According to the World Bank, about half of all people in the developing world (1.94 billion people) lived on less than $1.25 per day in 1981; that fell to 21% by 2010. During this same time period, the population of the developing world increased by 59%. However, 1.2 billion people are still living in extreme poverty, 50% of them in fragile states. Those living on less than $2/daydeclined from 2.59 billion in 1981 to 2.4 billion in 2010, while the world population has increased from 4.5 billion to over 6.7 billion over that period. According to UNDP's Multidimensional Poverty Index, about 1.7 billion people - a third of the population of the 109 countries covered by the index - live in multidimensional poverty. Meantime, ILO reports that the number of working poor is declining globally; from the early 2000's to 2013, the number of workers living below $1.25/day declined from more than 600 million to 375 million (11.9% of total employment), while the number of the workers living below $2/day declined from more than 1.1 billion to 839 million (26.7% of total employment) over the same period. Now, that serious poverty reduction has proven possible, world attention is beginning to focus on income disparities.

World GDP passed $83 trillion (PPP), growing at an estimated 2.1% in 2013, considerably slower than the 4.6% IMF average forecast for 2011-2015. Emerging market and developing economies' growth averaged 5%, while advanced economies grew at 1.4%. Although G20's share of the world's economy decreased from 87% in 2011 to 77% in 2012, the U.S., the eurozone, and Japan continue to account for almost half of global output. UNDP forecasts that by 2020 the combined GDP of Brazil, China and India will exceed the combined output of Canada, France, Germany, Italy, Great Britain and the U.S. Average GDP per capita in emerging market economies is expected to grow from $7,285 in 2013 to about $10,000 in 2018, while in advanced economies, it is projected to grow from $41,250 to $50,420 over the same period. The UN is expecting world GDP to grow at 3% in 2014, and 3.3% in 2015, although key risks and uncertainties remain.

The World Economic Forum identifies income disparity as the most likely global risk over the next decade, while the impacts of unemployment and underemployment are seen as being both likely and serious. UNDP indicates that over the past 20 years, within-country income inequality increased by 9% in the developed countries and 11% in developing countries. About 75% of the households of developing countries are living in societies with higher income inequality today than in the 1990s. It notes that continuing current inequality trends versus the ‘best-ever' inequality rate of each country could mean an extra 1 billion people living below the $2 per day poverty line in 2030. Oxfam International also warns about rising wealth concentration and unequal opportunities, as the richest 1% of the population owns about 46% of global wealth, $110 trillion, while the bottom 50% of the population barely owns $1.7 trillion (some 0.7% of the world's wealth), about the same as the world's 85 richest people. Credit Suisse notes that in 2013, global wealth has reached $241 trillion, or some $51,600 per adult; however, 86% of it is owned by the top 10% of the world population. The ratio between wages and profit is increasingly and dangerously imbalanced. Well aware of this, financial leaders are placing inequality and structural reforms on the top of the world policy agenda. Meanwhile, movements like the 1% versus 99% along with other protests and strikes around the world question the integrity of financial leaders and the fairness of the current economic system calling for changes toward more sustainable prosperity. New indicators that look beyond GDP are being developed (e.g. see the State of the Future Index) for measuring progress and prosperity, and to help policymakers use new technologies and financial tools for reshaping economies and enhancing public welfare.

Over 2 billion people connected to the Internet provides a new kind of market for self-employment and SMEs to find markets rather than applying for jobs. New technologies and innovations are empowering people around the world, creating new forms of business with the potential to raise living standards and reduce income disparities. The Post-2015 development agenda envisions increased partnerships among all actors, mainly with the private sector, emphasizing the role and accountability of large corporations concerning their social and environmental impact.

The landscape of geoeconomic power is changing rapidly as the influence of emerging economies and of multinational enterprises is rising. New geopolitical economic alliances are growing: the G20 is already G35+, the Group of 77 now includes more than 130 countries encompassing over 60% of the world's population, and over 110 countries are involved in some 22 regional and other trade agreement negotiations. As regional trade agreements interlock, world trade and multilateral processes will increase.

Trade has been a powerful driving force for economic development over the past 30 years, increasing productivity and living standards in many developing countries, mainly through outsourcing of manufacturing and service jobs to low-wage high-tech economies. The newly emerging-market middle class continues the development process through increasing local demand, while also moving lower-value jobs to other developing economies, thus spreading the prospects for global prosperity. WTO notesthat, in 2012, exports from developing countries increased 4%, while those from developed countries declined 3%. OECD estimates that world trade growth will continue, increasing from the estimated 3% in 2013 to 4.8% in 2014, and 5.9% in 2015. However, tax systems and financial regulations have not kept up with the complex growth of financial instruments requiring adjustments to ensure fairness.

For the first time, FDI flows to developing countries overtook those to developed countries, representing 52% of global FDI inflows in 2012. Global FDI inflows fell by 18% in 2012, to US$1.35 trillion, with developed economies' FDI inflows declining by 32%. FDI outflows from developing economies also grew, reaching $426 billion, a record 31% of the world total, while that of developed countries dropped by 23%, to $909 billion. Flows from the BRICS countries rose from $7 billion in 2000 to $145 billion in 2012 (almost 10% of the world total.) China became the world's third top investor, after the U.S. and Japan. The number of State-owned TNCs increased from 650 in 2010 to 845 in 2012, their FDI flows reaching about $145 billion, about 11% of the world total. For 2013, UNCTAD forecasts FDI to remain close to the 2012 level-at a max $1.45 trillion, with potential growth to $1.6 trillion in 2014 and $1.8 trillion in 2015.

By 2030, the global middle class is expected to grow by 66% - about 3 billion more consumers with increased purchasing power and expectations. Yet, the economic slowdown and the prolonged "jobless recovery" lowering demand, might continue to affect unemployment. The ILO estimates that in 2013, there were some 202 million people unemployed worldwide, 5 million more than in 2012, and if current trends continue, global unemployment might reach over 215 million by 2018. An estimated 23 million people have dropped out of the labor market due to rising long-term unemployment and discouragement. The most affected are the young people - aged 15-24, whose unemployment rate has reached 13.1%, some 74.5 million in 2013 and although some 40 million net new jobs are expected to be created yearly over the next five years, this does not meet the needs of an estimated 42.6 million people expected to enter the labor market every year. OECD estimates that unemployment will remain close to 8% by the end of 2014, meaning that about 48 million people will be out of work in the 34 OECD countries. The rates will vary from under 5% in Germany, to close to 28% in Spain and Greece, with young people continuing to be the most affected, with rates about 60% in Greece, and around 52% in South Africa. Meantime, many businesses lack qualified workers; hence, a better collaboration is needed among the private sector, civil society, government agencies, and education institutions to create the human capital with the qualifications needed by today's and tomorrow's job markets. Estimates show that spending 1.2% of GDP on active labor market policies could create an additional 3.9 million jobs in the developed economies and the EU region, notes ILO.

Almost 48% of all employment in 2013 is "vulnerable employment" with most of those people having limited or no access to social security or secure income. the informal economy remains widespread in the developing world with most unable to exercise their basic legal and social rights. Such informal economy rates in Latin America vary from below 50% in some countries, to 70% or more in low-income Andean and Central American countries, while in some countries of South and South-East Asia the rates could reach up to 90% of total employment. Meantime, about 30 million people are slaves today, the majority of which are in Asia.

Agriculture is the second-largest source of employment in the world, with 35% of the workforce (over 1 billion people worldwide). Its contribution to global GDP is only 6%, compared with 31% for industry and 63% for the service sector. The Bali Packageadopted by the WTO in December 2013 is expected to address the "tariff quota", land-use programs, export subsidies, and other measures that will improve developing countries' access to world markets, while also addressing their food security.

Official development assistance (ODA) by the 26 DAC countries in 2012 totaled $128.4 billion (preliminary data, 2011 dollars), a 4% decline from 2011's $133.7 billion, and a 6% decline from 2010, when global ODA peaked at $136.7 billion. Meanwhile, South-South cooperation increased to 10-15% of total official aid, although in real terms it is estimated to be much higher, as the valuation of their services tends to be lower than that of western contractors. Global remittance flows in 2012 reached $528 billion, out of which $401 billion were to developing countries. The World Bank estimates global remittances to reach $550 billion in 2013 and $594 billion by 2014, with $414 and $449 billion respectively to developing countries. Crowdfunding via cell phones, apps and websites is increasing; Devex estimates that about $2 billion has already been crowdfunded for development.

Although the 2012 State of the Microcredit reports that the number of very poor families receiving a microloan rose from 7.6 million in 1997 to 137.5 million in 2010, affecting more than 687 million people, the 2013 report found that 13 million fewer of the poorest families received microloans in 2011 compared to 2010. This is the fist decline since global records were kept in 1998. Nevertheless, 124 million families in extreme poverty received microloans; assuming five people per family, 621 million people were affected in 2011.

The UN estimates that a tax on international financial transactions might generate up to $250 billion per year, which could help offset the costs of the continuing economic, financial, fuel, climate, and food crises. Taxes on shadow banking could be a new source to help address development gaps. The overall assets in the global shadow banking system have seen a rapid increase, rising from €20 trillion (~ $27.3 trillion) in 2002 to €52.5 trillion (~ $71.7 trillion) in 2011. The U.S. and the eurozone have the world's largest shadow banking systems, in 2011, with assets worth some €18 trillion (~ $24.6 trillion) and €17.2 trillion (~ $23.5 trillion), respectively.

The world needs a long-term strategic plan for a global partnership between rich and poor. Such a plan should use the strength of free markets and rules based on global ethics. It should encourage increased roles for business in addition to philanthropic initiatives like Bill Gates' challenge to billionaires to share half their wealth. Since half of the world's major economies are multinationals, these businesses play a crucial role in poverty alleviation and building a sustainable economic system. Approximately 1 billion people in 96 countries now belong to a cooperative, according to the International Co-operative Alliance. Over 8,000 companies and 4,000 civil society organizations from 145 countries participate in the UN Global Compact, combining business interests with global priorities to help poverty alleviation, climate change mitigation, and women's empowerment, while protecting children's and labor rights, and fighting corruption. Such Conventional approaches to poverty reduction (technical assistance and credit) that work in low- and middle-income stable countries do not work in fragile countries, which need stability first. Richer countries used to send money, talent, and equipment to help poorer countries with mixed results; pay-for-performance is now being explored. For example, Norway will pay Brazil up to $1 billion by 2015 for deforestation reduction targets; it is also working similar deals with Indonesia, Guyana, and Tanzania.

Ethical market economies require improved fair trade, increased economic freedom, a "level playing field" guaranteed by an honest judicial system with adherence to the rule of law and by governments that provide political stability, a chance to participate in local development decisions, reduced corruption, insured property rights, business incentives to comply with social and environmental goals, a healthy investment climate, and access to land, capital, and information. Direction from central government with relatively free markets is competing with the decentralized, individualized private enterprise for lifting people out of poverty.

Challenge 7 will be addressed seriously when market economy abuses and corruption by companies and governments are intensively prosecuted and when the inequality gap - by all definitions - declines in 8 out of 10 consecutive years.

Regional Considerations

Africa: Although the AfDB notes that 313 million people (34% of the region's population) are now middle-class, half of the current middle class is significantly dependent on African diaspora that sends more money back home ($31 billion) than Africa receives from foreign aid. Since the late 1990s, much of Africa has experienced 4-6% economic growth. In 2013, its economic growth was 4% and the AfDB projects 4.8% and 5 to 6% for 2014 and 2015 respectively, noting that the economic growth is more broad-based, driven by increased continental trade and domestic demand, and infrastructure development. Sub-Saharan Africa is the world's second-fastest growing region, with half of today's 30 fastest-growing economies. If these trends continue, there could be one billion people in the middle class by 2060. Yet, current per capita income levels remain low due to population growth and high income disparities-100,000 people hold 80% of the wealth, according to AfDB. For the first time since 1981, less than half (48%) of Sub-Saharan Africa's population is living below $1.25/day; the number of the region's extremely poor doubled over this period, from 205 million to 414 million, representing about 35% of the world's extreme poor. The WB optimistic forecast is that extreme poverty rate will fall to between 16% and 30% by 2030. Also, the average income of the extremely poor remains at approximately half of the $1.25/day threshold, with the region having the countries with the highest rates of intensity of deprivation of population living in multidimensional poverty and the countries with the highest inequality in the world-South Africa, Comoros, and Namibia.

Since one in every three births will be African by 2050, and almost one in three children under the age of 18 will also be African, unless jobs creation and new forms of cyber self-employment increases considerably, poverty and social instability could be rampant. Dependency on commodities with fluctuating prices, lack of infrastructure, and rampant corruption make economic growth and development challenging. FDI to Africa rose from $15 billion in 2002 to $50 billion in 2012 (with a peak of $59 billion in 2008), while outflows grew from $5 billion in 2011 to $14 billion in 2012. BRIC accounted for 36% of the region's exports in 2012, at $144 billion, close to $148 billion that were its exports to the EU and the U.S. combined. Intra-African trade continues to account for only 10% of exports on the continent and is too weak to be an incentive for changing trade patterns. This might change with the Continental Free Trade Area expected to be set in 2017. Remittances to sub-Saharan African are estimated at $31 billion in 2012. Approximately 56.2 million hectares (5% of Africa's agricultural land) is subject to land-grabbing, further threatening the livelihoods of the already poor. There is an increase in the promotion of small and micro enterprises through policies and funds, but township and local innovation systems are also needed to help reduce the rich-poor gap. Urban farming in the Democratic Republic of Congo is converting many unemployed people into small farmer entrepreneurs. For a steady development, the region should address in a systemic way its complex challenges: poor governance, corruption, high birth rates, gender inequality, income and location biases, weak infrastructure, high indirect costs, armed conflicts, environmental degradation and climate change, poor health conditions, and lack of education.

Asia and Oceania: The historic speed and volume of Asia's economic growth has begun to slow, but remains a major factor in the future of civilization. The EIU is expecting the economic growth of China to continue slowing from 9.2% in 2011 to 7.7% in 2013 and to 5.9% in 2018. This may not keep pace with employment needs. FDI flows to developing Asia fell 7% in 2012, to $407 billion, over 50% of which went to China and India. Japan's long-term relatively stagnate economy complicated by the Fukushima nuclear disaster, is beginning to improve over it's 0.5% contraction in 2013. India's government is projecting an increase from 5% in 2013 to 6% in 2014, 7% in 2015, and 8% in 2016. Increasing geopolitical tensions in the region, plus corruption, organized crime, pollution, growing rich-poor divides, potentials for increasing shortages of water, energy, and food make continued poverty reduction difficult. Natural disasters and the effects of climate change are threatening the development and the very existence of entire Pacific communities. Thus, there are speculations that the Asian economy as-a-whole might not surpass a middle-income level in the foreseeable future. Nevertheless, Asia's middle class is expected to grow from the current 500 million to 1.75 billion by 2020. China brought more people out of extreme poverty than any country in history. It reduced its extreme poverty rate from 84% of population in 1981 to 12.5% today, although 161.7 million people are still living in multidimensional poverty. Chinese has more than one million millionaires and adding more than any other county. The middle class in India has grown to 300 million people. Although it employs about 2.2 million directly in the IT sector and 8 million indirectly, over 11 million people are unemployed. India has about a third of the world's extreme poverty population, with some 612.2 million people living in multidimensional poverty. Remittances to developing Asia totaled over $218 billion in 2012 and the World Bank estimates that they could grow to over $255 billion by 2015. The top recipients in 2012 were India ($71 billion), China ($60 billion), and the Philippines ($26 billion). Meanwhile, China, Japan, and South Korea are negotiating a Free Trade Agreement. This would be one of the biggest free trade areas, accounting for 70% of Asia's and 20% of the world's GDP, and representing 35% ($5.4 trillion) of world's trade. A larger Asian economic integration with ASEAN, an Asian Monetary Union, and an Asian Union are also in discussion. The search for lower labor costs and China starting to outsource manufacturing continues the intraregional restructuring in Asian. However, increasing pollution, water and energy problems, and the rich-poor gap threaten the future economic growth of developing Asia. Israel's strong economic development continues thanks to a favorable entrepreneurship climate and great support to innovation. In the MENA region, youth unemployment is about 27% and nearly 5 million people are added to the workforce annually. The Arab Labor Organization estimates that a 1% increase of unemployment rate reduces GDP by 2.5%. Economic growth in MENA is likely to gradually pick up from the estimated 2.6% in 2013, to 5% in 2018, mainly due to Saudi Arabia and other oil-rich Gulf states. The Arab Spring created momentum for building a more open economy and democratic society. Remittance inflows to MENA are estimated to be about $49 billion in 2012, a 14.3% increase compared to 2011, mainly driven by Egypt, which accounts for over 40% of total remittance inflows to the region.

Europe: The EU is one of the richest regions in the world with a GDP of over $16,000 billion (PPP), but concerns remain about eurozone countries' debt and direction of fiscal policy. The European Commission expects GDP to grow by 1.4% in 2014 and 1.9% in 2015 across the EU (after stagnation in 2013 and 0.4% contraction in 2012), but more slowly in the euro area. Discontent continues among the population as austerity measures increase inequality. In 2014, unemployment is expected to stay at about 11% across the EU, but above 12% in the eurozone. By the end of 2013, a total of 19.3 million people were out of work in the euro zone, with unemployment rates varying from around 27% in Greece and Spain, to about 5% in Austria and Germany. The divide between the creditor countries in the north and the debtor nations in the south continues to widen. The eurozone leaders adopted a set of short- and long-term measures to save the euro and stimulate economic growth and are discussing several proposals, including a financial transaction tax across the eurozone, more centralized supervision of banks, and issuance of eurobonds. The crisis also triggered negotiations over structural reforms, which might include a tighter political integration with more solidarity and concessions on fiscal sovereignty. In response to economic and financial crisis, a new set of rules to enhance EU economic governance entered into force on 13 December 2011, including stronger preventive and corrective action through a reinforced Stability and Growth Pact and deeper fiscal coordination; minimum requirements for national budgetary frameworks; and preventing and correcting macroeconomic and competitiveness imbalances. The Market in Financial Instruments II reform is intended to regulate financial markets and commodity prices across the EU, to prevent market distortions and abuse. As a result of the financial crises, 72% of the population believes that creating jobs and combating unemployment should be the bloc's top policy priority. The economic costs incurred by corruption in the EU are estimated at €120 billion (~ $163.8 billion) a year (close to the total EU annual budget), and some 40% of the companies participating in the 2013 Eurobarometer survey consider corruption, nepotism, and patronage to be an impediment for doing business. This is expected to be addressed by the comprehensive anti-corruption package adopted by the EC in 2011. The ODA from the EU-15 DAC members was $63.7 billion in 2012, representing over 50% of the world ODA. FDI inflows to the EU decreased by 41%, while outflows decreased by 40% in 2012. In the European transition region, growth rate is expected to pick up from 1.4% in 2013 to almost 3% in 2014, with further growth in 2015-2018. Although the Stabilization Fund and revenues from oil and gas exports helped Russia recover from the global financial crisis better than expected, its economy has continued to weaken, due to internal constraints such as unfavorable business environment mainly to SMEs, too much bureaucracy, and high inflation that has prevented the central bank from cutting interest rates to stimulate growth. Economic growth is expected to recover to 2.9% in 2014. In 2012, FDI from the Russian Federation accounted for 92% of the total $55 billion flows from transition economies.

Latin America: Latin America and the Caribbean remains a highly unequal society, with the richest 10% receiving about 48% of total income while the poorest 10% captures only 1.8%. Nevertheless, during the 2000s, inequality declined considerably. In Brazil and Mexico is at the lowest level since the 1960s when data records started. Some 40% of social inequality reduction is due to lower wage inequality, increasing skilled workers, and increased minimum wages, while another 13%-20% is due to more progressive government transfers. Decreasing inequality also accounts for 33%-50% of the poverty reduction in the region. The share of people living below $1.25/day dropped from approximately 12% for the last two decades of the 20th century to 6% now, and unemployment decreased from 6.4% in 2011 to 6.2% in 2013 according to ECLAC. Brazil reduced the number of people living in poverty from 41 million in 2002 to 15.7 million in 2013; the middle class increased by 42 million people since 2003, and income per capita grew by 78%; it pledges to continue creating an investment-friendly economic environment and to use its rich natural resources to improve living standards sustainably. Peru has reduced its poverty rate from 59% in 2004 to 28% in 2012. The Community of Latin American and Caribbean States pledged to continue the efforts for poverty eradication and reduction of inequalities by increasing regional economic, social, and political integration. Regional economic growth is expected to increase from 2.6% in 2013 to 3.2% in 2014. According to OECD, less than 4% of state revenue is generated by personal income taxes, compared with 27% in industrialized countries, while VAT is placing an additional burden on poor customers. The "shadow economy" is estimated to be about 40% relative to the formal one. Remittance inflows reached an estimated $62 billion in 2012, of which Mexico receives 37%. Although in South America FDI increased 12%, the region's total FDI inflows decreased 2% in 2012 compared to 2011, to a total $244 billion (about half going to Brazil), due to a decline in Central America and the Caribbean. Fiscal and economic reforms are improving stability, although country and regional policies increasingly focused on national interests and ethical behavior might affect future foreign investments. A World Economic Forum survey has found that on average, 64% of Latin Americans think that their country's economic system favors the wealthy, with the rates varying from 86% in Chile, to 32% in Venezuela. Chile is one of the countries with the highest rate of social inequality.

North America: The U.S. economic slow but steady recovery makes it still the leading world economy and is likely to continue to be so mostly due to its entrepreneurial spirit, university system, and innovative patent portfolio. Potential trade agreements such as the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership might open new global economic opportunities. Intra-NAFTA (Canada, Mexico, and USA) trade has tripled in its 20 years of existence, helping continental economic integration. By the end of 2013, the U.S. unemployment rate fell to 6.7%, a five-year low, and GDP growth is expected to pick up from about 2% in 2013 to about 3% in 2014. However, a World Economic Forum survey has found that North Americans see increasing inequality as the most important challenge facing their region. The rich-poor gap continues to widen; in 2011 and 2012 the official poverty rate was 15% (46.5 million people), 2.5% higher than in 2007, before the recession. From 1978 to 2012, for the 350 top publicly owned firms, the CEOs average options realized compensation increased about 875%, versus 5.4% growth for a typical worker's compensation, with the CEO-to-worker compensation ratio reaching 273-to-1 in 2012, and Oxfam notes that since 2009, the wealthiest 1% captured 95% of post-financial crisis growth, while the bottom 90% became poorer. Increasing profits at the expense of lower wages is not sustainable and undermines markets at home, as well as people's confidence in the system. The U.S. continues to provide the largest amount of ODA, with a total of $29.9 billion in 2012. Canada's economy is focused on resources, with no clear sustainability strategy. By the end of 2013, unemployment reached 7.2%, but over 15% for the young people, most of whom finished university with high debts and few jobs matching their qualifications. Canadianfamilies' income share of top 20% is 47.2%, while for the bottom 20% is 4.1%. The livelihood of 400+ remote communities in the boreal and Arctic regions remains problematic and unaddressed. The merger of the Canadian International Development Agency with the Department of Foreign Affairs, International Trade and Development indicates a new approach to aid, by also including commercial and foreign-policy objectives to programs, rather than exclusively humanitarian ones.

Economic Income Inequality (% income share of the richest 1%)