ABSTRACT
Every student of income distribution on a worldwide scale will very soon come across a disturbing fact: per capita incomes vary enormously across nations. At present about 190 nation states are members of the United Nations. The fundamental economic fact characterizing this collectivity is the huge variation in national living standards. Rich nations exist beside poor ones, very often in their immediate neighbourhood: take only Mexico and the United States as an example. As Lucas (1988: 3) has put it: the diversity across countries in measured per capita income levels is ‘literally too great to be believed’. As a rule, it even exceeds the inequality within nations that many observers find to be so appalling. In 2001 the reported per capita income of the United States amounted to PPP $34,142, whereas the reported per capita income of Sierra Leone did not surpass the deplorable level of PPP $490.1 That is, living standards in the United States and Sierra Leone, which according to the Human Development Report of the United Nations is the poorest country of the world, differ by a factor of almost seventy.2
