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  1. Countries Rich and Poor

  2. Why are some countries rich while others are poor? Daniel S. Taylor-Roman

  3. Research Goals • Identify poor countries • Identify rich countries • List commonalities between each country group • Determine the factors that have allowed rich countries to become rich • Determine the factors that have kept some countries in poverty

  4. What is poverty? Definitions and Limitations

  5. Poverty Definitions • The state of having little or no money and few or no material possessions • Poverty (also called penury) is deprivation of common necessities that determine the quality of life, including food, clothing, shelter and safe drinking water, and may also include the deprivation of opportunities to learn, to obtain better employment to escape poverty, and/or to enjoy the respect of fellow

  6. Poverty Definitions • The state of living on less than $2 a day, according to the World Bank. Poverty can also represent a lack of opportunity and empowerment, and bad quality of life in general. • An income leveldefined by the Census Bureau that determines a family’s poverty status. This level isadjusted yearlyas changes occur in the national economy’s Consumer Price Index and costs of

  7. Limitations • The first two definitions are almost impossible to measure. • The second two are money based – income level.

  8. Poverty line Where do we draw it? Who draws it?

  9. Limitations • Glewwe and van der Gaag agree that these definitions are too short and fail to grasp poverty as a “whole”. • In 1988 they developed a way to measure poverty through a combination of different indicators such as income, food consumption, education, etc. • Many other organizations concerned with the topic of poverty such as the World Bank and the UN have come up with indeces that attempt to measure poverty.

  10. Human Development Index UN measuring tool

  11. HDI • The first Human Development Report (1990) introduced a new way of measuring development by combining indicators of life expectancy, educational attainment and income into a composite human development index, the HDI • The breakthrough for the HDI was the creation of a single statistic which was to serve as a frame of reference for both social and economic development. • The HDI sets a minimum and a maximum for each dimension, called goalposts, and then shows where each country stands in relation to these goalposts, expressed as a value between 0 and 1.

  12. Poverty Analysis By the World Bank

  13. WB Poverty Analysis • Discusses the different dimensions of poverty and its measurement by analizing the concept of well-being. • Focuses on three aspects of well-being: poverty, defined as whether households or individuals have enough resources or abilities today to meet their needs; inequality in the distribution of income, consumption or other attributes across the population; and vulnerability, defined here as the probability or risk today of being in poverty – or falling deeper into poverty -- in the future.

  14. Rich Countries Poor Countries

  15. Who’s who? The richest and the poorest according to both indeces

  16. Bibliography • Olson, M. (1996). Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations are Rich, and Others Poor. The Journal of Economic Perspectives, 10, Retrieved April 4, 2009, from • Lucas, R. E. (1990, May). Why Doesn't Capital Flow from Rich to Poor Countries?. The American Economic Review, 80, Retrieved April 20, 2009, from • Hall, R. E., & Jones, C. I. (1998). Why Do Some Countries Produce So Much More Output than Others?. Retrieved April 20, 2009, from • Glewwe, Paul and Jacques van der Gaag. (1988) Confronting Poverty In Developing Countries: Definitions, Information,and Policies. Living Standards Measurement Study. Working Paper No. 48. Retrieved on April 17, 2009 • Hibbs, D. A., & Olsson, O. (2003). Geography, biogeography, and why some countries are rich and others are poor. PNAS, 101, Retrieved April 20, 2009, from

  17. Bibliography • Tornell, A., & Velasco, A. (1992). The Tragedy of the Commons and Economic Growth: Why Does Capital Flow from Poor to Rich Countries?. The Journal of Political Economy, 100, Retrieved April 20, 2009, from • Easterlin, R. A. (1994, September, 22). Will Raising the Incomes of All Increase the Happiness of All?. Journal of Economic Behavior and Organization, 27, Retrieved April 20, 2009, from • Reinhart, C. M., & Rogoff, K. S. (2004). Serial Default and the “Paradox” of Rich to Poor Capital Flows. National Bureau of Economic Research, Retrieved April 20, 2009, from • Matsuyama, K. (1996, August). Why are there Rich and Poor Countries?: Symmetry-Breaking in the World Economy. National Bureau of Economic Research, Retrieved April 20, 2009, from • Mankiw, N. G., Romer, D., & Weil, D. N. A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics, 107, Retrieved April 20, 2009, from

  18. Bibliography - Websites • World Bank • Human Development Index • CIA: The World Factbook