Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Poverty in pakistan_revised_


Published on

  • Be the first to comment

  • Be the first to like this

Poverty in pakistan_revised_

  1. 1. Poverty Trends , Causes and Solutions
  2. 2. Indicator of Wellbeing <ul><li>Monetary indicator ; i.e. consumption expenditure of households </li></ul><ul><li>5 sub consumption aggregates: </li></ul><ul><li>food items </li></ul><ul><li>fuel and utilities </li></ul><ul><li>housing </li></ul><ul><li>frequent non food expenses </li></ul><ul><li>other non food expenses </li></ul>
  3. 3. Poverty Line <ul><li>Absolute Poverty Line </li></ul><ul><li>Food Energy Intake (FEI)/Caloric Approach </li></ul><ul><li>(a monetary expenditure necessary to reach the minimum calorie intake, and it also includes a minimum expenditure of non-food items) </li></ul>
  4. 4. <ul><li>At least three steps required in adopting the calorie approach: </li></ul><ul><li>minimum calorie intake per day (2350 calories per adult per day set by Government of Pakistan); </li></ul><ul><li>transformation of the calorie intake in monetary terms </li></ul><ul><li>inclusion of other non food minimum expenditure in relation to the minimum food expenditure. </li></ul>
  5. 5. <ul><li>Poverty Index </li></ul><ul><li>Most common and preferred measure: Headcount Ratio (Incidence of Poverty) </li></ul><ul><li>Head-count: </li></ul><ul><li>Where z is the poverty line, w i is the per adult equivalent consumption expenditure of the individual i , and N is the total population </li></ul>
  6. 7. <ul><li>using less than 2350 calories Food Deficient Population = 69.69% </li></ul><ul><li>(i.e. population daily) </li></ul>
  7. 8. The Situation in Pakistan: <ul><li>20% increase in wheat prices between November 2007 and February 2008. </li></ul><ul><li>Food and beverage prices had risen 14.7% from October 2006 to October 2007 </li></ul><ul><li>One-half of Pakistan’s population is considered to be “food insecure,” according to the World Food Programme </li></ul>
  8. 9. Causes: DEMAND SIDE <ul><li>Rising demand for food in India and China (especially meat, requiring large quantities of grain to raise) </li></ul><ul><li>Bio-fuel initiatives in developed countries </li></ul><ul><li>Speculation in commodities markets </li></ul>
  9. 10. Causes: SUPPLY SIDE <ul><li>High petroleum prices (affecting the price of fertilizer and transport costs) </li></ul><ul><li>Disruptive weather patterns negatively affecting harvests in several regions </li></ul>
  10. 11. Causes: SUPPLY SIDE <ul><li>High petroleum prices (affecting the price of fertilizer and transport costs) </li></ul><ul><li>Disruptive weather patterns negatively affecting harvests in several regions </li></ul>
  11. 12. Impacts on the poor: <ul><li>Large negative impacts on poor net consumers of food, because food is a large part of household budget. </li></ul><ul><li>Potentially positive impact on net producers of food, if farmers have access to agricultural inputs and markets. </li></ul>
  12. 13. Data Sources <ul><li>The data is taken from two different sources: </li></ul><ul><li>Household level data from the Pakistan Social and Living Standards Measurement Survey (PLSM), 2004-2005 (using data on 14,100 households and 96,833 people) </li></ul><ul><li>Household level data from the Punjab Multiple Indicators Cluster Survey (MICS), 2003-2004 (using data on 29,342 households and 192,398 people) </li></ul>
  13. 14. Poverty Line and Head Count Ratio <ul><li>For PSLM data, poverty line used was Rs. 878.64 per person. </li></ul><ul><li>For MICS data, the poverty line used was Rs. 750 per person. </li></ul><ul><li>A household was characterized as poor if the average income of its members was below the poverty line. </li></ul><ul><li>The poverty head count was calculated as the number of people as a proportion on the population that had incomes below the poverty line. So a poverty head count of 0.30 implies that 30% of the population lies below the poverty line. </li></ul>
  14. 15. Various Categories of Expenditures and Budget Shares <ul><li>Analysis looked at five categories of expenditures of each household, which were used to determine the budget share of each category of expenditure: </li></ul><ul><li>(1) Food Expenditures </li></ul><ul><li>(2) Energy Expenditures (containing expenditures on gas, electricity, cooking and heating oil and other fuel related expenditures) </li></ul><ul><li>(3) Educational Expenditures </li></ul><ul><li>(4) Medical Expenditures </li></ul><ul><li>(5) Other Expenditures </li></ul>
  15. 16. <ul><li>Majority of household expenditures in Pakistan are made up of food expenditures which fall as a proportion of total expenditures as the income level increases. </li></ul><ul><li>After food, the second most major expenditure category across households was energy expenditures </li></ul>
  16. 17. Simulated Price Shocks <ul><li>In the first part of our analysis, we adjust per capita incomes given in the PSLM and MICS data sets for shocks to the price of food and energy. </li></ul><ul><li>Given that the price rises will reduce real incomes, the price shocks bring additional households below the poverty line. </li></ul><ul><li>We then recalculate what the new poverty head-count ratio would be after each price shock. </li></ul><ul><li>Price shocks of 1%, 5%, 10%, and 20% on the price of food and energy are simulated and the impact on the poverty head count is analyzed. </li></ul>
  17. 18. Simulated Poverty Head Counts (by Province) after increases in FOOD prices (PSLM Data)