0 350 249 377 00 316 83 pakistan 15 121 176 512 42

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Unformatted text preview: 6.1% Peru 66.8% 150 68.6% 27.0% 0.7% 13.6% South Africa 5.5% Tanzania 91.7% 92.6% 100 70.7% 68.4% 400 35.4% 5.6% 33.4% 11.9% Cote d'Ivoire 18.4% 0.7% 182 Timor Leste 24.8% 40.4% 12.3% Urban 83.6% 32.0% 45.7% Guatemala India - Hyderabad 20.2% 40 0.1% 20.3% 1.3% 88.7% 12.2% Indonesia 13.9% 20 13.2% 49.5% 18.6% 71.5% 46.8% Mexico 35.2% 26.8% 21.9% 19.7% 41.4% 23.6% Nicaragua 11.5% 630 12.1% 45.6% 0.0% 20.0% 8.7% 1.6% 162 17.5% 48.4% 3.0% 68.5% 35.5% 0.0% 51.1% 0.0% 0.0% 150 11.4% 61.9% 0.0% 12.5% 52.2% 18.8% Pakistan Panama 0.0% Peru 8.8% South Africa 2.5% Tanzania 61.2% 60.3% 100 6.7% 42.2% 0.5% 121 Timor Leste 0.0% 18.8% 9.2% Markets and economic environments of the poor Economic choices of poor are constrained by their market environment Market for credit and the poor: Do not get loans from formal lending institutions commercial banks cooperative 38 Instead using informal sources : relatives friends neighbours money lenders shopkeepers landlords 39 Credit from informal sources is expensive: mainly due to high costs of contract enforcement rather than high rates of default High costs of contract enforcement: No collateral No formal mechanisms (law courts, etc) 40 Market for savings and the poor: Need safety and reasonable return Unsafe to leave at home (theft and also temptation to spend) No access to formal savings accounts form clubs or groups (ROSCAS, Self-help groups (SHGs)) deposit with money lenders, post offices, collectors 41 Table 8: Market for Credit and Savings and the poor Percent of HH with at least one Loan Living on less than $1 a day Rural Cote d'Ivoire India - Udaipur India - UP/Bihar Indonesia Mexico Nicaragua Pakistan Panama Papua New Guinea Peru South Africa Timor Leste Urban Cote d'Ivoire India - Hyderabad Indonesia Mexico Nicaragua Pakistan Papua New Guinea Peru South Africa Tanzania Timor Leste Living on less than $2 a day Rural Cote d'Ivoire India - Udaipur India - UP/Bihar Indonesia Mexico Nicaragua Pakistan Panama Peru South Africa Timor Leste Urban Cote d'Ivoire India - Hyderabad Indonesia Mexico Nicaragua Pakistan Panama Papua New Guinea Peru South Africa Timor Leste Proportion of Total Laons from: Bank Moneylender 30.5% 66.3% 6.0% 11.6% 18.5% 5.7% 6.0% 2.2% 25.3% 17.4% 15.9% 19.2% 2.7% 2.5% 93.2% 2.8% 1.5% 0.8% 12.3% 39.6% 10.9% 1.0% 0.0% 40.4% 70.5% 11.6% 19.1% 3.9% 6.9% 32.3% 1.2% 61.6% 22.6% 12.7% 95.1% 6.2% 8.6% 26.0% Credit Union Savings Group 0.0% 0.0% Microcredit Instiution 0.0% 2.9% 0.0% 6.0% 0.0% 0.0% 0.0% 0.0% 2.6% 1.5% 17.8% 0.0% 0.0% 0.0% Shopkeeper Villager Friend Other 0.0% 15.8% 9.2% 71.3% 0.0% 0.0% 2.8% 1.3% 51.3% 8.3% 38.1% 29.0% 3.7% 11.7% 0.5% 26.1% 11.2% 0.0% 2.1% 0.0% 0.0% 18.3% 79.5% 6.4% 53.5% 36.4% 94.3% 4.0% 60.9% 0.0% Relative 16.7% 21.6% 23.9% 13.4% 0.0% 0.0% 0.0% 0.0% 2.1% 0.0% 3.8% 0.0% 0.0% 92.6% 10.5% 0.0% 6.2% 0.4% 0.0% 0.0% 8.9% 4.7% 0.0% 0.0% 10.3% 0.0% 0.0% 6.8% 6.4% 3.0% 33.3% 17.1% 17.9% 19.8% 4.6% 3.6% 0.0% 95.4% 2.1% 14.7% 41.7% 13.2% 3.6% 0.7% 4.4% 5.1% 39.6% 5.3% 52.1% 9.0% 10.6% 94.0% 0.0% 5.8% 0.5% 14.7% 43.1% 11.5% 1.5% 2.7% 38.8% 14.1% 93.4% 24.7% 3.3% 3.0% 43.5% 23.2% 13.1% 26.2% 25.5% 0.0% 49.3% 22.3% 79.1% 0.0% 17.7% 8.5% 0.0% 40.0% 69.9% 19.4% 21.3% 31.4% 0.0% 11.1% 0.0% 40.6% 0.0% 37.3% 68.0% 6.4% 11.9% 17.9% 3.0% 2.5% 0.0% 0.9% 0.0% 1.1% 0.0% 0.0% 6.4% 0.0% 0.0% 0.0% 1.1% 2.6% 1.9% 23.0% 0.0% 6.1% 33.2% 0.1% 2.7% 16.8% 86.9% 4.3% 58.7% 1.5% 0.0% 5.2% 3.2% 1.2% 28.8% 25.9% 38.1% 25.9% 5.5% 21.2% 9.3% 6.0% 61.3% 0.0% 2.2% 0.0% 0.0% 20.1% 27.4% 33.8% 37.4% 0.0% 12.9% 0.0% 34.2% 3.4% 2.2% 29.9% 16.0% 90.6% 23.2% 14.9% 5.1% 42.9% 25.5% 9.9% 31.2% 0.0% 23.0% 46.6% 23.0% 30.6% 0.0% 2.1% 0.7% 13.7% 0.0% 0.0% 0.0% 86.4% 12.1% 9.6% 10.1% 16.0% 2.5% 1.0% 14.5% 0.0% 0.0% 0.0% 0.0% 0.0% 1.3% 7.8% 6.6% 6.2% 0.5% 0.0% 1.0% 2.4% % HH with a Savings Account 1.2% 0.0% 11.6% 7.8% 39.8% 90.0% 11.5% 0.0% 3.7% 12.9% 43.3% 0.1% 8.6% Market for insurance and the poor: Little access to formal insurance Informal insurance through social networks limited ability to insure (lack of resources) Consumption of poor households is strongly affected by variations in their incomes Also suffer more healthcare risks which are financed by borrowing Response to economic stress can be eating less or taking their children out of school and less medical treatment for family members Lack of insurance also causes poor to under-invest in risky but profitable technologies like new seeds 43 Weakness of informal insurance: relies on willingness of more fortunate to take care of those less favored exploitative relations (landlord versus tenant) Informal networks are not well-diversified spread risk over households located next to one another who have similar incomes and occupations Governments are not effective at providing insurance no public healthcare public employments schemes not that successful 44 Market for land and the poor: Land is one asset poor do own Typically land records are incomplete poor do not have official titles to their land hard to sell or mortgage When titles are missing or hard to enforce political influence matters lack of incentives to invest 45 Infrastructure and the economic environment of the poor Infrastructure = roads, power, schools, health facilities, sanitation, etc. Availability of public infrastructure to poor varies considerably across countries Access to electricity and tap water is greater for urban poor than rural Most low income countries have attempted to make available primary schools and healthcare centers Quality th...
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This document was uploaded on 02/26/2014 for the course ECON 541 at The University of British Columbia.

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