28. Measuring development

Question 1

Define relative poverty

Answer 1

A person is said to be in relative poverty when they do not reach a specified level of income

Question 2

Define absolute poverty

Answer 2

A person is in absolute poverty when their income is below the level of income which is sufficient enough to buy basic items such as clothing, food and shelter.

Income levels:

Below 1.90$ - extreme poerty

Below 3.21$ - moderate poverty

Question 3

Define a poerty trap

Answer 3

Poverty trap (poverty cycle) - any linked combination of barriersto growth and deelopment that forms a circle, thus self-perpetuating unless the circle can broken

Question 4

An example of a poverty trap

Question 5

What are the single indicators of development?

Answer 5

• financial measures: GDP (regardless who owns the prod assets) / GNI (regardless where prod assets are located) per capita; GDP per capita at PPP
• health measures: life expectancy at birth; infant mortality rate
• education measures: adult literacy rate; net enrolment ratio in primary education

Question 6

Explain PPP

Answer 6

Purchasing power parity (PPP) exchange rate - equates the purchasing power of currencies in different countries

Created by comparing identical goods / services at different countries - Big Mac index

Question 7

What are the composite indicators of development

Answer 7

• HDI: healthy life (life expectancy at birth), improved education (adult literacy rate + I, II, III school enrolment), decent standard of living (GDP per capita at PPP)
• GDI (gender related index): HDI for men and women
• GEM (gender empowerment measure): looks at women in leadership, managerial, parliamentary positions, technical, professional jobs
• HPI (human poverty index): measure deprivation and poverty (opportunity to basic level) - opposite of HDI