CountriesRich and Poor

Why are some countries rich while

others are poor?Daniel S. Taylor-Roman

Research Questions Which are the poorest countries? Which are the richest countries? What are the commonalities between the “poorest

countries” group? What are the commonalities between the “richest

countries”group? What factors allowed rich nations to become rich? What factors keep poor nations in poverty?

Hypotheses

Hypothesis 1

Countries that allow free trade and

have a capitalist economic structure are on the richest side while the poorest countries lack those elements in their economic society.

Hypothesis 2

The amount of exploitable natural resources a country has determines whether or not they fall under the poverty category.

Specifically, countries with less natural resources tend to be poorer. Countries

with more natural resources tend to be

richer.

What is poverty?Definitions and Limitations

Poverty Definitions The state of having little or no money and few or

no material possessions wordnet.princeton.edu/perl/webwn

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 citizens.en.wikipedia.org/wiki/Poverty

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. library.thinkquest.org/05aug/00282/other_glossary.htm

An income level defined by the Census Bureau that determines a family’s poverty status. This level is adjusted yearly as changes occur in the national economy’s Consumer Price Index and costs of living.www.marketresearchterms.com/p.php

Limitations

The first two definitions are almost impossible to measure.

The second two are money based – income level.

Poverty lineWhere do we draw it?

Who draws it?

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.

Poverty AnalysisBy the World Bank

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.

Human Development Index

UN measuring tool

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.

Rich CountriesPoor Countries

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

HDI world map 2008 update

Green shades indicate .75 or more high development

Yellow shades indicate .60 or more

Orange to Maroon indicate .50 or less low development

Richest Poorest Iceland Norway Australia Canada

Sierra Leon Burkina Fasso Guinea-Bissau Niger

2008 update

Richest: Top ranking from top to bottom

Poorest: Least ranking from top to bottom

Do you promote free trade? Do you have a capitalist economy?

Hypothesis 1

Iceland Iceland's Scandinavian-type social-market

economy combines a capitalist structure and free-market principles with an extensive welfare system, including generous housing subsidies.

CIA worldfactbook

Norway The Norwegian economy is a prosperous

bastion of welfare capitalism, featuring a combination of free market activity and government intervention. The government controls key areas, such as the vital petroleum sector, through large-scale state enterprises.

Sierra Leone Sierra Leone is an extremely poor nation

with tremendous inequality in income distribution.

The fate of the economy depends upon the maintenance of domestic peace and the continued receipt of substantial aid from abroad, which is essential to offset the severe trade imbalance and supplement government revenues.

Burkina Fasso Burkina Faso has embarked upon a

gradual but successful privatization of state-owned enterprises. Having revised its investment code in 2004, Burkina Faso hopes to attract foreign investors.

How many natural resources do you

have?Hypothesis 1

Iceland Not many natural resources at all. Iceland's economy has been diversifying

into manufacturing and service industries in the last decade, with new developments in software production, biotechnology, and tourism.

Norway The country is richly endowed with natural

resources - petroleum, hydropower, fish, forests, and minerals - and is highly dependent on the petroleum sector, which accounts for nearly half of exports and over 30% of state revenue.

Sierra Leone While it possesses substantial mineral,

agricultural, and fishery resources, its physical and social infrastructure is not well developed, and serious social disorders continue to hamper economic development. Nearly half of the working-age population engages in subsistence agriculture.

Burkina Fasso Thanks to this new code and other legislation

favoring the mining sector, the country has seen an upswing in gold exploration and production.

One of the poorest countries in the world, landlocked Burkina Faso has few natural resources and a weak industrial base. About 90% of the population is engaged in subsistence agriculture, which is vulnerable to periodic drought.

Findings

Hypothesis 1 True Best governmental practices lead less

poorer countries

Hypothesis 2 Depends Some rich countries have lots of natural

resources but some do not and are still very rich.

Some poor countries have lots of natural resources and are still very poor.

Conclusion The ability that their people have to develop

their potential healthy lifestyles, have access to education, develop infraestructure, etc. will determine whether a country is on which side of the poverty line.

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Bibliography - Websites World Bank www.worldbank.org Human Development Index

http://hdr.undp.org/en/ CIA: The World Factbook

https://www.cia.gov/library/publications/the-world-factbook/