102 INTL FINAL EXAM STUDY GUIDE
I.
Introduction: Concepts, Tools and Measurements
#4 What do we mean by the distribution of income and how do we measure it?
- distribution of income = measure of inequality; capture income of individual or group
compared to others
- measurement of inequality by comparing income, assets or wealth, distribution of
services, health/education or quality of life measures
What are the pros and cons of different inequality measures, for example, the Gini vs. the
income shares of the bottom quartile?
- gini coefficient = draws a line that shows cumulative share of income earned by
cumulative share of the population (Lorenz curve) & gini is area between the diagonal
and the curve divided by the whole area of the triangle
o pros can be constructed not only for income, but for assets such as land and
education; compare different countries by their Gini coefficient
o cons not sensitive to income at bottom of distribution
- income shares of the bottom quartile - look at incomes shares of different income groups
o pro - more direct way of capturing how poorest groups are faring
II.
Growth, Poverty and Inequality
#1 What do we mean by economic growth, and what is the relationship between growth
and poverty both across countries and over time?
- economic growth increases employment and wages; economic growth good for poor
- unequal societies grow less rapidly than more equal ones; more corrupt
- inequality in income and assets is because unequal investment in human capital,
government services and political biases; breeds social and political resentments
#2 How do we measure growth?
- growth measured by increase in GDP
o GDP measured by expenditure or income approach
III.
The Role of State: Public Policy and Politics
General
#2 What are the issues associated with government transfers to the poor? What are some of
the problems associated with transfers?
- issues with government transfers to the poor
o financing government needs revenue for program, also hard to reduce leakage
because also can reduce access to resources to poor
o administrative costs how to efficiently target poor
- problems associating with transfers
o incentive effects does it discourage work efforts or relying on own opportunities
o stigma effects poor do not want to be identified as poor
o success of transfers is where poverty is limited like America low income
countries do not have finances for transfers
#3 Material deprivations often mean a lack of access to political power. What can be done
to improve the chances for pro-poor growth polices to be implemented? What role, for
example, might democracy or participation play in the allocation of resources through the
budget? Why might democracy not have positive effects attributed to it?
- democracy are more pro-poor because they have to be elected by an electorate; support
for democratic rule for basic necessities
-
authoritarian governments do not have to be replaced by electorate so they dont care for
electorate specifically the poor
- *** NEED HELP ANSWERING?
#4 What is meant by the concept of governance?
Basic Social Services
#11 Educating girls seems particularly important; why?
- education of mothers leads to positive social outcomes
o decrease infant mortality
o increase childrens health
o increase childrens education
o less HIV/AIDS
- equal education of father yields less
- higher returns of investments in girls education; increase women entry into labor force
#12 Why does the relationship between education and growth appear to be so weak?
- problem of quality; we use enrollment rates to measure education but enrollments do not
capture quality of education
- need to fix problem monitoring of teachers and the allocation of spending
Rural vs. Urban Poverty
#13 How is rural poverty different from urban poverty?
- Rural poverty
o greater extreme poverty in rural; harder to provide services for rural poor
o lack of jobs for non-agricultural sector
o many live in areas that are resources poor and risk prone; volatile weather
o lack specialization because have to be diverse to accommodate risks
- urban poverty
o urban poverty is lower than rural but life expenses are higher
o go to city for higher wages but end up in informal sector and problem with
housing (slums)
o slums lack of infrastructure, services, no protection, violence, corruption,
How do assets of the rural poor differ from that of the urban poor?
- Rural poverty
o most of the rural poor own land but the land is not profitable or productive
o poor houses have only one assets a hoe
o assets are things like a scotch cart, livestock; their assets is essential to their
livelihood
What are the particular problems associated with rural poverty? What different challenges
face governments as they deal with these two kinds of poverty?
- rural poverty
o need to raise productivity and create off-farm employment
o rising food prices; rural poor are net producers, they still need to purchase most of
their food
o government needs to also divert resources to agricultural sector, not just industrial
o government has urban bias because urban constituency is more mobile and
available to government
o need to invest in irrigation infrastructure; pro=poor investment
-
urban poverty
o problems- infrastructure housing and violence
o government should give basic social services like water and sanitation to slums
o regularize property rights with deeds and title with surveys
lack of police protection= high level of insecurity and reduced labor
supply
lack of title and risk of force evictions means
little incentive to invest in structures
lack of credit
Private Sector Solutions and Income Generation Programs
#20 What is meant by the fortune at the bottom of the pyramid
- low-income market = opportunity for rich companies
- should invest poor and lift them out of absolute poverty
- inclusive capitalism economic growth, profits and contribution to humanity
If companies can make money by selling to the poor, why might this nonetheless be
beneficial to the poor?
- encourage innovation and opportunities for the poor for employment and create markets
for local needs
IV.
External Actors I: Aid and Trade
#1 What are some of the connections between trade and poverty reduction? Distinguish
between trade, trade liberalization in the developing countries and trade liberalization in
the advanced industrial states.
- Higher level of exports is associated with higher GDP growth but trade favors some
groups over others; some benefit and some dont
- Countries that use their endowments of trade (labor, physical capital) benefit; such as
developing countries produce labor-intensive produces because they have lots of labor
- free trade in advanced industrial states help exports from developing countries; stimulates
export opportunity
- protection in advanced industrial states harm exports for developing countries
- advanced industrial statues usually want to protect against developing countries export
o if India reduces import barriers good for poor because cheaper imports for poor
#2 What are some of the issues in the recent WTO negotiations that might be particularly
germane for developing countries and poverty reduction?
- India wanted to raise tariffs against advanced industrial countries to protect poor farmers
from cheap exports
- US wanted free trade from developing countries