An Analysis of Global Economic Trends
Background
Over the past few months, I have been developing and honing my skills for roles in the field of Data Analytics. I have had the opportunity to earn multiple certifications, including the prestigious Google Data Analytics Specialization, and have also completed two full projects to display my skills.
This project is my third one, completed fully on my own, and will serve as a base for me to market my skills in key Data Analytics tools like Microsoft Excel, SQL, and Tableau.
As always, I will attach links to the code I used and the visualizations I created, here in the beginning of the post:
SQL code: GitHub
Visualizations created: Tableau
Ask: Business Task
I will analyze economic data across the world, including the GDPs-per-capita of countries throughout time and the distribution of wealth across different social segments of the respective nations, in order to identify patterns of economic growth to model in the future and to detect which nations/regions need the most financial support.
Prepare: Description of Data Source
Data was collected from Our World In Data's posts on Economic Growth and Economic Inequality. Within each of these posts, there was a downloadable table. I downloaded that table, for each metric, as a CSV file and deemed it reliable as it met ROCCC requirements.
The table for Economic Inequality was named worldwide_EconomicInequality and the able for Economic Growth was named worldwide_GDPpercapita.
The GDP per capita for each country was measured in the hypothetical currency International Dollars ($), which was described in the post as that which is "used to make meaningful comparisons of monetary indicators of living standards."
Process: Cleaning the Data
After collecting and storing the appropriate data, I opened each of the two files in Excel and began my cleaning process, described in detail below:
As the rest of the cleaning was done in SQL, the complete code I used will be mentioned again in the following section.
Analyze & Share: Analysis of Data Through SQL & Tableau
To carry on my analysis and with more efficiency, I moved over to SQL Server. After importing both workbooks into a newly created project within the server, I probed the data further, even joined both tables for the latter parts of the examination, and crafted some queries specifically for subsequent visualization in Tableau.
A full list of the SQL queries I used in this project is here.
During the initial phase of the exploration/analysis stage, I decided to generate lists of the top ten nations which had the lowest GDP per capita - from the worldwide_GDPpercapita table in SQL - and the top ten nations which had the highest GDP per capita, each, in the latest year the data was recorded: 2021. The lists are stated below:
It was sad to see that all the ten countries with the lowest GDPs per capita in the latest-recorded time period were African countries. In contrast, among the richest countries, the majority were European nations (two, namely Bermuda and Cayman Islands, are located in North America but are "British Overseas Territories") and throughout all, a trend could be detected: they were all small - in terms of area and population - nations, at least in relative terms to the rest of the world.
As depressing as it was to see African nations being among the poorest, it was - again, sadly - not that surprising as, historically, Africa has been perennially plagued with diseases, environmental hardships (/droughts), colonization and slavery, etc.
I also chose to make a line graph showing the average GDP per capita ($) produced in the world, from 1990 to 2021. As the average GDP per capita across all countries and time was calculated to be $18,071.91 (as will be shown more, later), this graph would help us gauge overall economic trends even better.
As can be inferred, the world has experienced a steady economic growth, overall, since 1990. The natural increase in global population, inflation, and technological advances can be significant contributors. The few points of average GDP halt and decrease can be attributed to well-known causes, like the Great Recession of 2007-2009.
Wealth Distribution Within Nations
Since the distribution of a nation's wealth is a good indicator of how beneficial economic growth truly has been, and has also been a hot topic of discussion being at the heart of socialists' and communists' arguments against capitalism, I chose to arrange countries by income share of the richest 10% of their respective populations.
There were other measures included in the data, like income share of the richest 0.1% of the population, but I opted to go for calculations by richest 10% as they would be a more accurate, broader representation of the upper classes of society.
Thus, I averaged the recordings of the percentage of income share of the richest 10% of the population for all years recorded, for each country from the worldwide_EconomicInequality table. The ten countries with the highest average income share (%) of the richest 10% of their respective inhabitants were:
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Yet again, eight out of the top ten countries most-dominated by the rich elite were African, and the remaining two were South American. African nations do not just need financial support, but also political stabilization (at least South Africa's apartheid era is over) as a few members from the upper echelons of their states have managed to gain a lot of power over their fellow-yet-lower-ranking citizens.
Now, to demonstrate the countries which have managed to distribute their wealth most equally, I created a Pivot Table - in the worldwide_EconomicInequality workbook - with nations arranged by all-time average of income share of poorest 50% of their respective populations. The countries in the top-ten-portion of the table are shown below:
Besides China - the largest Communist nation - all other states with the highest income shares for the poorer 50% of their inhabitants were European nations, and many of them included Scandinavian Socialist countries famed for their exemplary economic models (Norway, Sweden, Denmark). And, to add more misery, no African nation made it here.
However, the point to be noted was that, even then, the highest average rate of income distribution to the latter half of the population was 28%; even when wealth was distributed best across the country, on average, the lower-ranking 50% of the population received 25-26% of it. And this is so even after accounting for the fact that the poorer 50% of the population includes a larger sample size and should, thus, have been naturally expected to have a larger share of wealth. A point to ponder on, seriously.
Inspecting American Progress
Before moving on to give a summary of key takeaways, I opted to analyze the financial growth of our home nation, the United States of America (US), to determine whether the country's exemplary status among the world's leading nations is warranted in the economic domain as well.
Firstly, I calculated that the all-time average GDP per capita of the US was 52,100 International Dollars. I, then, created a visualization which showed the growth of the US economy over time:
Since the recording period, the US economy can be said to have grown steadily, reaching a peak GDP per capita of $63,600 in 2021.
Subsequently, and most importantly, I decided to construct a graph with visualizations regarding the average income distribution for the richest 10%, richest 1%, richest 0.1%, and poorest 50% of the American population throughout time:
As can be inferred, the richest 10% of Americans have generally held about 40% of the wealth generated in the country, every year. And within this grouping, as there are further sub-groupings (the top 1%, the top 0.1%), the income shares continue to be separately viable for the elite. And, astonishingly, the latter half of the population has usually earned only about 15% of the total wealth generated in the country every year!
Are the opponents of capitalism, which condone it for being responsible for the exploitation of the masses by the lucky few, right to criticize it, especially by using the (unofficial) paragon of capitalism as the prime example? That is a different discussion, but it nonetheless stimulated me to calculate the average GDP per capita and rates of distribution for all nations across time, and to list the ten countries with the best average GDPs per capita over time along with their respective average income distributions, so that we can determine whether the US is a bad outlier or if the distribution trends are normal or even better-than-average.
These were the statistics for all countries. Judging from this, the US seems to have done very well in producing a lot of wealth over the years (averaging a GDP per capita nearly thrice that of the average), but very mundanely in terms of distributing it across its people, as the distribution rates for the average of all others and of the US are nearly identical; the rich elite continue to obtain and keep an overwhelming share of the wealth of their nations.
Next, the visualization containing the best ten countries for average GDP per capita and their wealth distribution rates (removing NULL or incalculable rates):
This table clarifies the picture through another viewpoint. The US has been the tenth-best wealth-generator and the only "big" - in terms of population and landmass - country among the top ten. Also, even though its richest 10% have a massive average share of about 43% in its produced income, three other countries in this list lead it in that metric: Qatar (53%), Kuwait (53%), and United Arab Emirates (51%). Fewer nations, still, rank above it in average income shares of the wealthiest 1% and 0.1%.
Overall, what I deduced from this is that the US has been good in its economic performance compared with other great performers, and has lived up to its famed technological and political prowess.
The other countries ranking above the US in terms of average GDP per capita are far smaller in population and, so, their wealth is distributed among less people; this causes the GDP per capita to be much higher. The US, one the other hand, has a population of over 300 million people and, even then, manages to distribute the tenth-best income amount in the world to each of its earners.
The wealth held by the richest segments of societies is still a concern - especially in the small-yet-magnanimous gulf countries in the list (Qatar, Kuwait, United Arab Emirates), which have averages of more than 50% of income shares held by the richest 10% of their citizens - but it is only natural that the "richest" people are the ones who take larger chunks of the total payout (/income distribution).
Act: Findings & Recommendations
Based on the research I performed, I culled these vital insights:
Keeping these findings in mind, I would recommend the following course of action to world leaders: