4.2 Poverty And Inequality

Question 1

What is absolute poverty?

Answer 1

• when a household does not have the sufficient income to sustain even an acceptable standard of living or cannot meet the most basic needs
• the thresholds will vary between developed and developing nations
• the extreme poverty measure now used by the world bank used to be the % of people earning less than 1.90 a day per person but it changed in 2022 to 2.15

Question 2

What is relative poverty?

Answer 2

• a level of household income that is considerably lower than the median level of income within a household
• the official UK relative poverty line is household disposable income (adjusted for household size) of less than 60% of median income

Question 3

What is the official poverty line?

Answer 3

An income level that is considered to be minimally sufficient to sustain a family in terms of food, housing, clothing, medical needs etc.

Question 4

What are some causes of absolute poverty in developing nations?

Answer 4

• Resources not being distributed equally - especially in the case of most of country being rural // Under-utilisation of resources
• A lack of basic education - leads to unskilled workers that struggle to get jobs and earn an income // shortage of innovation and entrepreneurship
• An underorivision of public goods - absence of a stable govt or public services // Corruption of govt // Lack of infrastructure and capital
• Damaging effects of civil wars or natural disasters
• Not enough resources to provide for a country’s rapidly growing population
• Dependency on a primary sector/product
• Low productivity in agriculture

Question 5

How does a growing population lead to absolute poverty in developing nations?

Answer 5

• A rapidly growing population creates an increase in demand for consumption goods
• This leads to more pressure on resources and less availability per person
• Reduces the standard of living because not everyone can be provided for

Question 6

Why does dependency on the primary sector lead to absolute poverty in developed nations?

Answer 6

• This can stunt growth because commodities are subject to volatile price fluctuations
  E.g Zimbabwe relies heavily on exporting coal and gold and 97% of Angola’s exports are of oil

Question 7

What are the causes of relative poverty in developing nations?

Answer 7

• Income inequality - approx 1 in 9 workers receive the national minimum wage
• unemployment
• increased job security + part time work
• lack of education
• lack of access to services
• health complications - can be a consequences as well as a cause of poverty - leads to economic inactivity
• changing industry structures
• climate change
• discrimination and inequality in industry // institutional racism
• old age
• regressive taxes