Course Title: Issues in Development

Economics
Course Code: ECN 306
Dr Monica A. Orisadare
Department of Economics
OAU, Ile-Ife, Nigeria
 Module 7
Relationship between
underdevelopment and Imperialism
Objectives
• Measure poverty
• Suggest strategies for tackling poverty

• Explain the different measure of poverty

- Human poverty index
- human development index
- Multidimensional poverty index
Outline
• Measuring and Tackling poverty

• Different measure of poverty

- Human poverty index
- human development index
- Multidimensional poverty index
Measuring and Tackling poverty
• The World Bank defines poverty in absolute terms. The
bank defines extreme poverty as living on less than US$1.90
per day, and moderate poverty as less than $3.10 a day. It
has been estimated that in 2008, 1.4 billion people had
consumption levels below US$1.25 a day and 2.7 billion
lived on less than $2 a day. The proportion of the
developing world's population living in extreme economic
poverty has fallen from 28 percent in 1990 to 21 percent in
2001. Much of the improvement has occurred in East and
South Asia. In Sub-Saharan Africa GDP/capita shrank with 14
percent, and extreme poverty increased from 41 percent in
1981 to 46 percent in 2001. Other regions have seen little or
no change. In the early 1990s the transition economies of
Europe and Central Asia experienced a sharp drop in
income. Poverty rates rose to 6 percent at the end of the
decade before beginning to recede
Measuring and Tackling poverty
Map of world poverty by country, showing percentage of population living on
less than $1.25 per day. Information is based on different years (2000-2006)
for different countries. Data is missing for countries colored grey.
• Poverty can be and is measured in different
ways by governments, international
organisations, policy makers and practitioners.
Increasingly, poverty is understood as
multidimensional, comprising social, natural
and economic factors situated within wider
socio-political processes.

• The Poverty Gap Index is the mean distance

below the poverty line as a proportion of the
poverty line where the mean is taken over the
whole population, counting the non-poor as
having zero poverty gap.
• Absolute versus relative poverty
• When measured, poverty may be absolute or relative.
Absolute poverty refers to a set standard which is consistent
over time and between countries.

• An example of an absolute measurement would be the

percentage of the population eating less food than is required
to sustain the human body (approximately 2000–2500 calories
per day).

• Relative poverty, in contrast, views poverty as socially defined

and dependent on social context.

• One relative measurement would be to compare the total

wealth of the poorest one-third of the population with the
total wealth of the richest 1% of the population. In this case,
the number of people counted as poor could increase while
• Although absolute poverty is more common in
developing countries, poverty and inequality
exist across the world.

• Global poverty is when people within certain

countries are living on less than a dollar a day.
There are six different aspects that can attribute to
global poverty.
1. Hunger: Countries without the proper amount of
food to survive.

2. Mental state: This is where people or the country

as a whole is feeling powerless, ashamed, or
humiliated. This is connected to the fact that they
must rely or ask other countries for help and are
unable to survive on their own.

3. Poor groundwork: Lack of roads, clean water,

transportation, etc. Meaning that they do not have
a stable foundation in order to provide these things.
4. Education: People do not have access to proper education or any
education at all.

5. Health: Countries are unable to provide the proper health care

that many people need in order to survive.

6. Lack of income: People within a poor country tend to put income

aside and focus on their family, physical, and environmental
assets.

• Along with these six-dimensional aspects, there is also some things

preventing the decline of global poverty. One reason is because of
the ongoing armed conflicts going on throughout countries.

• A second reason for number of countries in poverty not declining

would be that there is not a lot of support from other countries.
Many rich countries, such as the United States, do not give a ton
of support to countries in poverty.
Tackling Poverty
While the total number of impoverished people worldwide
is declining, the rate of progress is not as fast as it needs
to be to achieve the Sustainable Development Goal of
ending extreme poverty by 2030. To increase the pace of
poverty reduction, lessons from the recent past can help.

Many factors have contributed to the shifting geography of

poverty. In Africa, weak economic performance – fueled
by conflict, ineffective policies, ethnic fragmentation,
and external shocks – has made it more difficult for
countries to fund poverty-alleviation programs. But the
most important factor may be state capacity. After all,
weak state institutions cannot effectively deliver public
goods and services.
• Using limits of $1.25 and $2 per person per day, we
found that poverty tended to decrease faster in
countries that started out poorer.But these findings,
while positive, tell only part of the story.

• In many countries, the end of poverty remains a

distant goal. For example, at the current pace of
poverty reduction, we estimate that Mali, where 86%
of the population lived on less than $1.25 a day in
1990, will require another 31 years to eradicate
extreme poverty altogether.

• But even in Ecuador, where only 7% of the

population lived on less than $1.25 a day in 1990,
eliminating poverty will take at least another decade.
• There are a lot of disparity among countries in the eradication of
poverty and whatever the reason for the variation, there is no doubt
that state capacity is one of the key ingredients for successful
poverty reduction.

• During the MDGs, high-poverty countries with strong state

institutions were able to reduce poverty twice as fast as countries
with feeble capacity, and were more likely to achieve the
MDGs’ target of halving poverty by 2015.

• Poverty eradication remains a top priority for the 193 governments

that have adopted the SDGs. But as the international community
learned from the MDGs, goals do not guarantee progress.

• To ensure that the 725 million people who remained in poverty at

the end of MDGs period can escape requires investing in programs
that aim at building effective states. Otherwise, an end date for
poverty will remain elusive.
• Share
Human development index
• The Human Development Index (HDI) is a statistic composite
index of life expectancy, education, and per capita income
indicators, which are used to rank countries into four tiers of
human development.

• A country scores a higher HDI when the lifespan is higher, the

education level is higher, and the gross national income
GNI (PPP) per capita is higher. It was developed by Pakistani
economist Mahbub ul Haq

• The 2010 Human Development Report introduced an

Inequality-adjusted Human Development Index (IHDI).

• While the simple HDI remains useful, it stated that "the IHDI is
the actual level of human development (accounting for
Human poverty index
• The Human Poverty Index (HPI) was an indication
of the standard of living in a country, developed by
the United Nations (UN) to complement the
Human Development Index (HDI) and was first
reported as part of the
Human Development Report in 1997.

• It was considered to better reflect the extent of

deprivation in developed countries compared to
the HDI.

• In 2010 it was supplanted by the UN's

Multidimensional Poverty Index
• Multidimensional Poverty Indices use a range of
indicators to calculate a summary poverty figure for a
given population, in which a larger figure indicates a
higher level of poverty.

• This figure considers both the proportion of the

population that is deemed poor, and the 'breadth' of
poverty experienced by these 'poor' households,
following the Alkire & Foster 'counting method‘ .

• The method was developed following increased

criticism of monetary and consumption based poverty
measures, seeking to capture the deprivations in non-
monetary factors that contribute towards well-being.
Recap
• Measuring and Tackling poverty

• Different measure of poverty

- Human poverty index
- human development index
- Multidimensional poverty index
Assignment

• State the different measures of poverty you

know

• State three dimensions of poverty you know

• Thank You