3. Every year, eight million people die because they are too poor
to survive
Every morning, more than 20,000 people perish because of
extreme poverty that is equivalent to sixteen September 11,
2001 disasters.
Every three seconds a child dies of extreme poverty. They
die namelessly, and their stories rarely get written
Despite our immense scientific
and technological advancements,
we continue to fail to save the
20,000 children who will starve
by this time tomorrow.
4. • On July 2, 2005, at the time of the (G-8) summit in Scotland, rock musician
Bob Geldof organized the Live 8 series of concerts around the globe to
lobby the world leaders for more aid to Africa.
• In his words:
Many top artists and groups participated in the Live 8 concerts.
• The passionate plea by rock stars and other advocates for more aid and
debt forgiveness assumes that aid programs have been effective and that
more money will further their admirable goals. Unfortunately, neither
assumption is justified.
. . . But at Best Ineffective, and at Worst Counterproductive
5. • Soon after the Live 8 concert, Jean-Claude Shanda Tonme, a journalist
from Cameroon, wrote an op-ed piece that was published in the New
York Times on July 15, 2005.He said:
•
6. -proportion of the world’s population living in extreme
poverty has declined since 1980 (most of the decline taken
place in china
-incomes have become more unequal over time
- There is disagreement about the correct measurement
of income in poor countries (exchange rate, purchasing
power parity and inequality)
7. world income distribution is more unequal than the distribution
in any country
Inequality has more clearly diminished when it comes to indicator
other than income
cure
improvement in other HD
causes
cures poverty
8. Neoclassical economists in 1950s and 60s explain absence of growth in
LDCs as a simple technical problem. The problem with LDCs was that
No domestic
saving no investment no growth
They ignored technology and population growth and strictly
excised any political or historical context from their analysis
9. • Radical and Marxist economists inspired by Raul
Peribisch argued that colonialism had distorted
the structure of poor economies.
• It fossilized them in a pattern of export of basic
commodities to developed countries in return for
manufactured goods on unfavorable terms.
• Many poor countries adopted planning and other
strategies recommended by left wing economists,
with dismissal result.
10. Is poverty predestined?
• Economists run growth regression in different
countries over time and they seem to support
endogenous growth model by confirming the
importance of education level (conditional
convergence).
• But other variables are thought to important
in explaining how well an economy performs
i.e Geography and history
11. Geography
• Jeff Sachs pointed out that nearly all of the world poorest
countries while temperate countries are almost rich. reasons
technology (do not transfer across
climate zone),
social factor such as demographic
transition and the colonial legacy, and
climate in debilitating disease
The discovery of a lucrative
resource has paradoxically adverse
effect on the economy as well
known as the curse of natural
resource
12. History
• Douglass emphasized in the historical context the vital importance of
institution to growth.
In case of developing countries, flaws in political, legal, and economic
institutions are increasingly thought to play an important part in the failure to
grow
corruption, absence of clear title to property for poor people in
developing countries and colonial experience.
Acemoglu et al argues that the tropical
colonies failed to industrialize because
of the colonial institutions through
which they have been governed.
European settler found tropical
countries uncomfortable and disease
prone, so they set up institution such as
plantation or large scale mining,
extracting the resources with relatively
few European managers and
administrators.
13.
14. Which policies Work?
clever push rather than the big push. looking for policies
designed to coordinate individual as absence of banks and
credit for poor people.
Civil war is bad for growth
Governments should clamp down corruption
Governments need to run their finances and set interest rates
so that inflation stay low and budget deficit never gets too big
15. Is globalization is good?
increase in trade and foreign investment
There is little dispute that many economies
have benefited from ever free trade
The question concerns the impact of poor countries.
Rich countries impose high tariffs on imports of agricultural products
from poor countries and heavily subsidize their own farmers. $ 300
billion.
It makes no sense for rich countries to give aid to poor countries, while
at the same time restricting food imports from those countries.
16. • Protectionism by poor countries is also a serious
problem. Poor-country tariffs on industrial products
can be five to ten times higher than those imposed
by rich countries.
Rodrick argue that openness to trade is in fact important for
economic growth, but indirectly so. Countries which are
open to international trade have a firmer rule of law which
raises growth.
17. The verdict of aid
boosted growth in those
countries which had
Aid good economic policies Burnside and
Dollar
Retard growth in those
countries which had
good economic policies
dependent
on foreign
assistance adverse effects
on economy even
Dutch diseases when given to the Rajan &
government with Submarine
good economic
policies
19. Why aid is ineffective?
• Aid is often politically motivated
• Commercial interests are also a strong motivation
for aid: tied
• Aid is subject to budgetary pressures in the donor
countries, and is therefore unreliable
• Aid tends to promote corruption in the receiving
countries.
• Aid encourages a culture of dependency.
20. And so the answer is?
Macro economic and political stability
institution and the rule of law
innovation in development economics
The poor themselves can create a
poverty-free world – all be have to do
is to free them from the chains that we
put around them
Poverty is not created by people who are
poor – they are the victims. It is the
failure at the top
http://www.youtube.com/watch?v=2FqU9_u7B-s&context=C371139fADOEgsToPDskLkQlL--uLUZuECX8RIS197
