Question: What are the causes of inequality? Explain How does it affect the economic development of a country? Answer: There is a big difference noticed in the incomes of the people in almost all developing countries. the third world countries which have experienced relatively high rate of economic growth by historical standards began to realize that such growth had not brought any difference to the to the teeming poors of their inhabitants. Standard of living began to fall in real terms.
Negative Effects of Population Explosion Population may be considered positive hindrance in the way of economic development of a country. In a 'capital poor ' and technologically backward country, growth of population reduces output by lowering the per capita availability of capital. Population can be a limiting factor for economic growth because of the following reasons: • Population Reduces the Rate of Capital Formation: In underdeveloped countries, the compostion of population is determined to increase capital formation. Due to higher birth rate and low expectation of life in these countries ,the percentage of dependents is very high. Nearly 40% to 50% of population is in the non productive age group which simply consumes and does not produce anything.
Such irony is from lack of capital resources, small market size, high cost, uncertainty and inefficient money markets. These factors keep investment level low as well as the profit expectations, or so called MEC. Furthermore, rate of interest which is another determinant
It proves that subjective poverty is a multidimensional concept. It also concludes that absolute and relative poverty thresholds coincide with the subjective one. It implies that increasing the absolute income level of individuals may not be enough to improve their subjective wellbeing, as they are also concerned with their relative income position (Siposné, 2010). Examples of subjective indicators are measures of the deficiencies in the consumption of necessities and of perceived over-indebtedness and scarcity. The main problem with the objective approach is to find a valid and reliable measure of the economic resources people are in control of and to define how and where to draw the poverty line.
Scarcity is also a cause and an economic problem that arises because people have unlimited wants but resources are limited and the scarcity in goods and supplies really affects the production and distribution of food and necessities because there are only limited supplies of things that can be allotted and allocated in a particular place. Another cause was the reduced demand for service, wherein there are limited services offered in a particular country. Also, another cause was the stock market decline or the stock market downturn, which affects the stock market and the exchange market. (Van Ours,
The Gini index represents the main principle, which based on income distribution between country's citizens. This number, which ranges between zero and one and is based on residents' net income, helps define the gap between the rich and the poor, with zero representing perfect equality and one representing perfect inequality. Gap between Rich and Poor: World Income Inequality To understand how many inhabitants of a country are poor, it is not enough to
The more ‘developed’ a country is, the more money it is capable of making. So in talking about poor countries, we are talking about Less Economically Developed Countries (LEDCs – This is a better term than ‘the developing world’, as some poor countries may not actually be developing, but standing still or even shrinking.) In asking ourselves why some countries are poor, what we need to work out is why they are not developing. And there are several reasons, with geographical, political, and cultural factors all coming in to play. Overpopulation Overpopulation is defined as the situation of having large numbers of people with too few resources and too little space.
It is not possible for a country to really develop and grow if it does not directly target the problem of inequality” The question of inequality has been raised especially concerning developing countries and the models that are currently used to attempt to effect development and growth. It is not really clear what correlation effect inequality has on subsequent economic growth. Different types of data used and varying econometric methods lead to a varying array of conclusions. In this essay, it will be shown that there is a strong correlation between rising inequalities and growth, in a positive relationship, inspired from data collection and analysis by (Forbes, September 2000). Likewise, some opposing arguments that propose a negative relationship
Low Household income levels: The land prices are 10 times higher than the average annual income in Asia as compared to developed countries having land price average 4 times the average annual income. 3. Discrimination: Women and minority are vulnerable to face issues like higher poverty levels and barriers to housing based on law and custom discrimination in many housing markets. 4. War & Violence: The author here also mentions about war and violence which evacuates people who are than forced to live in temporary settlements without access to basic amenities.
This essay focuses on the negative and positive effects of population growth on economic development. NEGATIVE EFFECTS OF POPULATION GROWTH ON ECONOMIC DEVELOPMENT Government resources are limited, so population growth is seen as using up those limited resources on unproductive investment such as providing for the dependent population