Comaprative Economies
Understanding And Comparing Patterns Of Global Poverty And Inequality.Global poverty and economic inequality have become the source of a great deal of political and social concern in recent times. The co- existence of great wealth and abject poverty, both among and within countries has caused a great deal of controversy amongst world politicians and economists. Both these groups, politicians and economists, have claimed that the central goals of economic policy have always been both efficiency and equity. Unfortunately, despite this, it can be claimed with certainty that a) relative global and national inequality is increasing and b) that relative income of the poorest citizens of the world has declined absolutely.This rise in global inequality has resulted more so, because of a rise in economic inequality among countries rather than a rise in inequality within countries. As the 1995 (Table 7) World Bank Study on Distribution of Wealth shows, average per- capita income in the U.S is about 152 times greater than in Ethiopia and 62 times greater than India. Compare this with the mean income of the top 10% of the population in Brazil (which has one of the highest degree of national income inequality) as being "only" 50 time
$200) 1,178 1,249 1,226 1,485Relative (%) 48. This superior technology makes it possible for rich countries to raise their profit rates to levels much higher than those attainable in poor countries. Personally I am a strong advocate of a relative measure of poverty, that poverty lines should be defined as being both objective and relative. One cannot solely blame Adam Smith's idea of selfishness and greed as being responsible for the increase in the income inequality levels of countries, infact many economists today believe that the main cause for this rise in income inequality between countries is because the rich countries have a much superior technology level than the poor countries. The level of skill of the labour force will be affected by the nature of the educational system as will the level of technical change, since a more educated workforce is more likely to develop and apply new ideas. Despite this until recently, for practical/ political purposes most of the emphasis laid on economic inequalities was at a national level. "What happens as a result of this is as Stiglitz claims a four-step process, detailed below. There are two reasons for merit goods. Education may also be important in promoting those values that are likely to create economic advancement. Also, because educational spending constitutes a significant proportion of total public expenditure, many questions are raised as to how such expenditure should be financed. Although, for practical and political purposes most economic policies and studies focus on solving the problems of income inequality and poverty within countries, there is no moral and ethical justification why such concerns should stop at national boundaries. To be able to sustain its growth levels, a country must be able to make sure that it provides goods and services that are required internationally. Stiglitz's recommendations include: forget the Bank and the IMF, and then to encourage essential land reforms and thereby completely changing the power of the elites. It seems that the fact is that as long as the rich, powerful countries remain to do well, then that is all that they are concerned with. This would result in not only a Pareto un- optimal outcome of the world resources but it would also have dire consequences on global distributional income patterns.
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Acceptance Essays
