, the UNDP reports.

The divide in Brazil is largely geographic, between the wealthy, industrialized south and the poor, largely agricultural north. The regional disparity includes 17 years in life expectancy and 33 percentage points in literacy and 40% in per capita income.

Elsewhere, the biggest challenge for post-apartheid South Africa is the internal gap. It ranked 93rd on the UNDP index. But as a separate country, white South Africa would rank 24th, above Spain, while black South Africa would rank 123rd. “Not just two different peoples, these are almost two different worlds,” the UNDP concludes.

The internal gap is not limited to poor countries. In the industrialized world, wage differentials in manufacturing also widened during the 1980s in 12 of 17 member countries surveyed by the Organization of Economic Cooperation and Development.

Some reasons for the growing divisions are systemic, others political:

* The collapse of socialism and its safety net of benefits, along with the introduction of competitive free markets, have led to soaring increases in both poverty and wealth in Asia, Africa and Europe.

Conditions have declined most sharply in the former Soviet Bloc. They are now more critical than in the West during the 1930s Depression or Latin American in the “lost decade” of the 1980s, according to a new UNICEF report.

In nine former East Bloc countries--Russia, Ukraine, Poland, Romania, Bulgaria, the Czech Republic, Slovakia, Hungary and Albania--plummeting gross domestic product levels have left 20% to 70% of the populations living on or below the poverty line.

“Some cases in the Second World are now worse than in the Third World,” said Eric Thurman, president of Opportunity International, a Chicago-based human development group.

Internally, China’s economic reforms have led to record growth--and a record gap between vibrant urban centers in Beijing and Shanghai and distant backwaters like Qinghai and Tibet.

In Vietnam, economic liberalization has fostered both the rise of a new class of business people and brokers and an estimated 15% unemployment. More than 700,000 workers in state-owned companies have been let go, while about 100,000 demobilized soldiers are jobless, contributing to a new class of street people.

* Lengthy wars--fought by forces oblivious to cost and allowed to drag on by an uninterested post-Cold War world--are setting back Third World countries to pre-colonial conditions. Paid for by its diamonds and oil, Angola’s two-decade-old civil war has turned developed areas into shattered landscapes. Without outside aid, up to half a million people would soon starve there, relief groups say.

The demise of the Cold War also cost many countries virtually the only leverage they had in winning funds or attention from either East or West.

* Aid still goes largely to former strategic allies rather than to poor countries. “Aid is still based on the shadows of the past. The world has not adjusted its sights to post-Cold War realities,” said Mahbub ul Haq, chief architect of the U.N. human development index.

“For example, the United States gave 16 times the amount per capita for El Salvador over Bangladesh, which has a population 22 times larger and five times poorer than El Salvador. But is El Salvador such a strategic place today?”

Based on current patterns, foreign aid is unlikely to help close the gap. Often it perpetuates inequities.

Better-off recipient countries get more than $240 per person, for example, while the worst-off states often get less than $1 per person a year, reports the Overseas Development Council.

* Inefficiency, corruption, bad debts, protectionism and skewed priorities also deserve much of the blame. “At a time the entire world is reducing military expenditures an average of 3.6% a year, the two poorest regions of the world--sub-Sahara Africa and South Asia--are increasing spending on arms,” Haq said.

India and Pakistan have for several years spent nearly twice as much on arms as Saudi Arabia, which is 20 times richer, he added. In contrast, Costa Rica abolished its army in 1948 and invested a third of its resources in health, education and housing. It’s now the most prosperous Central American country, with one of the highest human development ratings in the Third World.

Unlike East Asia’s major investments in basic education and health, most African countries decreased social expenditures in the 1980s--up to 64% in Gambia, 70% in Nigeria and 82% in Sierra Leone, the World Bank reported.

* Several countries with adequate resources to narrow the gap are choosing not to address poverty. “Brazil is rich enough to deal with poverty problems and so is the United States. We’re not for the same reason Brazil isn’t: We don’t want to,” said John W. Sewell, president of the Overseas Development Council in Washington.

Despite the gap, human progress is likely to continue to make significant strides. “Social indicators--average literacy, life expectancy, mortality and others--are improving. On average, those are much better than they were in the developing world 40 years ago,” Sewell said.

“But that’s like the man with his head in the oven and his foot in the icebox. The average temperature doesn’t tell the story.”

Researcher Pat Welch in The Times Washington bureau contributed to this article.

Human Development Index

This U.N. scale combines life expectancy, adult literacy, years in school and consumers’ purchasing power to rank nations on their socioeconomic status. * Top 10

1. Canada

2. Switzerland

3. Japan

4. Sweden

5. Norway

6. France

7. Austria

8. United States

9. Netherlands

10. Britain

* Bottom 10

164. Guinea Bissau