Poverty and the Politics of Foreign Aid
I. Poverty Defined
II. Inequality Defined
III. The MDGs
IV. The Foreign Aid Debate Tmr a debate at Rex
I. Poverty Defined
Gross National Income (GNI) per capita: a key measure for poverty Total economic
output of a country divided by the total population Low income: $1005 or less, Lower
and middle income 1006-3975upper middle income 3976-12,275 High income 12,276 or
more. Lower than 1175 countries are suitable for financial assistant.
Purchasing Power Parity (PPP): the purchasing price of the same basket of goods in
Human Development Index (HDI): more comprehensible way to understand includes
health ( life expectancy) and education attainment ( years of schooling) and standard of
living( GDP per capita) 0-1 1is better level of development Norway
Extreme Poverty vs. Chronic Poverty
Dimension of poverty: extreme poverty: those whose income is less than 1 d a day.
Implication: conceptualizes the poor as single, homogeneous group whose main problem
is low monetary income. It’s a temporary problem.
Need to understand why people are poor, how poverty differs across groups and which
policies are most efficient for each of these groups.
Alternative is Chronic Poverty: poverty that persists for many years or a lifetime and that
may be transmitted across generations (hereditary) ethnicity/ class/ genders. Inequality
distribution due to cultural and structural reasons
II. Inequality Defined: poverty is decreasing, while the income increase
Lorenz Curve: percentage of income earned and of population earning that income.
Straight line is equality any that curve to the up at right is inequality
Gini Coefficient: an aggregate measure of inequality that varies between 0 and 1. 0 is
perfect equality and 1 is perfect inequality. Over 0.5 extreme inequalities, most Latin
America, and most euro and North America is around 0.3, but Cuba is around 0.2.
High levels of inequality undermine development gains, despite how well a country’s
Kuznet’s Inverted-U Hypothesis
Simon Kuznet 1955 inverted the U curve hypothesis argues that relative income equality
is in the early stages of economic development and does not improve until countries
reach middle income level. III. The MDGs millennium development goals
MDGs defined: adopted by the world leaders and development institutions at a special
meeting of the UN in 2000 as the guiding principles for the international development
and community before 2015 now extend to 2020.
1. Eradicate extreme poverty and hunger reduce by half lower than$1 a day
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria and the disease by 2015 to reduce the spread
7. Ensure environment sustainability
8. Develop a global partnership for developmen