Summary of Policy Brief – Poverty Reduction in China_Essay

Summary of Policy Brief – Poverty Reduction in China_Essay

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Summary of Policy Brief – Poverty Reduction in China: Is High Growth Enough? Thesis: growth is not enough to offset poverty and inequality. Need policy initiatives to deal with inequality especially with the rural-urban disparity. Argument: there needs to be a tradeoff between growth and equity in order to reduce poverty. The PGI (poverty, growth, inequality) triangle states that any poverty change can be expressed as a mathematical function of growth and the variation in inequality. Growth in china has lacked equity development and has created inequality. These levels of inequality pose a threat to social and political stability and have profound implications for other economies. Finally Chinas PGI profile may help international organizations and other national governments in fighting poverty and inequality. Inequality in China has risen because of regional differences. The urban-rural gap has caused the rise in inequality. Domestic capital has become increasingly important and it
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Unformatted text preview: is more valuable if you own property or capital in an urban area than a rural area. Recommendations: drop of 50% if eliminate rural-urban gap. Short run: 1) establish and develop rural capital markets. Essential for promoting capital formation. Also eliminates discrimination against small farmers and rural activities. 2) Make fiscal spending and redistribution progressive. All transfers geared towards physical capital formation and education of the young. R&D in agriculture must be increased to improve productivity. 3) Promotion of trade and FDI in inland China (foreign direct investment) Long Run: URBANIZATION…move everyone to the city or make cities out of the rural areas… it is possible. If they are treated as urban residents, thy get better education and have brighter futures. Transferring them will also create more jobs especially in the service industry. To minimize social problems – need a step-by-step procedure to secure jobs and housing in urban areas....
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