Economic Policy - Inequality and Poverty Flashcards
What is Poverty?
World Banks threshold for poverty is?
What is absolute poverty?
What is relative poverty?
- The World Bank defines the threshold for poverty globally as $2.15 per person per day.
- Absolute poverty can be defined similarly - a situation of having the minimum necessary to survive, but perhaps not enough to avoid
deleterious effects. - Relative poverty is often defined as having an income below 60% of the median in a given country
What is (Economic) Inequality? (definition)
Inequality is always a…?
What is the Spirit Level?
An unequal distribution of income and/or wealth:
Inequality is always a relative measure, comparing different people, regions or countries with one another
The Spirit Level collates evidence linking low degrees of inequality with preferable societal outcomes (in areas such as health, education, crime and social mobility).
What is bilateral aid?
What is Multilateral aid?
Tied aid?
Bilateral aid involves transfers from one country to another,
multilateral aid involves transfers from an institution (e.g. World
Bank) to a recipient country.
Tied aid is aid which is provided for a specific purpose (often
purchasing goods or services from the donor country).
Policies - Taxation and Benefits
Unemployment benefits, tax credits, personal tax allowance and
progressive rates of income tax can all serve to redistribute income/wealth in such a manner as to reduce inequality.
But such policies do not ever seem to be used to produce a perfectly equal distribution.
Export-led industrialization
Many of the countries which grew rapidly in the latter half of the twentieth century (e.g. West Germany, Japan, Taiwan, South Korea, China) developed internationally competitive manufacturing industries (e.g. cars, semiconductors, ships, consumer electronics), i.e. they reduced poverty by producing more valuable output from their resources.
