Economic Inequality and Microfinancing

1. Economic
Inequality and
Microfinancing
BY: RENAN DE LIMA

2. Income Disparity
One of the most challenging issues
facing our generation
Developing countries and emerging
economies all suffer from inequality
Gini coefficient measures income
distribution

4. Convergence Theory
Output per person across countries
naturally converge
Developing countries have growing
labor forces and increasing capital
Convergence is limited to OECD and
Asian nations

5. Convergence Theory (Continued)
Countries Annual
growth of
output
per
person
(1950-
2004)
Real
output
per
person
(1950)
Real
output
per
person
(2004)
Increase
in real
output
from
1950-
2004
France 3.3 $5,920 $26,168 4.4
Japan 4.6 $2,187 $24,661 11.2
U.K. 2.7 $8,091 $26,762 3.3
U.S. 2.6 $11,233 $36,098 3.2

6. Microfinance
Small loans without collateral
Repayment rate over 90 percent
Opportunities for those living in
impoverished communities
Grameen Bank and Kiva