Poverty African Economic Development Renata Serra – Jan 25 th 2007.
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Poverty African Economic Development Renata Serra – Jan 25 th 2007
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Transcript of Poverty African Economic Development Renata Serra – Jan 25 th 2007.
Poverty
African Economic DevelopmentRenata Serra – Jan 25th 2007
What you need to know:
Poverty is multidimensional Data collection methods
Household surveys Participatory poverty assessments
Income poverty and poverty lines Income vs. consumption data
Poverty measures Headcount, poverty gap and squared poverty gap
Extent of poverty in Africa Difference between poverty and inequality
The causes of poverty
Unfavorable history and geography Low economic growth (the pie is small) Lower provision of essential services Low institutional capacity Corruption and bad governance Conflicts, epidemics (HIV/AIDS) Biased external factors (uneven trade regimes,
inappropriate trade relationships) Etc… all these factors will be tackled in this course
Growth and poverty traps
Q: Why do some countries exhibit stagnant growth and persistent poverty while others race on ahead?
Convergence theories do not hold empirically:
The gap between rich and poor have increased over time!!
→ endogeneity and self-reinforcing mechanisms
→ path-dependence of outcomes
A growth/poverty trap is any self-reinforcing mechanism which causes low growth or poverty to persist
The growth-investment-saving trap
Low growthLow growth
Low national income
Low national income
Low savingsLow
savings
Low investment
Low investment Threshold
GDP p.c.
Need for ‘Big Push’ Investment
Increasing Returns
The technology-export-growth trap
Low productivity
growth
Low productivity
growth
Limited external
competitiveness
Limited external
competitiveness
Low ExportsLow
Exports
Low imports
of capital goods
Low imports
of capital goods
The population trap
Low output per-capita
Low output per-capita
High mortalityrates
High mortalityrates
High fertility rates
High fertility rates
Low savingsLow
savings
Low growth Poor Living
standards
Low growth Poor Living
standards
The environmental-population trap
High population
growth
High population
growth
PovertyPoverty
High demand for
children
High demand for
children
Pressure on natural resources
Pressure on natural resources
Natural resources
degradation
Natural resources
degradation
The ‘vicious circle of poverty’
Loweconomic
opportunities
Loweconomic
opportunities
PovertyPovertyLack of assets
Lack of assets No collateral
Exclusion from credit
No production improvements
The nutrition-poverty trap
Nutrition deficienciesNutrition
deficiencies
Low Productivity
Low Productivity
Low incomes
Low incomes
The vicious cycle of corruption
High corruption
High corruption
High rents to elites
High rents to elites
High inequality
High inequality
No institutional
reforms
No institutional
reforms
What solutions?
Path-dependence can be broken only by exogenous factors: Government interventionMassive domestic or foreign investmentChanges in institutions and policies
But are institutions and policies really exogenous??
Millenium Development Goals Adopted at the Millenium Summit (Sept. 2000)1. Eradicate extreme poverty and hunger
T1: Halve between 1990 and 2015 the proportion of people whose income is less than $1 a day
T2: Halve between 1990 and 2015 the proportion of people who suffer from hunger
2. Achieve universal primary education T3: ensure that by 2015 children everywhere, boys and girls alike, will
be able to complete a full course of primary schooling
3. Promote gender equality and empower women T4: eliminate gender disparity in primary and secondary education by
2005, and in all levels of ed. not later than 2015
4. Reduce child mortality T5: reduce by 2/3 between 1990 and 2015 the IMR5
MDGs (cont’d)
5. Improve maternal health T6: reduce by ¾ the maternal mortality ratio
6. Combat HIV/AIDS, and other diseases T7: Have halted by 2015 and begun to reverse the spread of HIV/AIDS T8: Have halted by 2015 and begun to reverse the incidence of malaria and
other major diseases
7. Ensure environmental sustainability T9: Integrate principles of SD into country policies and programs and reverse
the loss of environmental resources T10: reverse by 2015 the proportion of people without sustainable access to
safe drinking water and basic sanitation T11: Have achieved by 2020 a significant improvement in the lives of at least
100 millions slum dwellers
8. Develop global partnership for development
