Development Gap and Poverty Measurement

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Questions and Answers

Which of the following is classified as a low-income country?

India

Sri Lanka

Armenia

Bangladesh (correct)

Identify the country that is categorized as a lower middle-income country.

Burundi

Lao PDR (correct)

Mali

Somalia

Which of the following countries is NOT listed as low-income?

Rwanda

Tajikistan

Swaziland (correct)

Niger

Among these countries, which one appears in the low-income category?

Somalia Signup and view all the answers

Which country is cited as a lower middle-income but is geographically in Asia?

Kyrgyz Republic Signup and view all the answers

What is the ratio of income per head of the richest to the poorest country?

700:1 Signup and view all the answers

Which statistical measure is used to assess the average sum of squared deviations in per capita income?

Standard deviation Signup and view all the answers

What must occur for the relative income gap between countries to narrow?

Poor countries must grow faster than rich countries. Signup and view all the answers

What is the purpose of the coefficient of variation in income inequality measurement?

To normalize the standard deviation. Signup and view all the answers

What concept is derived from the Lorenz curve and widely used to measure income inequality?

Gini ratio Signup and view all the answers

What is the primary unit of measurement in world or global inequality?

Individual person or household Signup and view all the answers

How does weighted international inequality differ from international inequality?

It weights countries by their population size. Signup and view all the answers

What does the Kuznets ratio measure?

Income of the poorest 10% compared to the richest 10% Signup and view all the answers

Which measure provides insight into income distribution at the extremes?

Kuznets ratio Signup and view all the answers

What is a significant limitation of using a single statistic to analyze income distribution?

It is unable to capture extreme values in income. Signup and view all the answers

Which of the following statements is true regarding different measures of inequality?

No theoretical reason exists for them to move together. Signup and view all the answers

In the context of income inequality analysis, what does a high Gini ratio potentially signify?

Increasing income inequality Signup and view all the answers

What key aspect is typically overlooked when measuring using the Gini ratio?

Income distribution at the extremes Signup and view all the answers

What relationship is commonly observed among the various measures of inequality over time?

They tend to move together historically. Signup and view all the answers

Which of the following options is NOT a focus of the weighted international inequality measure?

Global standards of living Signup and view all the answers

Study Notes

Development Gap

The income gap between the richest and poorest countries is approximately 700:1.
Low-income countries have a ratio of income to high-income countries of about 60:1.
Historical data indicate that this relative income gap is unprecedented.

Low-Income and Lower Middle-Income Countries

A list of low-income countries includes Afghanistan, Bangladesh, Burundi, and Ethiopia among others.
Lower middle-income countries include India, Bolivia, and Sri Lanka.

Statistical Measurements of Income Dispersion

Standard deviation (SD) is used to measure the average deviation of each country's income from the mean income.
Sigma divergence and convergence refer to movements in income ratio over time.
The coefficient of variation normalizes SD, addressing the correlation between mean and SD.

Gini Ratio and Lorenz Curve

The Gini ratio, derived from the Lorenz curve, measures income inequality based on population distribution.
Three concepts of inequality are:
- International inequality treats each country as a unit.
- Weighted international inequality weights countries by population size.
- Global inequality measures differences at the individual level within countries.

Kuznets Ratio

The Kuznets ratio compares the income of the poorest 10% of the world's population with the richest 10%.
This metric can provide insights into income inequality and social justice that extend beyond the Gini ratio.

Lorenz Curve Distribution

The Lorenz curve visually represents income distribution versus population percentage.
Low-income countries receive only 2% of global income, despite having 9% of the population.
Rich countries account for 75% of global income but consist of only 19% of the population.

Poverty Measurements

The poverty gap at $1.90 a day (2011 PPP) reflects significant poverty levels:
- Low-income: 18.6%
- Lower middle income: 4.69%
- Sub-Saharan Africa: 16.47%

World Bank's Focus on Poverty

The World Bank emphasizes poverty eradication, defining absolute poverty in terms of severe deprivation of basic human necessities.
Historical quotes from former World Bank presidents indicate a progressive commitment to measuring development performance by poverty reduction metrics.

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Description

This quiz explores the concept of the development gap and the various ways poverty is measured across countries. It focuses on the differences between low-income, lower middle-income, and wealthier nations. Understand the implications of these classifications and their effects on global economic policies.