Development and Inequality

Development and Inequality - PLT/SCL 206 Rich World Poor...

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Unformatted text preview: PLT/SCL 206 Rich World Poor World Dr Michael Keating Monday 8th October 2007 Development and Inequality How is Poverty to be Defined and Measured? Poverty The definition and measure adopted are important because they influence policy... Low income Food, Shelter, Healthcare, and Education Deprivation Results in economic growth being seen as the solution to poverty Often doesn't correlate directly to poverty Poor people tend to define poverty themselves through other factors Results in more emphasis on social policy Poverty and Inequality Absolute Poverty Relative Poverty Measured against a benchmark People living below a defined income in US$ per day adjusted for Purchasing Power Parity (PPP) (usually US$2/day) Extreme poverty US$1/day The extent of inequality within a state usually measured by the GINI Coefficient (quartiles) The income/wealth as % of the economy of the highest 25% versus the lowest 25% Poverty Poverty can apply to individuals, households, communities, countries or entire regions... Vulnerability to Poverty Permanent Poverty Many people live on the edge of poverty and socio economic changes can push them into poverty Poverty traps preventing people from escaping poverty Social systems which reinforced and perpetuate poverty Cycles of poverty reproduced across generations Difficult for `headcount' measures to differentiate between permanent and temporary poverty Inequality Within Regions and Countries Country poverty measured by GNP per capita But however good a development measure this is a poor measure of poverty 1) Average statistics take no account of distribution so states with identical GNP per capita can have vastly different poverty levels 2) Ignores nonincome measures of poverty Inequality Within Regions and Countries % of population falling below the poverty line Ignores how far below the line people are so can understate changes in income Poverty line a seemingly arbitrary indicator Determined by income levels then ignores non income poverty indicators Any averaged nonincome poverty indicators (e.g. child mortality) also ignore distributive issues Determined with reference to a basket of goods (food poverty line) and/or services The Poverty Line Income may rise and fall over time but consumption tends to be flatter Income/expenditure often the most reliable data indicator... Data is likely householdlevel not individuallevel raising problems of interhousehold distribution Economies of scale in household size Prices vary across time and space PPP exchange rates are not universally available Sources of `wild food', collective property, and social support systems vary massively between states making comparisons difficult Relative Poverty Within Countries or Regions But are you really poor if you can't afford a microwave oven? Setting poverty measurements to average social wealth? Poverty in Industrialised countries US$14.40 per day US income poverty line Social exclusion Focus on mechanisms and institutions which exclude people Problematic Social Inclusion Rural Poverty 1.3 billion living below the Poverty line (World Bank 2000) 72.2% live in rural areas Asia 633 million SubSaharan Africa 204 million Latin America 76 million North Africa and the Near East 20 million Rural Poverty Despite aggregate decreases in poverty Poverty has clearly and substantially increased in sub Saharan Africa More generally poverty may have got worse for the poorest 40% of the rural poor Poor rural groups are far more likely to be drawn into ethnic violence, conflict and civil war Structural adjustment period has increased indebtedness of these groups overall Increasing urban/rural divide in terms of access to social services Urban Poverty GDP disproportionately generated in urban areas Industrialization and urbanization as a pathway to development However parttime, transient and informal employment, lowwage levels, and high unemployment linked to rising urban poverty Lack of access for the poor to urban physical and social infrastructure Self, private, or black market provision Urban Poverty High cost of housing Higher cost of goods and services in general compared to rural areas Greater likelihood of disease (particularly as related to acute malnutrition) Massive urban poverty and inequality (greater than in rural areas) the result Between Countries and Regions GNP (Gross National Product) measure of national income; GNP per capita average income per person in that country Poverty Africa Most countries where more than 50% of the population live in Poverty Africa lowest 24 countries in HDI index are African Asia most of the World's poor in aggregate terms Poverty Poorest 25% or 33% of the world? China and India has most of the World's poor; but they mostly lie between these 2 figures China also has high levels of social welfare (education and life expectancy)... India's are improving Clear evidence of poverty alleviation in South and East Asia Between Regions and Countries Cycles of perpetuate poverty Causes of Inequality Continued impact of colonial era Global distribution of power Debt burden on poor countries Prevalence of disease in poorest countries Rapid population growth Weak, unstable political systems Marginalisation in a globalized world Poverty Unlike problematic concepts like development or the imposition of Western values like democracy there is no cultural or political opposition to eliminating hunger or improving child mortality rates However, given multicausal and geographically specific problems of poverty universal prescriptions have tended to fail... The Global Millennium Goals? Growth with Equity % Population in Poverty South Korea Indonesia 1970 23.4 1970 57.1 1980 9.8 1980 39.8 2000 3.6 2002 18.2 Malaysia Thailand Growth with Equity Jomo 2006 http://www.un.org/esa/desa/papers/2006/wp33 Land Reform and Redistribution Human Resources and Education Inequality rising post1990 especially in China ...
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