Poverty in the Third World

Transcription

1 11. World Poverty Poverty in the Third World Human Poverty Index Poverty and Economic Growth Free Market and the Growth Foreign Aid Millennium Development Goals

2 Poverty in the Third World Subsistence definitions of poverty are of considerable value in examining Third World poverty. Extreme poverty is the most severe state of poverty. Many cannot meet basic needs for food, water, shelter, sanitation, and health care (Sachs, 2005). Poverty headcount ratio at $1.25 a day (PPP) (% of population) : most high -> Middle of Africa

3 International Comparison of Poverty According to World Bank data, of the world s population living in developing and transition economies in 2005, 41.9 million, or almost half, live on less than $2 a day (modest poverty) About 1.44 billion live on less than $1.25 a day (extreme poverty), with 40.3 percent of these people living in South Asia (World bank, 2005). Poverty is especially severe in South Asia and Africa, where 40.3 and 50.9 percent of the population is poor, respectively.

4 Extreme Poverty The World Bank defines extreme poverty since 1981, finding that 1.4 billion people (one in four) in the developing world were living below US$1.25 a day in 2005, down from 1.9 billion (one in two) in The proportion of people in extreme poverty is now the lowest in history.

5 Global Inequality The average income in the richest twenty countries is thirty seven times the average in the poorest twenty. While in the thirty member nations of OECD 6 out of every 1,000 children die before the age of one. In the sub-saharan region 92 out of 1,000 among children die before that age.

6 The percentage of the population living on less than $1.25 per day, Percentage of the population living on less than $1.25/day East Asia and the Pacific Europe and Central Asia MidMiddle East and North Africadle India World China Latin America and the Caribbean South Asia South Asia Note: Based on US$1.25 in 2005 Purchasing Power Parity (PPP), and then adjusted for country-specific inflation. Source: Global economic prospects " by World Bank

7 Infant Mortality Absolute progress has been fastest in developing countries from the 1970s to the 2000s. However, the percentage decline continues to be faster in developed countries (77 percent) than in developing countries (59 percent). And huge health gaps remain, with eight times more infant deaths per 1,000 live births in developing countries than in developed countries.

8 Life Expectancy Source: Human Development Report 2010

9 UN Human Development Index (HDI) The Human Development Index (HDI) is the normalized measure of life expectancy, literacy, education, standard of living, and GDP per capita for countries worldwide. It is used to determine and indicate whether a country is a developed, developing, or an underdeveloped country. It is also used to measure the impact of economic policies on quality of life.

10 Multidimensional Poverty Index The Multidimensional Poverty Index is an indication of the standard of living in a country, developed by the United Nations (UN). For highly developed countries, the UN considers that it can better reflect the extent of deprivation compared to the Human Development Index. The Human Development Reports summarizes this as a composite index measuring deprivations in the three basic dimensions captured in the human development index a long and healthy life, knowledge and a decent standard of living and also capturing social exclusion." The poverty index for calculating include probability at birth of not surviving to age 60 (times 100); adults lacking functional literacy skills; population below income poverty line (50% of median adjusted household disposable income); rate of long-term unemployment (lasting 12 months or more).

11 Multidimensional Poverty Index Source:

12 Other Poverty Estimates According to World Bank s Poverty Estimates (2002), income inequality for the world as a whole is diminishing. Regardless of who is right about the past trend in income inequality, it has been argued that improving absolute poverty is more important than relative inequality.

13 Food Supplies The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories per day decreased from 56% in the mid-1960s to below 10% by the 1990s.

14 Inequality in Health, Education and Income and HDI levels Source: Human Development Report 2010

15 Working for the Few The wealth of the one percent richest people in the world amounts to $110 trillion. That s 65 times the total wealth of the bottom half of the world s population. The bottom half of the world s population owns the same as the richest 85 people in the world. The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer (Oxfam, Working for the Few, 2014)

16 Other Poverty Estimates Life expectancy has almost doubled in the developing world since the Second World War. Infant mortality has decreased in every developing region of the world. Between 1950 and 2009, global literacy rates increased from 52% to 83.7% of the world. Women made up much of the gap: female literacy as a percentage of male literacy has increased from 59% in 1970 to 79.2% in The percentage of children in the labor force has fallen from 24% in 1960 to 10% in 2000.

17 Inequality and Poverty Simon Kuznets (1955) argue that the relationship between the level of per capita GNP and inequality in the distribution of income may take the form of an inverted U. That is per capita income rises, inequality may initially rise, reach a maximum at an intermediate level of income, and then decline as income levels characteristic of an industrial country are reached.

18 Poverty and Economic Growth The World Bank argues that an overview of many studies shows that: Economic growth is fundamental for poverty reduction, but growth as such does not affect inequality. Economic growth accompanied by progressive distributional policies is better than growth alone. High initial income inequality tends to hinder poverty reduction and wealth inequality seems to predict lower future growth rates.

19 Strategies for Growth and Equity Countries in Asia, Africa and L.A. have demonstrated the difficulties of trying to redistribute before growing. A modified model of the redistribute then develop approach has been used in Taiwan and South Korea, where rural landholdings were redistributed shortly after the Second World War and development has proceeded rapidly and comparatively equitably. The basic idea of redistribution with growth is that the gains from economic growth can be redistributed so that over time the income distribution gradually improves.

20 Free Market and the State In the 1990s, international organizations focused on a policy package of anti-poverty measures, but their proposals are criticized as the Washington Consensus which involved reducing state intervention in the economy, reducing trade barriers, and opening economies to foreign investment. This raises vigorous debate over these issues continually. Free market reforms does not necessarily represent the abandonment of the state action. It is also important to note that good social infrastructure is essential for the market reforms to work, and the active role of the state is important.

21 Debates on Foreign Aid Humanitarian aid is therefore primarily used for emergency relief, while development aid aims to create long-term sustainable economic growth. Most developed countries provide development aid to developing countries. The UN target for development aid is 0.7% of GDP, but only a few countries reaches this.

22 Foreign Aid and the State It is widely observed that some of foreign aid is stolen by corrupt governments officials, and that higher levels of foreign aid diminishes the quality of government action. However, supporters argue that many problems can be solved with strict monitoring of how the aid is used. Some argue that the foreign aid often serves to increase poverty and social inequality because the donor countries demands the conditional implementation of free market economic policies in the recipient countries, and thus foreign aid is regarded as serving the interests of the donor countries. This raises serious debates on the role of the state. Non-governmental organizations (NGOs) play a major role in distributing aid - examples include ActionAid, Oxfam, and the Mercy Corps. Aid from NGOs may be more effective than governmental aid. This may be because it is better at reaching the poor and better controlled at the grassroots level.

23 Employment and Poverty Reduction Employment can fail to help escape from poverty, the International Labour Organization (ILO) account for that as many as 40% of workers as poor, earning below $2 a day, the modest poverty line. Increases in employment without increases in productivity leads to a increase in the number of working poor. The government needs to promote the creation of quality, not "quantity" in labor market policies.

24 Trends of Working Poor Who Experienced Extreme Poverty Source: The Millennium Development Goals Report 2011

25 Millennium Development Goals The Millennium Development Goals (MDGs) were developed out of the eight chapters of the United Nations Millennium Declaration, signed in September The eight goals and 21 targets include Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria, and other diseases Ensure environmental sustainability Develop a global partnership for development

26 The Sachs Report The Sachs Report (for the UN Millennium Project) proposes a series of "quick wins", approaches identified by development experts which would cost relatively little but could have a major constructive effect on world poverty. The quick wins include Directly assisting local entrepreneurs to grow their businesses and create jobs;

27 Summary Subsistence definitions of poverty are of considerable value in examining Third World poverty. The World Bank defines extreme poverty as living on less than US$ (PPP) 1.25 per day. Economic growth is strongly associated with a reduction in poverty. Many studies argue that Economic growth accompanied by progressive distributional policies is better than growth alone. Free market reforms does not necessarily represent the abandonment of the state action. It is important to note that good social infrastructure and the active role of the state are essential for the market reforms to work. Humanitarian aid is therefore primarily used for emergency relief, while development aid aims to create long-term sustainable economic growth. The Millennium Development Goals are eight goals to reduce poverty that 189 United Nations member states have agreed to try to achieve by the year 2015.