DEVELOPMENT ECONOMICS

VAIDEHI RUPARELIA
AU1811190
The Hazards Of
Being Poor
 Poor are like hedge fund managers they live with huge amount of risk the only
difference is in their levels of incomes.
 Hedge fund managers are not liable for 100 percent of his losses.
 Country dataset says that average of 50% of the urban poor have a non-
agricultural business while the rural poor running a farm business ranges from 25%
to 98%.
 In South Africa historically black population was excluded from farming.
 Most of the land farmed by the poor is not irrigated.
 Over half of those who are employed among the extremely poor in rural areas
are casual workers.
CASES

 Pak Solhin Case-He lost his job when the fertilizers and oil prices went up
and the farmers cut back on the labor.
 Bangladesh drought of 1974- When the wages fell by 50 percent in
terms of purchasing power and according to some estimates upto 1
million people died.
 Indonesian crisis of 1998- The Rs. lost 75% of it’s value, food prices went
up 250% and the GDP fell by 12% but the rice farmers gained in terms of
purchasing power.
 Thai financial crisis in 1997-1998- The economy shrank by 10%, two –third
of the nearly 1000 people said the main reason for falling of the income
was drought.
 Cut in consumption for is more painful for someone who consumes very little when
a not so poor household needs to cut back on consumption members may sacrifice
on small things which is not so difficult but for the poor cut in consumption is cutting
on some essential expenditures.
 Agricultural wages in India are are 21 times more variable than in united states.
 In India farmers thought that their costs had increased more than their prices,
workers complained that they could not find work because farmers were saving
money at the same time the city dwellers were struggling to pay for food.
 For the poor risk is not limited to food and income, health is also major source of risk.
 The world bank note.
IBU TINA CASE

 Ibu tina is an international businesswomen.

 The figure shoWs the relationship between her
income today and for the future.
 The graph formed is S shaped because her
business needed a minimum scale to be
profitable.
 Before the theft he and her husband had four
employees and they had enough money to buy
raw materials to make garments with the sewing
machine.
 Afterwards all they could manage was to buy
ready made shorts and package them which was
less profitable.
 Before the sudden bounce of check they were
outside the poverty trap zone and they started
getting poorer with time.
 When the relationship between income today
and in future is S shaped a family can plunge from
being on a path to middle class to being
permanently pooR. This is reinforced by a
physiological process.
THANK YOU !