Global Inequality Quiz

Questions and Answers

What is a major cause of global inequality today?

Inequality between countries (correct)

Inequality within countries

Unequal distribution of natural resources

Variations in government policies

Which Gini ratio values reflect the state of international and global inequality in 1820?

International inequality - 0.54, Global inequality - 0.67

International inequality - 0.2, Global inequality - 0.5 (correct)

International inequality - 0.5, Global inequality - 0.67

International inequality - 0.4, Global inequality - 0.6

Why is measuring per capita income in poor countries especially challenging?

Rural economies often lack market transactions (correct)

Income from foreign aid is disregarded

All income is reported accurately in tax returns

High levels of inflation affect currency values

What does the Gini ratio for global inequality account for?

Inequality within and between countries Signup and view all the answers

When comparing countries' per capita incomes, what must be done to facilitate accurate comparison?

Convert all values into a common currency Signup and view all the answers

What does the concept of 'big push' theory in development economics refer to?

A substantial increase in capital investment Signup and view all the answers

Which of the following concepts is related to the challenges faced by developing countries due to dependency on developed ones?

Dependency theory Signup and view all the answers

What criticism is often levied regarding the empirical approach in development economics?

There is too much focus on empirics and not enough theory Signup and view all the answers

Which of the following is NOT a focus of new empirical development economics?

Ignoring social factors in economic behavior Signup and view all the answers

What is a primary goal of the New International Economic Order (NIEO)?

To provide a fairer deal for developing countries Signup and view all the answers

In the context of development economics, what does the term 'low-level equilibrium trap' refer to?

A cycle of poverty and underdevelopment Signup and view all the answers

Which approach in development economics emphasizes the necessity of both theoretical and empirical perspectives?

Integration of theory and empirics Signup and view all the answers

What does 'immisering growth' refer to in development economics?

Economic growth resulting in worsening living conditions Signup and view all the answers

What does a Gini Ratio of 0 indicate?

Perfect equality Signup and view all the answers

Which Gini Ratio value corresponds to the year 2002 for international inequality?

0.58 Signup and view all the answers

In the year 2011, which Gini Ratio value reflects global inequality?

0.67 Signup and view all the answers

Which year shows the highest Gini Ratio for unweighted international inequality from the data?

2008 Signup and view all the answers

What is the Gini Ratio for population weighted inequality in 1913?

0.37 Signup and view all the answers

How does the Gini Ratio in 1993 compare to that in 1988 for global inequality?

It increased Signup and view all the answers

What was the Gini Ratio for international inequality in 1820?

0.20 Signup and view all the answers

Which statement best describes the trend of the Gini Ratio from 1820 to 2013?

It has fluctuated but generally increased Signup and view all the answers

What does the Neoclassical growth model suggest occurs if capital grows faster than labor?

Reduction in required incremental capital-output ratio Signup and view all the answers

According to the Neoclassical model, what is expected to happen to per capita incomes across countries?

They will converge as poor countries grow faster Signup and view all the answers

What major factor do studies find most important for growth in developing countries compared to developed countries?

Capital input Signup and view all the answers

What is a key assumption in the Neoclassical growth model regarding returns to capital?

Returns to capital exhibit diminishing returns Signup and view all the answers

What does the 'New' (endogenous) growth theory challenge?

The assumption of diminishing returns to capital Signup and view all the answers

What does the Neoclassical growth model argue against from Harrod's conclusions?

The inevitability of economic stagnation Signup and view all the answers

In the production function approach, what is commonly treated as a residual factor?

Technical progress Signup and view all the answers

What are key factors identified in the 'New' growth theory?

Human capital and research and development Signup and view all the answers

What can affect the elasticity and rate of return in the production function approach?

Any growth-inducing variable Signup and view all the answers

What does empirical research suggest about conditional convergence?

It is unlikely without the same levels of education across countries Signup and view all the answers

Which model suggests that economies will naturally converge on a growth rate over time?

Neoclassical growth model Signup and view all the answers

What is a focus of 'growth diagnostics' in economic development?

Identifying reasons for volatile growth in specific countries Signup and view all the answers

Which factor could be a reason for low investment according to the growth diagnostics approach?

Lack of finance or high cost of finance Signup and view all the answers

Why is there no evidence of convergence in the world economy?

Rich countries maintain higher marginal product of capital Signup and view all the answers

What does the idea of 'catch up' imply in the context of growth?

Poor countries can grow faster due to structural changes Signup and view all the answers

What is one of the main reasons countries experience volatile growth rates?

Differences in macrodeterminants of growth Signup and view all the answers

Study Notes

Development Concepts in Economics

Low-level equilibrium trap impedes growth in underdeveloped economies.
Models of population and growth address demographic influences on economic development.
'Big push' theory suggests a significant investment surge is needed to break out of poverty.
Dynamic externalities indicate how economic activities impact others, creating positive or negative effects.
Immisering growth refers to situations where growth benefits few while harming many.
Models of dualism examine the coexistence of traditional and modern sectors in the economy.
Dual gap analysis highlights the resource gap in less developed countries in achieving growth.
Dependency theory critiques the influence of international economic structures on developing countries.
Growth pole analysis identifies areas or sectors that can drive economic development due to their growth potential.
Rent-seeking behavior emphasizes how individuals or groups may exploit resources for personal gain rather than societal benefit.

New Empirical Development Economics

Growth in empirical studies, emphasizing the need for micro and macro-empirical methods.
Micro-empirics validate theories through household-level decision-making studies, such as randomized control trials.
Macro-empirics analyze relationships between broader economic variables and growth determinants.
Balance between empirical studies and theoretical frameworks is necessary for effective prediction and policy evaluation.

New International Economic Order (NIEO)

Aims for equitable economic participation of poor countries on a global scale.
Advocates for improved terms of trade and greater access to developed markets.
Emphasizes the need for increased aid and debt relief for poorer nations.
Promotes inclusion of poorer countries in decision-making processes of international institutions.

International and Global Inequality

Three Gini ratio measures: international inequality (equal country weight), population-weighted international inequality, global inequality (individual households).
Historical context shows decline in international inequality compared to rising global inequality over centuries.
Gini ratio for international inequality rose from 0.20 in 1820 to 0.54 today; global inequality increased from 0.50 to 0.67.
Current global inequality primarily stems from disparities between countries rather than within them.

Measurement of Per Capita Incomes

Difficulty in comparing per capita income in impoverished regions due to various factors.
Revenue figures are often skewed as informal economies and subsistence production are not fully captured.
Conversion of income figures into common currency is complicated by non-traded goods and fluctuating exchange rates.

Neoclassical Growth Model

Solow's model challenges earlier pessimistic views, suggesting mechanisms do exist for growth rate equilibrium.
Capital and labor interplay dictates growth rates, favoring capital accumulation over time.
Predicts that poorer nations will experience faster economic growth due to higher marginal product of capital.

Production Function Approach

Neoclassical production function assesses aggregate output based on labor, capital, and technological progress.
Initial studies indicated technical progress as key for growth in developed nations.
Differentiated findings in developing countries highlight capital input as a primary growth driver.

Endogenous Growth Theory

Emerged in the 1980s, countering the notion of inevitable diminishing returns in capital.
Human capital and research play crucial roles in sustaining growth and preventing convergence.
Evidence for conditional convergence suggests faster growth in poorer nations, given equal educational levels.

Growth Diagnostics

Methodology investigates specific constraints affecting individual countries' growth trajectories.
Emphasizes the variability of growth experiences due to differing investment climates and financial conditions.
Identifies binding constraints that may hinder investment and economic advancement.

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Description

Explore the factors contributing to global inequality today through this quiz. Test your knowledge on the Gini ratio, its historical context, and the challenges of measuring per capita income in poorer nations. Understand what the Gini ratio accounts for and how to compare per capita incomes accurately.