Week 10 - Poverty and Inequality Flashcards
Global Rise of Inequality
Top 10% of world population owns 85% of global wealth.
In 2018, top 26 people owned the same as the bottom 3.8 billion
Why Should We Care?
Extreme Poverty/Inequality:
* Kills
* Breeds Exploitation
* Produces Political Inequality
* Fuels Conflict
* Damages Environment
We are implicated
Our prosperity is enabled (in part) by poverty elsewhere.
Not helping is arguably, akin to murder (Singer Reading)
UN Sustainable Development Goals
- Development Assistance
- Developed Countries Aiding the Underdeveloped - Development through trade
- Free and Fair? Ex. European Cows generate $2.50 daily - higher incomes than 1/3 of the world’s people - Global Minimum Standards
- Global minimum wage, labour standards, environment standards
Ex. Corporate Taxation - Foster Inclusive Institutions
Ex. Conditional Cash Transfer - Microlending (Small loans)
- Empower Women
Brain Drain
When highly skilled leave their country of origin to another country. Commonly for better job opportunities, higher salaries, improved living conditions.
* This leads to the country of origin losing valuable human capital that could contribute to economic growth, or research opportunities, etc.
How do social scientists define “extreme poverty”? How is poverty “multidimensional”?
Extreme poverty is a state of deprivation in which individuals lack the basic necessities for survival, including adequate food, clean water, safe housing, and healthcare.
What is GDP per capita; and, what are some of its limitations as a measure of development?
Gross Domestic Product (GDP): A well known measure of development, but it is limited in capturing human well-being. It measures the total value of goods and services produced within a country’s borders.
- It overlooks income inequality, environmental sustainability, and social well-being
What is the Human Development Index? And how does it differ from other ways of measuring development?
Human Development Index:
Measures 3 key dimensions of human develpment:
- Life expectancy - Long, healthy life
- Education - Expected years of schooling
- Decent standard of living: Gross National income per capita
It differs from other developmental mesures because it accounts for human well-being instead of solely focusing on the country’s economic situation.
What are the key factors that contributed to the historical divergence between rich and poor countries?
- Geographical location
- Access to natural resources can provide a significant economic advantage
Ex. Saudi Arabia’s Oil - Insititutional Quality
- Strong institutions, like a stable legal system, is essential for economic growth - Technological Innovation
- The industrial revolution led to rapid technological advancements, which led to a boosted economy in Western Europe and North America
Why are some countries poor and others rich? What are some of the key contending perspectives on how economic development can be promoted?
- Geographical Location (Resources)
- Historical Factors (Wars, Conflicts)
Key Contending Perspectives on promoting economic development:
- Modernization Theory: Traditional Societies -> Modern Societies through industrialization, urbanization, and technological innovation
- Dependancy Theory:
Underdeveloped countries are dependant on developed countries to thrive through economic and political expoitation - Neoliberalism: Free markets and minimal state intervention are key to economic growth Less State Intervention = More Economic Growth
What is the distinction that Acemoglu and Robinson make between “inclusive” and “extractive” institutions? What are the characteristics of inclusive political institutions and inclusive economic institutions, and what is the connection between the two?
Inclusive institutions: Promote broad participation, rule of law, and the protection of property rights. (Equal playing field for businesses)
Exlusive Institutions: Concentrate power in the hands of a small elite group, often through corruption, coercion, or fraud. (Not equal playing field)
Characteristics of inclusive political institutions:
* Rule of Law
* Property Rights
* Limited Power of Elites
Characteristics of inclusive economic institutions:
* Fair Competition
* Open Markets
* Education and Health
* Proetection of Property Rights
Connection Between the Two: They both promote economic opportunity for the majority of people, rather than a few elites. they are fair and equal for everyone
How do inclusive institutions and extractive institutions affect development, according to Acemoglu & Robinson?
- Inclusive institutions promote economic growth while exclusive institutions hinder economic growth
- Inclusive institutions reduce poverty, and exclusive institutions prolong poverty
- Inclusive Institutions enhance social well-being, while exclusive institutions undermine social well-being
Does development assistance play a role in promoting development? In what ways does development assistance serve donor countries?
Development assistance can both promote and hinder development. It can provide crucial aid, but can also lead to dependency and corruption.
For donor countries, it offers moral, economic, and political benefits. However, its effectiveness depends on factors like governance, alignment with national priorities, and sustainable development goals.
How does Canada benefit from low-income countries?
- Low-Income countries can provide markets for Canadian goods and services
- Low Income countries may have natural resources that Canada can access
- Canada’s reputation can be positively impacted by helping low income countries with development and humanitarian aid
