Despite the rise of self-made millionaires, the growing fortunes of the wealthy highlight the extent to which wealth remains concentrated among the few. Even after the huge economic gains during the bull market of the late 1990s, the wealthiest 1% in the U.S. control more than a third of the nation's wealth -- the starkest such concentration among industrialized countries. In 2001, according to NYU economist Edward Wolff, the richest five percent of American households controlled over 59 percent of the country’s wealth; the richest 20 percent held 83 percent of the wealth; the bottom 80 percent had 17 percent.  Actual statistical data leaves no doubt as to the existence of a definite trend towards distributive inequality worldwide, both across and within countries.

The Latin American and Caribbean region has the most unequal income distribution in the world, followed by the countries of Africa and the second generation of recently industrialized countries of Eastern Asia.

The existence of a highly unequal income distribution is an important consideration, not only because of the ethical and political problems it poses, but also because of its implications for economic growth (Solimano, 2001). Although the reciprocal relationships between growth and equity have long been a subject of controversy, in recent years numerous studies have highlighted the negative effects of inequality on economic growth —the so-called “inequality trap” (ECLAC) The tremendous distributive inequalities found in several regions of the developing world, especially Latin America, may thus help account for international differentials in development levels or the blockage of convergence factors. Inequality.org

THE NOTION OF A POVERTY TRAP

A poverty trap can be said to exist when poverty has effects which act as causes of poverty. The causes of poverty can be identified at different levels of aggregation, running from the micro level (the characteristics of the household and community), up to the national level (characteristics of the country) and up to the global level (the nature of the international economy and the institutional structures which govern international relationships). It is thus possible to identify poverty traps at different levels of aggregation. A model of a poverty trap which can occur at the individual level: Very poor people tend to be hungry, sick and weak. Being hungry makes one prone to being sick and being weak. People are thus able to cultivate less and work less, and as a result they have less money to buy food or can produce less food, and so they are hungry. They also have less money for medical treatment, and so they are more likely to be sick and weak. Globalpolicy.org

It is necessary to break down the barriers and monopolies which leave so many countries on the margins of development, and to provide all individuals and nations with the basic conditions which will enable them to share in development. This goal calls for programmed and responsible efforts on the part of the entire international community. Stronger nations must offer weaker ones opportunities for taking their place in international life, and the latter must learn how to use these opportunities by making the necessary efforts and sacrifices and by ensuring political and economic stability, the certainty of better prospects for the future, the improvement of workers' skills, and the training of competent business leaders who are conscious of their responsibilities. 

Centesimus Annus 1991  Pope John Paul II