China and India led global output until the Industrial Revolution tipped the balance
For most of recorded history, the biggest shares of the world's production came from China and India. Only in the middle of the nineteenth century did successive waves of industrialisation in Western Europe and North America pull the centre of gravity westward, reshaping who was rich and who was poor for generations.
That shift left a long shadow. Between 1820 and 2000, income inequality across the globe rose by almost half, though most of the increase happened before 1950. The main driver was the gap between countries rather than within them. By around the 1970s the world had split into two clusters, rich nations and poor ones, with little in between. Since then the gap has been closing quickly; incomes now bunch around a single peak, and most people live in middle-income countries.
Wealth tells a starker story than income. A United Nations University study in the 2000s found that the richest 1 percent of adults held 40 percent of global assets, the top tenth held 85 percent, and the poorer half of humanity owned barely 1 percent. In 2014 Oxfam reported that 85 individuals together owned as much as the poorest 3.5 billion people.
Measuring any of this is surprisingly slippery. Official exchange rates often fail to reflect what money actually buys, particularly where governments tightly control prices, so economists usually convert local figures using purchasing power instead. Even then, black-market trade in goods like illegal drugs is part of the real economy but has no legal market to price it, and it is unclear how much of many people's economic lives appears in the numbers at all. Categories are contested too. There is no firm agreement on which nations count as developing, and the United Nations generally accepts a country's own claim. Its separate list of least developed countries dates from a resolution passed on 18 November 1971.
Shocks show how interconnected the whole system has become. During the COVID-19 pandemic in 2020, global output shrank by 3.4 percent, less than the 5.2 percent drop the World Bank first feared, with cities, which generate 80 percent of global GDP, bearing the heaviest blow. The following year brought an estimated 5.5 percent rebound. By one 2004 estimate, services already made up 64 percent of world output, industry 32 percent and agriculture just 4 percent.
Source: World economy
