This document discusses economic inequality and microfinancing. It notes that income disparity is one of the most challenging issues today, with developing countries and emerging economies suffering from inequality. While convergence theory posits that output per person will naturally converge across countries over time, this has primarily occurred for OECD and Asian nations. The document then discusses microfinancing as a way to provide small loans without collateral to those living in impoverished communities, with repayment rates over 90%, examples including Grameen Bank and Kiva.

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