Investigating World Trade, Investment and Income Flows Using Non-Parametric Method

The questions which will be discussed in this article are as follows; 1- Has inequality increased in the world?2- If inequality has increased in the world economy, what was the reason?3- Was it the rich countries which have a higher share in the world GDP?In order to answer the above questions, selected indices for 144 countries has been Analyzed for the 1960 -2000 period. The result of the analysis shows that world inequality has considerably increased in the 1960 - 2000 period and Gini coefficient increased from 0.861 to 0.90. Analyzing the Herfindal – Hirshman Index (HHI) and first order Shanon entropy index (T), reveals that the HHI index was constant while the T index was increasing after 1945. This result shows that the real cause of inequality was the relative increase in the share of some of the poor countries (those which had lower share of the world GDP). As the conclusion we could also mention that inequality in the amount of Foreign Direct Investment (FDI) in different countries was the cause of increasing inequality in the distribution of the world income. We have also found that the relation between world trade and world income inequality is not significant.