Monetary Poverty: An approach for inter-country and inter-temporal

Similar documents
Poverty measurement: the World Bank approach

2015 HDR. Human Development Index. Frequently Asked Questions. What does the Human Development Index tell us?

Shifting Wealth and What It Means for Development Policy

Topic 11: Measuring Inequality and Poverty

Executive summary WORLD EMPLOYMENT SOCIAL OUTLOOK

International Economics

Human Development Indices and Indicators: 2018 Statistical Update. Peru

Assignment 2 (Chapter 2)

Will Growth eradicate poverty?

MEASURING INCOME AND MULTI-DIMENSIONAL POVERTY: THE IMPLICATIONS FOR POLICY

Who Benefits from Water Utility Subsidies?


THREE WORLDS THEORY G L O B A L S T R A T I F I C A T I O N

WRITTEN PRELIMINARY Ph.D EXAMINATION. Department of Applied Economics. Spring Trade and Development. Instructions

Explanatory note on the 2014 Human Development Report composite indices. Argentina. HDI values and rank changes in the 2014 Human Development Report

Can Paris deal boost SDGs achievement? An assessment of climate-sustainabilty co-benefits or side-effects

Human Development Indices and Indicators: 2018 Statistical Update. Argentina

Financing strategies to achieve the MDGs in Latin America and the Caribbean

Declining Inequality in Latin America: Labor Markets & Redistributive Policies

Redistribution via VAT and cash transfers: an assessment in four low and middle income countries

Incidence of Taxation

Unit: 1 Basic Concept Second Year B.A. Economics Paper: - 3 Money, Banking & Public Finance Money: Meaning and function, Money as an assets, Grasham s

Potential impacts of climate change on $2-a-day poverty and child mortality in Sub-Saharan Africa and South Asia

Sustainable social and economic transition: Some evidence from Latin America

Commodity Prices and Fiscal Policy in Latin America and the Caribbean EMILY SINNOTT

ADB Economics Working Paper Series. Poverty Impact of the Economic Slowdown in Developing Asia: Some Scenarios

Linking Education for Eurostat- OECD Countries to Other ICP Regions

WHAT WILL IT TAKE TO ERADICATE EXTREME POVERTY AND PROMOTE SHARED PROSPERITY?

A Framework for Analysis of International Pension Objectives, Challenges and Reform Issues Pension Core Course 2010 Session 01

B.A. SOCIAL SCIENCE - ECONOMICS. Semester - I. Title of The Paper - MICRO ECONOMICS

Human Development Indices and Indicators: 2018 Statistical Update. Brazil

THESIS SUMMARY FOREIGN DIRECT INVESTMENT AND THEIR IMPACT ON EMERGING ECONOMIES

Poverty and development Week 11 March 15. Readings: Ray chapter 8

ECONOMICS B.A. part 1 M.M.100 Paper I MICRO ECONOMICS Unit I 1.Consumer s Behaviour : The Neo Classical Marginal Utility approach and a study of

Benchmarking Global Poverty Reduction

2015 EXAMINATIONS ECONOMICS - MSS J133 JOINT UNIVERSITIES PRELIMINARY EXAMINATIONS BOARD MULTIPLE CHOICE QUESTIONS

UNIVERSITY OF CALICUT INTERNATIONAL ECONOMICS

Fiscal Space for Social Protection: Harmonization of Contributory and Non-Contributory programmes

Vizualizing ICT Indicators Tiziana Bonapace, Jorge Martinez-Navarrete United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)

Department of Economics Queen s University. ECON239: Development Economics Professor: Huw Lloyd-Ellis

Revenue Statistics in Latin America and the Caribbean

ACCION Poverty Assessment Framework

Emerging market equities

Economic Growth: Malthus and Solow Copyright 2014 Pearson Education, Inc.

MDGs Example from Latin America

5 SAVING, CREDIT, AND FINANCIAL RESILIENCE

On Minimum Wage Determination

The Spread of Feed-in Tariffs: Lessons Learned

26 MAY Boustead Singapore Limited FY2010 Financial Results Presentation

SESSION 8 Fiscal Incidence in South Africa

Chapter 11: The Effects of General Fluctuations in Wages on the Prices of Production

Social safety nets in good and bad times

The State of the World s Macroeconomy

Economic and Social Council

How middle-class is Latin America?

Economic and Social Survey of Asia and the Pacific 2017 Governance and Fiscal Management

Integration between CPI and ICP Activities in Western Asia Region

History of Economic Thought

Labour. Overview Latin America and the Caribbean. Executive Summary. ILO Regional Office for Latin America and the Caribbean

Wits School of Governance

What is Inclusive growth?

GENERAL AGREEMENT ON TARIFFS AND TRADE 17 March 1961 SUGAR

Pre-Classical Theory of International Trade. Adam Smith s Theory of Absolute Cost Difference. David Ricardo s Theory of Comparative Cost Advantage.

Third Working Meeting of the Technical Advisory Group (TAG) on Population and Social Statistics

Social impacts of the inflation

Human Development Indices and Indicators: 2018 Statistical Update. Dominica

How Rich Will China Become? A simple calculation based on South Korea and Japan s experience

Chapter 17: The Circulation of Surplus-Value 1

National Department of Planning

Research of the Surplus in Sino-US Trade based on Comparative Advantage YU Mengchen 1, a

Key findings: Economic Outlook

Guatemala. 1. General trends. 2. Economic policy. In 2009, the Guatemalan economy faced serious challenges as attempts were made to mitigate

Asian Development Outlook 2017

Economic Consequence of Population Ageing in Asia

Against the Consensus Reflections on the Great Recession. Justin Yifu Lin National School of Development Peking University

26 MAY Boustead Singapore Limited / Boustead Projects Limited Joint FY2015 Financial Results Presentation

FONTERRA INTERIM RESULTS 2014

Fiscal policy for inclusive growth in Asia

Human Development Indices and Indicators: 2018 Statistical Update. Costa Rica

A National Dividend vs. a Basic Income Similarities and Differences

International Economic Outlook

Development and Indicators. Unit 5

Explanatory note on the 2014 Human Development Report composite indices. Brazil. HDI values and rank changes in the 2014 Human Development Report

Explanatory note on the 2014 Human Development Report composite indices. Colombia. HDI values and rank changes in the 2014 Human Development Report

Growth and Poverty Revisited from a Multidimensional Perspective

Chapter 11 International Trade and Economic Development

SURINAME. 1. General trends

CHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE

The Median Is the Message: A Better Measure of Development

KEY CHALLENGES FOR ERRADICATING POVERTY AND OVERCOMING INEQUALITIES: Alicia Bárcena

ADAM SMITH S CONCEPT OF LABOUR: VALUE OR MEASURE?

The Great Deceleration

Chapter II Poverty measurement in India

Mobiles for Development: the case of Banking Poverty and Access in Latin America

MULTIPLE CHOICE ECONOMICS

Investment opportunities: A look at the emerging markets consumer sector

Human Development Indices and Indicators: 2018 Statistical Update. Paraguay

1 Four facts on the U.S. historical growth experience, aka the Kaldor facts

Sustained Growth of Middle-Income Countries

The Commodities Roller Coaster: A Fiscal Framework for Uncertain Times

Transcription:

Transformational Growth and Monetary Poverty: An approach for inter-country and inter-temporal comparisons Enrique Delamonica UNICEF, Social and Economic Policy Advisor (Latin America & Caribbean) CROP Fellow (Comparative Research Programme on Poverty)

Structure 1) Introduction 2) Some problems with International Poverty Lines 3) Absolute Poverty, Relative Poverty and Income Distribution through time 4) A discussion of conceptual definitions 5) Transformational Growth and the variation of the poverty line through time 6) Capabilities and International Comparisons 7) Summary and Conclusions

Some problems with International Poverty Lines Modern Income (consumption) definitions of poverty A person is poor in any period if, and only if, her or his access to economic resources is insufficient to acquire enough commodities to meet basic material needs adequately. (Lipton, 1997) Poverty lack of command over basic consumption needs, and the poverty line [is] the cost of those needs (Ravallion and Bidani, 1994) Based on the work of Rowntree attheturnofthe Based on the work of Rowntree at the turn of the century and Orshansky in the 1960s

National vs international poverty line Per capita income and poverty lines 100 90 80 70 60 50 40 Incidence 30 20 10 0 Guinea-Bis issau Nige geria Hondu duras Pakis kistan Philipppines China Peru Dom Rep Brazil Cost sta R Pana nama Colom mbia Mex exico Thaila iland Venezu zuela Malay aysia Chile US$1 - PPP National PL Linear (US$1 - PPP) Linear (National PL) Source: World Bank (1998) and ECLAC (1998) 17 countries

1US$ a day: Origins Po overty Lin ne 4800 4200 3600 3000 2400 1800 1200 600 0 0 1200 2400 3600 4800 6000 7200 8400 9600 10800 Mean consumption (GNPpc)

1US$ a day: Origins Po overty Lin ne 4800 4200 3600 3000 2400 1800 1200 600 0 Enlarged view 600 300 0 0 300 600 900 1200 0 1200 2400 3600 4800 6000 7200 8400 9600 10800 Mean consumption (GNPpc)

National vs international poverty line Cost of basic food basket (national PL) International Poverty Line Cost of basic food basket (national PL) 2/3 1/3 Incidence according to the National PL and the International Poverty Line 1/3 2/3

Some examples National PL 1US$ a day Algeria 22.6 Less than 2 Azerbaijan 68.1 Less than 2 China 46 4.6 18.5 Egypt 22.9 3.1 Indonesia 27.1 77 7.7 Sri Lanka 25.0 6.6 Ti Trinidad idd&t 21.0 12.4

Income Absolute Poverty, Relative Poverty and Income Distribution through time: Reducing poverty, increasing disparities Poverty Line Income poverty = 40% Income poverty = 20%

Absolute Poverty, Relative Poverty and Income Distribution ib i through h time 1 2 3 4 5 Total T1 5 10 15 20 25 75

Absolute Poverty, Relative Poverty and Income Distribution ib i through h time 1 2 3 4 5 Total T1 5 10 15 20 25 75 (ABSOLUTE) POVERTY LINE = 12

Absolute Poverty, Relative Poverty and Income Distribution ib i through h time 1 2 3 4 5 Total T1:Absolutepoverty= 40% 5 10 15 20 25 75 (ABSOLUTE) POVERTY LINE = 12

Absolute Poverty, Relative Poverty and Income Distribution ib i through h time 1 2 3 4 5 Total T1:Absolutepoverty= 40% 5 10 15 20 25 75 T2 : Absolute poverty = 0% 15 19 35 51 80 200 (ABSOLUTE) POVERTY LINE = 12

Absolute Poverty, Relative Poverty and Income Distribution ib i through h time 1 2 3 4 5 Total T1:Absolutepoverty= 40% 5 10 15 20 25 75 T2 : Absolute poverty = 0% 15 19 35 51 80 200 (ABSOLUTE) POVERTY LINE = 12 (RELATIVE) POVERTY LINE = 1/2 of average income

Absolute Poverty, Relative Poverty and Income Distribution ib i through h time 1 2 3 4 5 Total T1:Absolutepoverty= 40% 5 10 15 20 25 75 T2 : Absolute poverty = 0% 15 19 35 51 80 200 (ABSOLUTE) POVERTY LINE = 12 (RELATIVE) POVERTY LINE = 1/2 of average income T1: 75/5 = 15, thus (relative) poverty line = 7 1/2 & Relative Poverty = 20% T2: 200/5 = 40, thus (relative) poverty line = 20 & Relative Poverty = 40%

Temporary conclusion Absolute poverty is better, conceptually, than relative poverty But absolute poverty is not absolute

A discussion of conceptual definitions Every yman is rich or poor according to the degree in which he can afford to enjoy the necessities, conveniences and amusements of human life (Adam Smith, 1776).

A discussion of conceptual definitions The power of the labourer to support himself, and the family which may be necessary to keep up the number of labourers, does not depend on the quantity of money which he may receive for wages, but on the quantity of food, necessaries, and conveniences become essential to him from habit, which that money will purchase (David Ricardo, 1817).

A discussion of conceptual definitions There enters into the determination of the value of labour-power a historical and moral element. Nevertheless, in a given country, at a given period, the average quantity of the means of subsistence necessary for the labourer is practically known (Karl Marx, 1867).

Transformational Growth Ontology: Steady State Economic Growth does not exist Economic Growth is irregular 300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Transformational Growth Ontology: Steady State Economic Growth does not exist Economic Growth is irregular However, it is not random Old and New economic cycle Different types of cycles for different periods (characterized by institutions, technology and market structures)

160 140 120 100 80 60 40 20 0 Transformational Growth 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 However, it is not random Old and New economic cycle Different types of cycles for different periods (characterized by institutions, technology and market structures)

Transformational Growth (continued) Institutions, technology and market structures are not completely independent of each other They are also endogenous to the TG process (from Size of the market determines division of labor to size of aggregate demand influences economically viable technology and market structure ) Income distribution changes along TG process Consumption patterns change along TG process

Transformational Growth and the definition of the poverty line As new Goods and Services (G&S) are introduced and diffused consumption patterns change. First they may be luxuries, eventually they become a must have. It is the TG process that determines which h G&S are necessities, amusement and conveniences morally accepted dby habit as minima i not to be poor

Transformational Growth and the variation of the poverty line through h time Poverty line changes but not automatically. There is no specified income-elasticity precisely because TG and the concomitant income distribution are not steady War on Poverty cannot be won once and for all. It is continuous as economies evolve and new consumption products and patterns emerge and are diffused

Capabilities and International Comparisons Sen s Capabilities (Functionings) occupy a middle space between utility and commodities. Supposedly better than either for interpersonal comparisons and distributive assessments Extremely difficult to measure in practice Diverse and contradictory literature and lists

Capabilities and International Comparisons (II) Clearest point (after debate with Townsend): Although Capabilities may be universal and absolute, the way to fulfill them vary with time and space I.e. Absolute poverty is not absolute when comparing across countries Most attempts at measuring capabilities i are static (unlike TG) due to inter-country focus

Summary and Conclusions International poverty line is a mirage unless it is grounded on attaining minimum standard of living in every country Absolute Poverty is a better measure than Relative Poverty Absolute Poverty is not absolute It varies in time and space Variation is not haphazard, it is grounded in TG process Thus, poverty lines should be recalculated periodically (e.g. every 10 years) based on practical knowledge Redistributive policies constantly needed