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Poverty in pakistan_revised_

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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)

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