When future historians look back at the beginning of the 21st century, they’ll note that we grappled with many big issues.
They’ll write about the battle between nationalism and globalism, soaring global debt, a dysfunctional healthcare system, societal concerns around automation and AI, and pushback on immigration. They will also note the growing number of populist leaders in Western democracies, ranging from Marine Le Pen to Donald Trump.
However, these historians will not view these ideas and events in isolation. Instead, they will link them all, at least partially, to an overarching trend that is intimately connected to today’s biggest problems: the “hollowing out” of the middle class.
Visualizing the Collapse of the Middle Class
The fact is many people have less money in their pockets – and understandably, this has motivated people to take action against the status quo.
And while the collapse of the middle class and income inequality are issues that receive a fair share of discussion, we thought that this particular animation from Metrocosm helped to put things in perspective.
The following animation shows the change in income distribution in 20 major U.S. cities between 1970 and 2015:
The differences between 1970 and 2015 are intense. At first, each distribution is more bell-shaped, with the majority of people in a middle income bracket – and by 2015, those people are “pushed” out towards the extremes as they either get richer or poorer.
A Broader Look at Income Inequality
This phenomenon is not limited to major cities, either.
Here’s another look at the change in income distribution using smaller brackets and the whole U.S. adult population:
It’s a multi-faceted challenge, because while a significant portion of middle class households are being shifted into lower income territory, there are also many households that are doing the opposite. According to Pew Research, the percentage of households in the upper income bracket has grown from 14% to 21% between 1971 and 2015.
The end result? With people being pushed to both ends of the spectrum, the middle class has decreased considerably in size. In 1971, the middle class made up 61% of the adult population, and by 2014 it accounted for less than 50%.
As this “core” of society shrinks, it aggravates the aforementioned problems. People and governments borrow more money to make up for a lack of middle class wealth, while backlashes against globalism, free trade, and open borders are fueled. The populists who can “fix” the broken system are elected, and so on.
Ranked: Top Countries for Foreign Direct Investment Flows
Take a look at changes in foreign direct investment flows over a decade, analyzing the top destinations and biggest investors.
One of the most significant phenomena in 21st-century globalization, driven by the ascent of multinational corporations and the removal of investing barriers, is the vast cross-border flow of foreign capital.
To analyze recent trends, Samidha Nayak utilized World Bank data spanning 2012–2022, charting the top 10 destinations for foreign direct investment (FDI) and the leading investing countries annually.
Countries With the Most FDI Inflows (2012–2022)
In 2012, the United States had the highest FDI inflow, attracting about $250 billion in investment from the rest of the world.
At second place, China’s FDI inflows stood about $9 billion lower at $241 billion.
The middle ranks have representatives from Europe (Netherlands, Cyprus), from Asia (Hong Kong) and from South America (Brazil).
Towards the bottom, three OECD countries—Germany, Ireland, and Australia—all attracted an average of $60 billion in foreign investment.
Unexpectedly, the British Virgin Islands came in 8th. Their lack of corporate tax makes it a popular place for companies to headquarter, in turn attracting FDI inflows.
|1||🇺🇸 U.S.||$250.35||1||🇺🇸 U.S.||$388.08|
|2||🇨🇳 China||$241.21||2||🇨🇳 China||$180.17|
|3||🇳🇱 Netherlands||$239.67||3||🇸🇬 Singapore||$140.84|
|4||🇧🇷 Brazil||$92.57||4||🇭🇰 Hong Kong||$120.95|
|5||🇭🇰 Hong Kong||$74.89||5||🇫🇷 France||$105.42|
|6||🇨🇾 Cyprus||$69.97||6||🇧🇷 Brazil||$91.50|
|7||🇩🇪 Germany||$65.44||7||🇦🇺 Australia||$67.12|
|8||🇻🇬 British Virgin Islands||$61.12||8||🇨🇦 Canada||$53.71|
|9||🇮🇪 Ireland||$58.09||9||🇸🇪 Sweden||$50.05|
|10||🇦🇺 Australia||$57.55||10||🇮🇳 India||$49.94|
Ten years later however, the top 10 saw a shuffle. The U.S. and China retained their top spots, but the difference grew much larger—with the U.S. attracting nearly 50% more foreign investment ($388 billion) than China ($180 billion).
Singapore, which first appeared in the rankings in 2014, took third place with $141 billion.
Meanwhile the bottom half changed almost entirely with France, Canada, Sweden, and India replacing Cyprus, Germany, the British Virgin Islands, and Ireland.
Countries With the Most FDI Outflows (2012–2022)
Unlike the ranks of net inflows, the top 10 countries with the highest FDI outflows have stayed essentially the same.
The U.S. topped the list in both ends of the decade, despite briefly falling out of the top 10 entirely in 2018. There were only three new entrants (France, Australia, and the UK) in 2022 compared to 10 years prior, with Cyprus, Switzerland, and the British Virgin Islands dropping out of top spots.
|1||🇺🇸 U.S.||$377.24||1||🇺🇸 U.S.||$426.25|
|2||🇳🇱 Netherlands||$237.94||2||🇩🇪 Germany||$178.87|
|3||🇯🇵 Japan||$117.63||3||🇯🇵 Japan||$175.40|
|4||🇩🇪 Germany||$99.08||4||🇬🇧 UK||$158.93|
|5||🇭🇰 Hong Kong||$88.12||5||🇨🇳 China||$149.69|
|6||🇨🇾 Cyprus||$75.25||6||🇳🇱 Netherlands||$125.89|
|7||🇨🇳 China||$64.96||7||🇦🇺 Australia||$123.36|
|8||🇨🇦 Canada||$62.25||8||🇫🇷 France||$118.76|
|9||🇨🇭Switzerland||$54.30||9||🇭🇰 Hong Kong||$106.86|
|10||🇻🇬 British Virgin Islands||$53.94||10||🇨🇦 Canada||$83.11|
Many of the countries who are in the top ranks for inflows (U.S., China, Canada, Australia) are also in the top ranks for outflows both in 2012 and 2022.
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