Poverty + Inequality Flashcards
Absolute poverty Vs. Relative poverty
Absolute
- minimum resources a person needs to for basic human needs e.g. food, shelter, clothing, water
–> US $1.90
Relative
- comparison to other people in country
–> live below 60% average income
–> subjective, changes over time, unusable for international comparison
What are measurements of poverty
- Absolute poverty –> $1.90 day
- Relative poverty –> below 60% Average income
- UN Human Poverty Index –> life expectancy, literacy rate, long-term unemployment, relative income
- Ratio method –> proportion of income spent on basic needs e.g. food
What 5 things can causes a change in poverty levels?
- Level of Indebtedness
- Unemployment
- Health
- State of economy / Real Incomes
- Distribution of Income
Income Vs. Wealth
- Income - flow –> Money earned over period of time
–> Income inequality = unequal distribution of earnings - Wealth - stock assets a person owns
–> difference in value of stock of assets by individuals
List 6 cause of income + wealth inequality within countries?
- Globalisation
- Education / training
- Strength of Trade Unions
- Difference in wage rates of professions
- Welfare benefits
- Regressive tax system
List 5 causes of income + wealth inequality between countries?
- Natural resources
- History e.g colonisation
- Political stability
- FDI
- Trade liberalisation
How does Capitalism effect inequality?
Capitalist system
- Resources owned by some / private sector
- Labour sold to owners of resources
- prices determined by S+D
–> owners of resources have more wealth + income than workers –> leads to inequality
What is HDI?
Human Development Index
- GDP per capita –> measured at PPP
- Health –> life expectancy
- Education –> years of schooling
Advantages (2) + disadvantages (3) to HDI
ad
- Broader measure than GDP –> inc. health + education
- Used for international comparison of development
dis
- Narrow, only measures 3 things
- Only concerned with long-term development outcomes
- Average measure - disguises disparities + inequality
What are some non HDI measures of development?
HDI = GDP per capita, Health, education
- Inequality
- Access to clean water
- Internet Access
- Democracy
What 6 factors can influence development + growth
- Primary product dependency
- Savings gap
- Debt
- Infrastructure
- Governance e.g. corruption, civil war
- Education
Why is primary product dependency an issue for developing countries? (6)
- Economies vulnerable to changing global markets
- Price Fluctuations –> S + D of products inelastic, change in S+D cause large price fluctuation
- Unstable Producer revenue –> caused by Price fluctuation, hard to plan investments
- Protectionism –> other countries placing tarrifs, quotas etc. on developing countries products
- Shortage for domestic consumption –> majority Exported, little for domestic consumption
- Finite supply of raw materials
- Falling terms of trade
–> Primary products income inelastic, Manufactured income elastic
–> ↑R. Incomes, D for manufactured ↑ at faster rate than primary
–> ToT for developing countries↓ compared to developed
What is the Savings gap?
- countries with low GDP per capita have low savings ratio –> more income spent
–> Low finance investment –> low capital accumulation –> low output + low GDP
–> fails to account for FDI, assumes relationship between capital + output
What is the Foreign currency gap
- Developing countries have shortage of foreign currency
Cons
–> Capital flight - consumers save/ buy shared in foreign countries
–> Dependent on exports of primary products
–> Dependent on Imports of manufactured goods
