Poverty and income inequalities in asia


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Made by Wannaphong Durongkaveroj, Student at Chiang Mai University, Thailand.
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Poverty and income inequalities in asia

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  4. 4. START
  5. 5. “ Add your company slogan ”Poverty and incomeinequality in AsiaToo big to ignored ? LOGO
  6. 6. Contents1 Introduction2 Case : China’s Inequalities3 Case : Philippines and Taiwan4 Case : Global distribution of income
  7. 7. Percentage population living on less than $2 per day
  8. 8. social problems Poverty Retarding Growth IncomeInequality
  9. 9. Perspective Poverty have inadequateThe inability to income oraccess for a education, or be inminimal poor health, orstandard of feel powerless, orliving lack political freedoms.
  10. 10. Absolute Poverty Relative
  11. 11. Absolute Poverty
  12. 12. Relative Poverty Judged by standard of country Standard referred toRelative term of society Different among countries
  13. 13. National Poverty Line Standards and definitions vary across different countriespoverty line deemed appropriate for National Poverty a country by its authorities Line Based on population-weighted Subgroup estimates from household surveys
  14. 14. International Poverty Line : 2$ per day
  15. 15. Asia’s performance Sustained Economic Growth Poverty and income inequalities existCountry’s performance ASIA A majority of the world’s quite varies poorest people today a majority of the worlds population Asian poverty being Concentrated in South Asia.
  16. 16. Divergence Phase 1 Phase 2 Phase 3The data andstatistics affirm Some of Asia hasthat gap between shown good Asia, holding thethe rich and the progress on largestpoor has poverty in recent populations, stillgrown, rather than years, like China has manydiminished, with and South Korea extreme poorsustained growthin income
  17. 17. Perspective Broader concept than poverty Define entire populationInequalities Does not emphasize on the poor Difference in level of living The rich and The poor
  18. 18. Inequalities• When economy achieve economic growth• Ideally, benefits should distribute to individuals equally• In fact, it accrues to some members other than others
  19. 19. The extent of concept Inequalities refer to the uneven distribution of income across the population or individuals within society The gap between the rich is inevitably consequence of growth and development the high inequality raises a moral question about fairness and social justice
  20. 20. Measurement of Poverty1. Headcount IndexIt’s the proportion of poor people in the population or the headcount ratio (HCR). q HCR nWhere q refers to the number of individual below a given poverty line, and n refers to the total number of individuals in country.For example, Thai’s poverty line 2010 is 1,678 Thai Baht or approximately$54 per month. There are 5.1 million individuals live below the poverty line. And our population is about 66 million people. Thai’s HCR = 7.72%So, headcount here would show us that 7.72% of total population is in poverty.
  21. 21. Measurement of Poverty2. Using the poverty line that called the international poverty line It can use to compare among many countries by some standard. The World Bank uses two lines for what can be called poverty (percentage of household live in $2 per day) and extreme poverty (percentage of household live in $1 per day) Nowadays, there is the national poverty line that stems from concerning about the difference in each country about population, economic condition and so on. So, the national poverty lines vary in each country.
  22. 22. Measurement of Inequality1. Using percentage share of income We divide the population into 5 groups (Quintiles) or 10 groups (deciles), and consider about what percentage share of income that each group receives. Ideally, each group has to get income or benefit equally, but it does not like this due to uneven distribution which leads to inequality.
  23. 23. IdeallyIncome Category Percentage share of incomeLowest Quintile 20%Second Quintile 20%Third Quintile 20%Fourth Quintile 20%Highest Quintile 20%
  24. 24. In fact (data from https://www.cia.gov/library/publications/the- world-factbook/fields/2047.html) Thailand -2009 Income Category Percentage share of income Lowest deciles 1.6% Second deciles N/A Third deciles N/A Fourth deciles N/A Fifth deciles N/A Sixth deciles N/A Seven deciles N/A Eight deciles N/A Ninth deciles N/A Highest deciles 42.6% Highest Quintile is higher than lowest Quintile about 25 times.
  25. 25. China - 2008Income Percentage share ofCategory incomeLowest deciles 3.5%Second deciles N/AThird deciles N/AFourth deciles N/AFifth deciles N/ASixth deciles N/ASeven deciles N/AEight deciles N/ANinth deciles N/AHighest deciles 15%Highest Quintile is higher than lowest quintile about 4.3 times
  26. 26. Singapore - 2008 Income Category Percentage share of income Lowest deciles 4.4% Second deciles N/A Third deciles N/A Fourth deciles N/A Fifth deciles N/A Sixth deciles N/A Seven deciles N/A Eight deciles N/A Ninth deciles N/A Highest deciles 23.2%Highest Quintile is higher than lowest quintile about 5.27 times
  27. 27. Japan – 2008 Income Category Percentage share of income Lowest deciles 1.9% Second deciles N/A Third deciles N/A Fourth deciles N/A Fifth deciles N/A Sixth deciles N/A Seven deciles N/A Eight deciles N/A Ninth deciles N/A Highest deciles 27.5%Highest Quintile is higher than lowest quintile about 14.5 times
  28. 28. Measurement of inequalities2. Lorenz Curve and Gini CoefficientLorenz curve gives information on the distribution of income. It’s a rough index of income inequality.
  29. 29. Lorenz Curve The horizontal axis gives the percentage of households. The vertical axis gives the percentage of nation’s income. The green line or 45-degree line is called line of equal distribution or egalitarian line. Note that no nation has a Lorenz curve such as green line. The degree of inequality typically prevails. From the information in Lorenz Curve, we can get the Gini index, which measure the degree of inequality for any income distribution by calculating the ratio of area between the Lorenz curve and 45-degree line.
  30. 30. Gini Coefficient Area ASo, Gini Index (G) = AreaA AreaB If the Gini coefficient were equal to zero, the Lorenz curve would be the 45-degree line. The closer to zero, the more equal about income distribution.
  31. 31. Gini Coefficient and TaxGini Coefficients are often calculated for pretax and posttax income distribution. If the Gini coefficient is lower for the posttax, it means that taxes have served the function of reducing income inequality.For example, on average in 2000s,Japan’s Gini coefficient pretax is 0.462Japan’s Gini coefficient posttax is 0.329It means that imposition achieve the target of reducing inequalities
  32. 32. China
  33. 33. SUMMARY China 2010 ranks the worlds 2nd largest economy. It is theworlds fastest-growing major economy with consistent growth rates ofaround 9% over the past 30 years since 1980. At that time, economicreforms initiated after 1978 began to generate significant and steadygrowth in investment, consumption and standards of living. China is also the largest exporter and second largest importerof goods in the world. The countrys per capita GDP was $7,544 in2010. Especially, the provinces in the coastal regions of China tend tobe more industrialized while regions in the hinterland are lessdeveloped.
  34. 34. Two sector : agriculture and industry  The two most important sectors of the economy are agriculture and industry. The two sectors differs in many terms including technology, labor productivity, and incomes that have advanced rapidly in industry than in agriculture.  Agricultural output follows the effects of weather, while industry is directly influenced by the government. The disparities between the two sectors have combined to form an economic-cultural-social gap between the rural and urban areas.
  35. 35. Coastal and Inland Problems Economic development is more rapid in coastal than in the inland area, and there are large disparities in per capita income between these regions. The three wealthiest regions are in the southeast coast, centred on the Pearl River Delta; along the east coast, centred on the Lower Yangtze River; and near the Bohai Gulf, in the Beijing–Tianjin–Liaoning region. It is the rapid development of these areas that is expected to contribute to the Asian regional economy growth, and Chinese government policy is designed to remove the obstacles to accelerated growth in these wealthier regions.
  36. 36. 5 Policies to reduce inequalities: China Western Development for increasing economic situation of the western provinces through capital investment and development of natural resources. Revitalize Northeast China, to renew the industrial bases in Northeast China covered the three provinces of Heilongjiang, Jilin, and Liaoning Rise of Central China Plan to boost the development of its central regions. It covers six provinces: Shanxi, Henan, Anhui, Hubei, Hunan, and Jiangxi. Third Front, focused on the southwestern provinces. Go Global, to encourage its enterprises to invest overseas.
  37. 37. Introduction Policies ConclusionProblem & Background Causes of Problem Solutions & Advices
  38. 38. Problem Cause Impact China’s regional inequality,Rapidly growing China’s especiallyinternal income economic reform between itsinequality in 1978 inland and coastal regions, has risen considerably
  39. 39. Regional Differences Inland regions have less favorable natural conditions for agricultural production.Long distance of inland regions limits Geography plays a the access to seaports and international market. role in producing Geography also affects regional development
  40. 40. Government Policies Fiscal DecentralizationGlobalization Margetization
  41. 41. Fiscal Globalization Marketization Conclusion decentralization - Enhance trading -Weaken the financial -Make an ownership - make a connection to capacities of the central transformation others government - market flexibilityTarget - impair its abilities to - effectively absorbed redistribute resources surplus rural labor into among region for an industrial production equity -Considerable autonomy -It took place only -Lead to many nonCoastal - enjoy Tax treatment coastal area state enterprise - preferential allocation - Especially the new - rapid economicBenefit of resource rich provinces growth -Inland’s FDI is less than -Insufficient revenue -Inland ownership Coastal’s FDI, so it is - heavier fiscal burden transformation has attractive investor to - a worse investment been carried out more invest in coastal more environment slowlyInland than inland area - inland regions have effect - lack of opportunities to been lacking behind in grow due to small developing key market magnitude of investment. institution
  42. 42. Comparisonbetween Philippinesand Taiwan
  43. 43. Gini Coefficient Year Philippines Taiwan 1985 0.410 0.290 1988 0.406 0.303 1991 0.438 0.308 1994 0.429 0.318 1997 0.462 0.320 2000 0.461 0.326 2003 0.445 NA 2006 0.440 NA
  44. 44. Share of Total Income of thePoorest Quintile and the RichestQuintile Philippines Year Poorest 20% Richest 20% 1988 5.2 51.8 1991 4.7 53.9 1994 4.9 52.0 1997 4.4 55.5 2000 4.4 54.8 2003 4.7 53.4
  45. 45. GDP per capita PPP $USD Year Philippines Taiwan 2000 3,800 17,400 2001 4,000 17,200 2002 4,200 18,000 2003 4,600 23,400 2004 5,000 25,300 2005 4,700 27,500 2006 5,000 29,500 2007 3,200 30,100 2008 3,300 31,100 2009 3,300 32,000 2010 3,500 35,700
  46. 46. GDP per capita PPP $USD Taiwan Philippines
  47. 47. Population below poverty line (%) Year Philippines Taiwan 1997 36.8 N/A 1999 N/A 1 2000 33.0 1 2001 38.0 N/A 2003 24.9 N/A 2005 N/A 0.9 2006 26.4 0.9 2007 N/A 0.95 2008 N/A 1.08 2009 26.5 N/A 2010 N/A 1.16
  48. 48. Causes of income inequality inPhilippines • Dynastic political culture Institution • Corruption • Landlocked Geography • Frequency of typhoons hitting the province • Lack of adequate education Education opportunity in the country
  49. 49. Causes of poverty in Philippines NonperformingDeclining revenue Poor investment loans in the banking collection climate sector Governance Gradual loss of structure, corruption international and inefficiency in competitiveness economic management
  50. 50. Conditions for development inTaiwan Good governance Reformed the health insurance system Taiwan government expanded the availability of higher education
  51. 51. Global distribution of income
  52. 52. Global distribution of income Manage property right Lower Promote trade economicbarriers activity Globalization
  53. 53. Other ways to reduce poverty and inequality Open Economy in overall sectors Land reform Inherence tax Welfare state Green Revolution Technological process International consensus
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