Poverty and Development

• Unequal resource distribution leads to large proportions of the world's population consuming too little
• Less developed countries are particularly affected by low consumption
• Approximately 10% of the world's population (736 million) lived in extreme poverty with incomes of less than $1.90 per day in 2015
• 821 million people were malnourished in 2017, an increase from 2016
• Rising inequality results in increasing polarization of society
• Weakness in the real-world process complicates the problem and challenges the sustainability of resource utilization
• The welfare of citizens is endangered by these issues
• Socioeconomic issues like multiple faces of poverty, globalization, growing imbalance of regions/countries, corruption, and global health crises are covered
• There is an urgent need for further economic development to lift people out of poverty

Multiple Faces of Poverty and Implications for Development

• Identifying the causes of poverty and their relationship to economic development
• Explaining the relationship between conflict and poverty

Concepts of Poverty

• Poverty is a measure of deficiency in meeting basic needs for a person, household, or community to achieve a basic standard of living
• Deficiency is measured by lack of resources such as income, assets, and capabilities (skills, knowledge, technology)
• Poverty is divided into absolute and relative poverty
• Absolute poverty is when household income is below a level making it impossible to meet basic needs like food, shelter, water, education, and healthcare
• In absolute poverty, economic growth has no effect on people living below the poverty line
• Absolute poverty compares households based on income level that varies by country
• Relative poverty involves households receiving 50% less than average household incomes, providing some money but not enough for needs beyond the basics
• Relative poverty is changeable depending on the economic growth of the country
• Relative poverty is described as "relative deficiency" because those affected do not enjoy same standard of life as others
• Relative deficiency includes lacking internet, clean clothes, safe home, or education
• Relative poverty can be permanent making it impossible for certain families to have same standard of living
• Persistent poverty occurs when households receive 50-60% less income than average incomes every 2 out of 3 years
• Persistent poverty is an important concept because long-term poverty has impactful socioeconomic consequences

Causes of Poverty

• Causes of poverty are divided into structural reasons and behavioral/cultural explanations
• The structural approach suggests poverty is a result of systemic issues like racial/gender discrimination, low wages, and insufficient investment in education/healthcare/social insurance
• These factors reduce opportunity and increase economic insecurity
• These structural approaches point to patriarchy, capitalism, white privilege, and racism
• The behavioral or cultural approach points to culture, behavior, and personal differences
• The approach states there is a poverty culture passing on attitudes that perpetuate bad decisions, and hence poverty
• Fatalism and rejection of societal norms make the poor less attractive in labor/marriage markets, and less capable as parents
• The behavioral/cultural approach says each person has free will and is responsible for their own life
• Features emphasized by poor people include lack of income/assets for basic needs, voicelessness/powerlessness, and vulnerability to adverse shocks
• Determinants of poverty can also be understood by considering people's assets, returns to those assets, and the volatility of returns
• Assets include human assets, natural assets, physical assets, financial assets and social assets
• Poverty is mainly caused by labor market issues, education, demographic characteristics, race, poverty-related policies, and cultural factors

Relationship between Conflict and Poverty

• Poverty and violent conflict are inter-linked
• Poverty can directly contribute to conflict or conflict can create poverty
• Violent conflict has been considered a peace and security issue
• Conflict causes poverty
• There is a consensus that conflict causes poverty
• Battlefield deaths, disablement and displacement have long-term costs for societies
• Chronic poverty increases due to higher dependency ratios
• Conflict affected countries showed a fall in GDP per capita, food production/exports, gross investment, government revenue/expenditure, and war which can lead to entitlement collapse and famine
• Focusing on destruction, poverty and people as victims provides only a partial reading of war
• The political, economic and social dimensions of conflict impact chronic poverty
• Protracted, collapsed-state conflicts lead to intergenerational exclusion and chronic poverty
• Poverty can cause conflict
• Conflicts have short and long term factors like economic slowdown, rising expectations, external shocks, and state crises involved
• Isolating and weighting the different ‘risk factors’ is difficult
• There is the challenge to understand how poverty may interact with other factors in certain contexts to produce violent conflict
• There is empirical work examines poverty's role as one of a number of causal factors behind violent conflict
• The view that conflict is driven by grievance has been questioned
• War cannot be fought just on hopes and hatreds
• Civil wars exist when rebel organizations are financially viable
• The feasibility of predation determines the risk of conflict
• Rebellion is motivated by greed, so that it occurs when rebels can do well out of war

The Advantages and Limitations of Globalization

• The interrelationship of globalization and economic development in developing countries needs to be described
• The advantage and disadvantage of globalization needs to be explained

Basic Concept of Globalization

• Globalization describes the process through which the world becomes more linked due to greater commerce and cultural interaction
• Globalization has increased the production of goods and services
• The biggest companies are no longer national firms but multinational corporations with subsidiaries in many countries
• The trend is countries joining together economically, through politics, and education
• Countries joining together economically view themselves as part of the world as a whole

Globalization and Developing Countries

• Globalization in the developing countries is manifested in economic, trade, educational, health, and cultural fields
• Globalization helps developing countries deal allowing them to increase economic growth and solve poverty problems
• Developing countries were not able to tap on the world economy due to trade barriers
• The World Bank and International Management encourage developing countries to go through market reforms and radical changes through large loans
• Many developing nations began to open their markets by removing tariffs and freeing up their economies
• Developed countries began to invest in developing nations, creating job opportunities for the people
• Rapid growth in India and China decreased world poverty.
• Countries in Africa still have the highest poverty rates
• Developed countries set up companies in developing nations to take advantage of low wages, which can lead to pollution
• Setting up companies and factories in the developing nations by developed countries has a bad effect on developed countries and increases unemployment

Impact of Globalization

• Globalization has contributed to the development of health and education systems
• It helps improve living standards, and life expectancy in developing nations
• Governments provide more money for health and education, which results in decreased rates of illiteracy
• Globalization has led to rising living standards and life expectancy in developing nations
• Globalized competition has forced many minds skilled workers where highly educated and qualified professionals to migrate to developed countries which decreases skilled labor in developing countries
• Cultural changes have appeared through globalization
• Imitating other cultures leads to extreme dependence, which might lead to the destruction of their own culture, tradition, identity, customs and even their languages
• Changes in clothing and a a behavior can change, words disappear from local languages because use of English and French words and changes in family life

Advantages of Globalization

• Globalization has increased the free trade between countries
• Increased capital liquidity allowed investors to invest in developing countries, corporations can operate in other countries and global mass media can tie the world together
• The increased flow of communication has allowed global mass media to tie the world together
• Vital information can be shared between corporations and individuals around the world and greater speed and ease of transporting goods and people are enabled
• Countries joining together economically, through politics and education have reduced and can even eradicate cultural barriers, and increase the global village effect
• Globalization has proven to be the medium for the spread of democratic ideals to well developed nations and greater independence to developing countries in the Global South
• Among numerous advantages, reduction of war is likely

Disadvantages of Globalization

• Globalization has a potential to decrease environmental integrity as polluting corporations from well developed countries can take advantage of developing nations weak regulatory rules
• Globalization increases jobs for non-skilled and skilled peoples of the developing nations as huge corporations of developed countries seek for cheap labor
• This condition creates further inequality between developed and developing countries and can also increase the likelihood of economic disrupt in a single nations
• Globalization imposes limits on free expression as most of the mass media tends to be controlled by huge corporations
• Mass media can be used by handful corporations to pose risks in the cultural heritage of both well developed and developing nations

Disadvantages of Globalization Cont'd

• Globalization is a global economic trend with advantages and disadvantages that are here to stay
• Benefits must be reaped, and risks must reduced
• Its is important to understand the impact globally and work altogether to remedy any problems
• All countries in the Global North and Global South must work altogether to spread its benefits

The Growing Imbalance Between Regions and Countries

• The causes of trade imbalance between developing and developed countries needs to be demonstrated
• The level of countries or regional inequalities has to be evaluated

The Concept of Economic Inequality between Regions and Countries

• Inequality is both very simple and very complex
• It has theories trade as a key instrument in determining the trend of regional and country economic inequality
• Both the convergence and divergence hypotheses take it into account with their distinct assumptions and methodologies
• Less developed countries and regions should be expected to grow faster than more developed ones

Inter-country inequality

• Latecomers into the world of modern economic growth enjoy an advantageadopt and exploit technologies
• Less developed economies have an advantage of low production cost
• The shift of large amounts of labor from farm to industry boosts labor productivity in general
• Widening income inequality is the defining challenge of our time
• The gap between the rich and poor is at its highest level in decades
• View investigates the divergent trends in inequality developments across advanced economies and developing countries, with a particular focus on the poor and the middle class
• Inequality has been exacerbated by technological development and the associated increase in skill, as well as the collapse of various labor market institutions in both advanced economies and developing countries
• The growing skill premiums are related with expanding income inequalities in advanced nations, whereas financial deepening is associated with rising inequality in developing countries

Cause and effect of trade imbalance

• An important indicator of regional and national inequality is measuring the trade balance
• A trade imbalance is also known as a negative trade balance
• A country's trade deficit may be calculated by subtracting the entire value of its exports from the total value of its imports
• A trade imbalance happens when a country does not produce what it requires which is referred to as a current account deficit
• The imports are subtracted from the country's gross domestic product
• Citizens can access a broader range of goods and services at a lower cost from trade
• A trade imbalance may result in more job outsourcing to foreign countries
• As a country imports more goods than it buys domestically, then the home country may create fewer jobs in certain industries

Measurement of countries and regional inequalities

• Economic inequality measure the inequality between a percentage of population and the percentage of resources that population has
• Inequality studies explore the levels of resource disparity and their practical and political implications
• The most often used metrics for evaluating global economic disparity is per capita GDP
• The major characteristics or features that were considered in such assessment are listed below
• Physical attributes – distribution of natural ability is not equal
• Personal Preferences - Relative valuation of leisure and work effort differs
• Social Process – Pressure to work or not to work varies across particular fields or disciplines
• Public Policy - tax, labor, education, and other policies affect the distribution of resources.

Perceptions and Findings

• Most people believed that economic disparity in Africa was quite modest and, at best, was not a significant barrier to reducing poverty until recently because they are all generally impoverished
• There was a general sense of concern when it was found that inequality in Sub-Saharan Africa was among the greatest in the world
• A Gini coefficient of 0 reflects perfect equality, where all income or wealth values are the same, while a Gini coefficient of 1 (or 100%) reflects maximal inequality among values
• Measures of inequality based on GINI coefficients of gross and net incomes have increased substantially since 1990 in most of the developed world
• Inequality, on average, has remained stable in developing countries, Although at a much higher level than observed in advanced economies
• There are large disparities across developing countries, with Asia and Eastern Europe experiencing marked increases in inequality, and countries in Latin America exhibiting notable declines
• During 1990–2012, market income inequality in advanced economies increased

Corruption

Concept of Corruption

• Critical geography examines corruption as deviant actions that are predominantly affecting states, particularly in the Global South
• Explanations get politicized and interrelated with material, and geographical power regimes
• Urban informality is a significant linked issue in both the North and South
• It involves a wide range of behaviors differing in their causes and effects in different spatiotemporal contexts
• It may be defined in different ways, occurs in varying levels of severity, and takes various forms in time and space, depending on local political cultures and institutional frameworks

Corruption Definition

• There is no one single definition of corruption that can be applied to all circumstances
• It can be petty or large-scale, systemic or occasional, implicit or explicit, committed by individuals, or defined as the abuse of entrusted power for private gain
• Judicial systems punish acts, not character.
• It is simultaneously a political, economic, legal, and moral phenomenon

Corruption

• Many studies have found evidence that corruption has harmful effects on economic growth
• It shows a negative correlation with economic growth after controlling for institutional efficiency
• Corruption causes uncertainty for investors and raises investment risk in nations with high levels of corruption

Types of Corruption

• Corruption can be categorized in various dimensions to facilitate the understanding of how corruption affects economic performance
• The concept includes three broad categories of human action which are; bribery, theft of public assets, and patronage
• Bribery consists of payments by individuals or firms to public officials in order to influence administrative decisions
• Corruption's administrative decisions determined by the scope of government regulations and activity

Corruption Examples

• Theft of public assets can occur as unilateral embezzlement by public officials or through the collusion of public officials and private agents
• Illegal transfer of real or financial public assets at below-market prices includes evasion of taxes and other legal payments to the public sector and diversion of public funds from their intended use into private pockets
• Corruption in the form of patronage consists of the preferential treatment of firms and/or individuals by public officials regarding the compliance with government rules for the allocation of government contracts or transfer payments
• The private sector counterpart consists of “special favors” in the form of financial rewards or professional opportunities granted to the public official involved
• Analytical distinction usually made is between low value (“petty”) and large value (“grand”) corruption
• Larger the value of the corrupt transaction, the higher the position in the public hierarchy of the public official(s) involved

Corruption Types

• Systematic theft at a grand scale by high public officials is called “kleptocracy"
• Systematic patronage with large stakes has been labelled “crony capitalism” or “government capture”
• “Kick-backs” describe acts of bribery that involve theft of public assets or patronage

Geography of Corruption

• Corruption has a geographical essence because social processes are always distributed unevenly across space
• The causes, nature, and consequences of corruption differ from place to place, depending on the context of historical, cultural, legal and political organization
• The incidence of corruption is difficult to determine empirically because its committers are often adept at keeping it hidden

Transparency International

• Analyses of corruption in different regional contexts rely heavily on the corruption indicator of Transparency International
• Transparency International is a global nongovernmental organization dedicated to monitoring and combatting public and private sector corruption
• Produces annual corruption report with Corruption Perceptions Index (CPI) of government misconduct since 1995
• Composite indicator based on surveys and interviews with public and private sector officials in each country and expert assessments by 13 sources
• Scores were normalized on an ordinal scale of zero (most corrupt) to 100 (least corrupt)
• Only a very small number of countries have relatively uncorrupt governments, with CPI numbers of 80 or higher

World Corruption

• Slightly corrupt states indices of 60-79, includes several European countries, the United States, Japan, Botswana, Israel, Taiwan, and the United Arab Emirates
• Moderately corrupt governments (scores of 40–59) include a diverse array of European, African, Middle Eastern, and a few Asian states such as South Korea
• Very corrupt governments scores ranging between 20 and 39 which accounts for most of humanity
• Extremely corrupt states scores below 20, includes failed states such as Somalia, Afghanistan, and Yemen,
• Levels of corruption have attributes such as that with rare exceptions, they are low-income countries, have a closed economy, The influence of religion is visible, Low media freedom and, a relatively low level of education.

Results of Corruption

• Corruption increases the volume of public investments, redirects the composition of public expenditure, reduces the effectiveness of public investments, and reduces tax revenues
• The influence of corruption on the economy operates through its impact on investments, the allocation of talents, public spending and taxes.

Responses to Corruption

• Top leadership must set a good example with respect to honesty, integrity and capacity for hard work
• Investigation and punishment must start with offenders on both the demand and supply side of a corrupt deal
• A publicity campaign to create greater awareness on the adverse effects of corruption needs to launched
• A responsible press to gather, analyze, organize, present and disseminate information Views on the effectiveness of anti-corruption oversight or watchdog bodies are mixed.
• Improving institutions like Improving the legal framework is necessary