From colonialism to AI: How the Global South became the world’s inequality hotspot
Over a century after Pareto’s observation, the Global South remains trapped in a cycle of concentrated wealth and entrenched class divisions that shape its social and economic realities.
Published July 11, 2025
PRISM/DAWN
In 1906, Italian economist Vilfredo Pareto made a striking observation: 80 per cent of Italy’s wealth was owned by just 20pc of its population. Startled by this imbalance, he formulated what would later become known as the Pareto Principle — or the 80/20 rule — suggesting that a small percentage of causes are responsible for a large part of the results. Though it began as an anecdotal insight, the principle eventually found its way into boardrooms, business schools, and self-help manuals.
More than a century later, the Global South stands as living proof that Pareto wasn’t far off. If economic inequality had a modern poster child, this part of the world would be it.
Once a loosely defined term for ‘Third World’ countries, the ‘Global South’ has evolved in recent years into a more meaningful label. Policymakers, academics, and journalists now use it to describe nations — many of them former colonies — that are part of the Non-Aligned Movement, a bloc of roughly 120 countries committed to principles such as sovereignty, anti-imperialism, and self-determination.
But such ideals don’t always pay the bills. The Global South is home to 85pc of the world’s population, yet it generates only 39pc of global GDP. This is the textbook definition of economic imbalance. And the future doesn’t look too bright either. According to the World Bank’s 2024 annual report, over the next decade, 1.2 billion young people in the region will step into working age. Yet the job market is expected to create just 424 million new positions. That’s not a gap — it’s a gaping chasm.
While one half of the world is busy riding the wave of the AI revolution — racing to patent algorithms, train billion-dollar generative models, and automate the future — the other half is still waiting for something as basic as electricity. Nearly 600 million people in Africa remain without reliable access to power — that’s almost half the continent’s population, and more than 80pc of the global electricity access gap. It’s a sobering contrast. One side teaches machines to outthink humans; the other side lights candles to chase away the dark. In an era of satellites, AI, and trillion-dollar tech empires, this scale of inequality is dangerous.
The numbers say it all
When it comes to measuring income inequality, few tools are as widely recognised as the Gini Index. The scale runs from 0 to 1, or 0pc to 100pc, where 0pc means perfect equality and 100pc means total inequality (all wealth concentrated in a single pair of hands). According to World Bank data drawn from recent years, South Africa tops the list with a staggering Gini Coefficient of 63pc, while Slovakia sits at the other end with just 24.1pc. For comparison, the United States clocks in at 41.3pc and China at 36.7pc. In South Asia, Pakistan stands at 29.6pc, India at 32.8pc, and Bangladesh at 33.4pc.
But here’s the catch: the Gini Index tells us how income is distributed, not how much wealth there is to go around in the first place. A country could have near-perfect distribution but still be grappling with widespread poverty.
Still, when mapped globally, the Gini Coefficient reveals a clear pattern: countries in the Global South consistently show higher inequality, exposing the structural gaps that income or wealth distribution alone can’t fully explain.
Another way to grasp the depth of income inequality is by looking at who holds what share of a country’s income — the bottom 50pc, the top 10pc, and the top 1pc. National income, after all, is simply the total of what a country’s residents earn in a year, but how it’s divided tells a much bigger story.
According to the World Inequality Database 2024, which tracks income data from 216 countries over two centuries, the picture is incredibly lopsided. The top 10pc of earners control more than half of global income, while the bottom 50pc barely scrape together 10pc. Zoom in by region, and the divide becomes even sharper. Europe stands out as the least unequal, while Latin America, Middle East, and North Africa show the most extreme concentration of wealth in the hands of the top 10pc. In other words, geography still shapes destiny, and in much of the Global South, the odds remain stacked in favour of the few.
The global map of inequality tells a familiar tale — the top 10pc hold a disproportionate share of income, and this imbalance is most stark in the Global South.
A world of haves and have-nots
In Asia, a study focused on India reveals something striking. The ‘Billionaire Raj’ is now more unequal than the colonial British Raj ever was. Since the early 2000s, inequality has soared. The top 10pc in India saw their income share jump from 40pc in 2000 to 58pc in 2023.
The real drivers? The top 1pc, whose slice grew from 15pc to 23pc, while the middle 40pc lost ground, shrinking from 39pc to 27pc. The United Nations Development Programme’s (UNDP) Multidimensional Poverty Index 2024 adds another layer. Out of 112 countries surveyed, 1.1 billion people out of 6.3 billion are living in poverty. India alone accounts for 234 million people living in poverty — more than the total populations of at least 29 smaller Asian nations combined.
In Indonesia and Pakistan, the top 10pc claim 46pc and 42pc of national income, respectively — a quiet confirmation that this is no regional fluke, but a structural feature of inequality across the South.
Latin America remains the world’s most unequal region. Here, the richest 10pc earn 12 times more than the poorest 10pc. In countries like Colombia, Chile, and Uruguay, just 1pc of the population controls between 37pc and 40pc of total wealth. The bottom half? They’re left with barely 10pc.
In Africa, the story grows more complex. While economic growth is occurring, it remains unevenly distributed. A joint report by the Agence Française de Développement (AFD) and the World Bank reveals that between 1980 and 2016, the richest 1pc of Africans captured 27pc of total income growth. In 2024, Sub-Saharan Africa — home to just 16pc of the world’s population — carries 67pc of the world’s extremely poor.
The takeaway is clear — economic growth may lift national economies, but it does not guarantee equitable outcomes.
This stark disparity across the Global South can largely be traced back to colonial legacies. Under colonial rule, land and resources were concentrated in the hands of a privileged few, entrenching class divisions that continue to shape social and economic realities today. Even after independence, low social investment, unequal access to education, weak tax systems, and the enduring influence of powerful elites in policymaking have all worked to reinforce these imbalances. And so today, we have a system that not only tolerates but sustains inequality — not just in Latin America, but throughout the Global South.
Even advanced economies like the United States aren’t immune to the rising tide of inequality. A recent survey found that, after immigration, income inequality ranked as the second most pressing concern for Americans, with many hoping Trump would address it within his first 100 days in office. It’s not hard to see why.
Consider this: the collective net worth of America’s top 12 billionaires now exceeds $2 trillion. Between March 18, 2020, and December 3, 2024, their combined wealth soared by $1.3 trillion — a 193pc increase. If evidence of deepening inequality is needed, the pandemic offers it in plain sight. Covid-19 did a lot more than disrupt lives; it supercharged billionaire fortunes, widening an already vast wealth divide.
A 2022 study co-authored by Nobel Laureate Daron Acemoglu highlights another powerful driver of inequality: automation. By replacing human labour in industries like retail, manufacturing, and customer service, automation alone accounted for 50–70pc of the growing income gap between more-educated and less-educated workers from 1980 to 2016 — a sobering reminder that technology, without the right policies in place, can entrench inequality rather than alleviate it.
Now, what about the future? In 2024, the International Monetary Fund (IMF) sounded the alarm, expressing “profound concerns” over labour disruptions and rising inequality as economies begin to adopt generative AI at scale. The Fund warned that generative AI could amplify the market power of already-dominant firms, accelerating the shift toward winner-takes-all dynamics and further concentrating capital in the hands of a few.
In Asia, a study focused on India reveals something striking. The ‘Billionaire Raj’ is now more unequal than the colonial British Raj ever was. Since the early 2000s, inequality has soared. The top 10pc in India saw their income share jump from 40pc in 2000 to 58pc in 2023.
The real drivers? The top 1pc, whose slice grew from 15pc to 23pc, while the middle 40pc lost ground, shrinking from 39pc to 27pc. The United Nations Development Programme’s (UNDP) Multidimensional Poverty Index 2024 adds another layer. Out of 112 countries surveyed, 1.1 billion people out of 6.3 billion are living in poverty. India alone accounts for 234 million people living in poverty — more than the total populations of at least 29 smaller Asian nations combined.
In Indonesia and Pakistan, the top 10pc claim 46pc and 42pc of national income, respectively — a quiet confirmation that this is no regional fluke, but a structural feature of inequality across the South.
Latin America remains the world’s most unequal region. Here, the richest 10pc earn 12 times more than the poorest 10pc. In countries like Colombia, Chile, and Uruguay, just 1pc of the population controls between 37pc and 40pc of total wealth. The bottom half? They’re left with barely 10pc.
In Africa, the story grows more complex. While economic growth is occurring, it remains unevenly distributed. A joint report by the Agence Française de Développement (AFD) and the World Bank reveals that between 1980 and 2016, the richest 1pc of Africans captured 27pc of total income growth. In 2024, Sub-Saharan Africa — home to just 16pc of the world’s population — carries 67pc of the world’s extremely poor.
The takeaway is clear — economic growth may lift national economies, but it does not guarantee equitable outcomes.
This stark disparity across the Global South can largely be traced back to colonial legacies. Under colonial rule, land and resources were concentrated in the hands of a privileged few, entrenching class divisions that continue to shape social and economic realities today. Even after independence, low social investment, unequal access to education, weak tax systems, and the enduring influence of powerful elites in policymaking have all worked to reinforce these imbalances. And so today, we have a system that not only tolerates but sustains inequality — not just in Latin America, but throughout the Global South.
Even advanced economies like the United States aren’t immune to the rising tide of inequality. A recent survey found that, after immigration, income inequality ranked as the second most pressing concern for Americans, with many hoping Trump would address it within his first 100 days in office. It’s not hard to see why.
Consider this: the collective net worth of America’s top 12 billionaires now exceeds $2 trillion. Between March 18, 2020, and December 3, 2024, their combined wealth soared by $1.3 trillion — a 193pc increase. If evidence of deepening inequality is needed, the pandemic offers it in plain sight. Covid-19 did a lot more than disrupt lives; it supercharged billionaire fortunes, widening an already vast wealth divide.
A 2022 study co-authored by Nobel Laureate Daron Acemoglu highlights another powerful driver of inequality: automation. By replacing human labour in industries like retail, manufacturing, and customer service, automation alone accounted for 50–70pc of the growing income gap between more-educated and less-educated workers from 1980 to 2016 — a sobering reminder that technology, without the right policies in place, can entrench inequality rather than alleviate it.
Now, what about the future? In 2024, the International Monetary Fund (IMF) sounded the alarm, expressing “profound concerns” over labour disruptions and rising inequality as economies begin to adopt generative AI at scale. The Fund warned that generative AI could amplify the market power of already-dominant firms, accelerating the shift toward winner-takes-all dynamics and further concentrating capital in the hands of a few.
Here’s what Pakistan needs to do
For countries in the Global South like Pakistan, the moment has arrived for a fundamental shift in development strategy. The obsession with short-term growth at the expense of inclusive development has only deepened systemic imbalances. Yet Pakistan holds immense potential to chart a different course by leveraging its vast natural wealth, including minerals, coal, crude oil and natural gas.
Geological surveys estimate the value of the country’s untapped mineral reserves at over $6 trillion. However, true progress cannot be measured by extraction alone. It will be defined by how equitably the resulting wealth is distributed and how effectively it contributes to uplifting the lives of ordinary citizens.
To address the persistent disparities in economic opportunity, Pakistan must begin to reorient its policy framework toward broader public welfare and inclusive governance. This requires building a culture rooted in meritocracy, holding institutions accountable, eliminating inefficiencies, and dismantling the bureaucratic red tape that stifles innovation. Only then can economic growth translate into meaningful, shared prosperity.
A progressive tax system, in its true spirit, is essential — one that fairly distributes the fiscal burden across all segments of society, rather than disproportionately weighing on salaried workers. Revenue, once mobilised, should be invested where it counts most: education, health and social protection. With nearly 64pc of Pakistan’s population under the age of 30, targeted spending on education is no longer optional, it’s imperative. This demographic presents a unique opportunity; only an educated, skilled, and empowered youth can steer the country toward inclusive and sustainable economic growth.
Equally important is the expansion and depoliticisation of social safety nets. Conditional cash transfer programmes, especially those tied to education and nutrition, can lift millions out of poverty if implemented with transparency and fairness. Targeted subsidies that empower small entrepreneurs and marginalised communities, rather than inflating the profits of the elites, can unleash Pakistan’s true economic potential and drive grassroots development.
These are not just prescriptions for Pakistan, they are imperatives for any country in the Global South wrestling with the scourge of entrenched inequality. Real development is not measured by growth alone, but by the inclusivity of that growth. Until economies are restructured to empower the many rather than enrich the few, progress will remain superficial. The numbers may impress on paper, but the lived reality for millions will continue to tell a far bleaker story.
For countries in the Global South like Pakistan, the moment has arrived for a fundamental shift in development strategy. The obsession with short-term growth at the expense of inclusive development has only deepened systemic imbalances. Yet Pakistan holds immense potential to chart a different course by leveraging its vast natural wealth, including minerals, coal, crude oil and natural gas.
Geological surveys estimate the value of the country’s untapped mineral reserves at over $6 trillion. However, true progress cannot be measured by extraction alone. It will be defined by how equitably the resulting wealth is distributed and how effectively it contributes to uplifting the lives of ordinary citizens.
To address the persistent disparities in economic opportunity, Pakistan must begin to reorient its policy framework toward broader public welfare and inclusive governance. This requires building a culture rooted in meritocracy, holding institutions accountable, eliminating inefficiencies, and dismantling the bureaucratic red tape that stifles innovation. Only then can economic growth translate into meaningful, shared prosperity.
A progressive tax system, in its true spirit, is essential — one that fairly distributes the fiscal burden across all segments of society, rather than disproportionately weighing on salaried workers. Revenue, once mobilised, should be invested where it counts most: education, health and social protection. With nearly 64pc of Pakistan’s population under the age of 30, targeted spending on education is no longer optional, it’s imperative. This demographic presents a unique opportunity; only an educated, skilled, and empowered youth can steer the country toward inclusive and sustainable economic growth.
Equally important is the expansion and depoliticisation of social safety nets. Conditional cash transfer programmes, especially those tied to education and nutrition, can lift millions out of poverty if implemented with transparency and fairness. Targeted subsidies that empower small entrepreneurs and marginalised communities, rather than inflating the profits of the elites, can unleash Pakistan’s true economic potential and drive grassroots development.
These are not just prescriptions for Pakistan, they are imperatives for any country in the Global South wrestling with the scourge of entrenched inequality. Real development is not measured by growth alone, but by the inclusivity of that growth. Until economies are restructured to empower the many rather than enrich the few, progress will remain superficial. The numbers may impress on paper, but the lived reality for millions will continue to tell a far bleaker story.
The future demands inclusive progress
While rising economic inequality is a global crisis, its effects are felt far more acutely in the Global South. Here, the absence of robust social safety nets and underfunded welfare programmes amplifies the disparities, standing in stark contrast to the well-funded and designed welfare systems of the West, supported by effective tax policies and the capacity to absorb national debt.
Meanwhile, as billions are funnelled into military spending and the technological arms race — ranging from Artificial Intelligence to quantum computing and supercomputers — the chasm between North and South threatens to grow even wider. Unless global leaders confront this economic divide with urgency and vision, the Pareto Principle will ring truer than ever, with a small elite controlling an ever-larger share of the world’s wealth and opportunity.
Header image created with generative AI
While rising economic inequality is a global crisis, its effects are felt far more acutely in the Global South. Here, the absence of robust social safety nets and underfunded welfare programmes amplifies the disparities, standing in stark contrast to the well-funded and designed welfare systems of the West, supported by effective tax policies and the capacity to absorb national debt.
Meanwhile, as billions are funnelled into military spending and the technological arms race — ranging from Artificial Intelligence to quantum computing and supercomputers — the chasm between North and South threatens to grow even wider. Unless global leaders confront this economic divide with urgency and vision, the Pareto Principle will ring truer than ever, with a small elite controlling an ever-larger share of the world’s wealth and opportunity.
Header image created with generative AI
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