PACCARANGAN, JUVILYN S.

BANKING AND FINANCE 302F

1. What is the most visible inequalities in the less developing countries? How those
inequalities resolve?
Today, wherever people live, they don’t have to look far to confront inequalities. Inequality
in its various forms is an issue that will define our time. Inequalities are not only driven and
measured by income, but are determined by other factors - gender, age, origin, ethnicity,
disability, sexual orientation, class, and religion. These factors determine inequalities of
opportunity which continue to persist, within and between countries. Groups such as
indigenous peoples, migrants and refugees, and ethnic and other minorities continue to suffer
from discrimination, marginalization, and lack of legal rights. Technology can be a great
equalizer – by enhancing connectivity, financial inclusion, access to trade and public
services, for instance – but those yet to be connected may experience
further marginalisation as a result, especially as progress is slowing, even reversing, among
some constituencies. With a global trend toward urbanization, cities are becoming a growing
site for inequalities. They find high levels of wealth and modern infrastructure coexist with
pockets of severe deprivation, often side by side. This makes gaping and increasing levels of
inequality all the more glaring within cities.
2. What is the most reliable ways in measuring inequalities? Explain.
Measuring inequality isn’t easy. Household surveys, our main source of inequality measures,
track either income or consumption expenditure. Gini index, the most commonly used
measure of inequality, using both income and consumption surveys for the same
year. Another measurement challenge that we face is accurately estimating the incomes (or
consumption) at the top. Many people think that top incomes are rising more quickly than
average incomes in a number of countries.These two measurement challenges highlight the
need for better and more data to improve our knowledge on inequality, especially in
developing countries around the world. While consumption data are absolutely crucial for
measuring poverty, in emerging economies, where own-consumption is becoming less
important and wage-employment is becoming the norm, more attention ought to be paid to
income data.

3. Do you think that capital flight be advantageous or not to the economy? Justify.
The capital flight is when a country sees a sudden loss of demand for large amounts of
capital.Not to say that capital flight does not occur in developed nations, but is most
commonly seen in poorer, less developed nations. This is because nations that do not yet have
a well-established political system are more likely to experience political unrest. Therefore,
capital flight is not advantageous in the economy because it reduces welfare in the sense that
it leads to a net loss in the total real resources available to an economy for investment and
growth. Governments customarily want to prevent capital flight. They do this by setting
up capital control policies. These are policies meant to limit and regulate the flow of foreign
capital into and out of the domestic economy.
4. Are the reduction of poverty and acceleration of growth is conflict? Justify.
Economic growth has helped in the reduction of poverty, making it clear that there is a strong
link between economic growth and poverty reduction. It also widens opportunities and
provides the resources needed to invest in human development. The higher growth rates have
helped significantly in the reduction of poverty. If economic growth raises the income of
everyone in a society in an equal proportion, then the distribution of income will not change.
However, if the growth occurs without a reduction in poverty, income distribution could
become unequa. A successful strategy of poverty reduction must have at its core measures to
promote rapid and sustained economic growth.