An Introduction to Poverty

Presented By:

Muzammil Abbas 2014-ag-89Usman Tariq 2014-ag-89Asad Ur Rehman 2014-ag-176

Presented To:Madam Rehana Qureshi

Institute of Business Management Sciences,University of Agriculture Faisalabad

Outline of PresentationIntroductionTypes of PovertyMeasurement of PovertyImportant Poverty MeasuresFactors affecting PovertyCauses of PovertyEffects of PovertyRemedial Measures

What is it?Poverty is the lack of basic human needs, such as

clean water , nutrition, health care, education, clothing and shelter, because of the inability to afford them.

It can also be referred as absolute destitution.Relative poverty is the condition of having fewer

resources or less income than others within a society or country, or compared to worldwide averages.

In Pakistan, poverty is a growing concern, as it is a developing country.

Types of Poverty It is multidimensional phenomena.Absolute Poverty•It is the extreme kind of poverty involving the chronic lack of basic food, clean water, health and housing. •People in absolute poverty tend to struggle to live and experience a lot of child deaths from preventable diseases.Relative Poverty•This kind is usually in relation to other members and families in the society. •For example, a family can be considered poor if it cannot afford vacations, or cannot buy presents for children at Christmas, or cannot send its young to the university. Situational Poverty (Transitory)•In this type, there is usually no escape from it, as people are trapped in its causes and have no access to tools that will help them get out of it. •People or families can be poor because of some adversities like earthquakes, floods or a serious illness.

Measurement of Poverty (%age of Poor)

Two basic ingredients in measuring poverty:

(1)Poverty Line: definition of threshold income or consumption level

(2)Data on size distribution of income or consumption (collected by a sample survey representative of the population)

Poverty Line•The CONCEPT of a poverty line depicting a global minimum standard for a socially acceptable minimum standard of living for the whole world. This concept came into existence after 1945.

•This GLOBAL conceptualization of POVERTY as an object of measurement EVERYWHERE is a feature of WORLD ORDER in the later 20th century.

•It is $ 1.25 /day/person in Pakistan

Important Poverty Measures Methods• Head Count Ratio (HCR): proportion of total population that

falls below poverty threshold income or expenditure. Based on either national PL or dollar-a-day PL.

• Poverty Gap Index (PGI): unlike HCR, it gives us a sense of how poor the poor are. It is equivalent to income gap below PL per head of total population, and expressed as a percentage of the poverty line.

• Squared Poverty Gap index (SPG): Adds the dimension of inequality among the poor to the poverty gap index. For a given value of the PGI, population with greater dispersion of income among poor indicates a higher value for the SPG.

• Monotonicity Axiom• Transfer Axiom

Factors affecting Poverty

•(1)Growth in average income (2)Distribution•Poverty reduction take place when average income rises and inequality falls.Other factors include,•Per capita agricultural income•Employment and real wage rate•Inflation rate and relative food prices•Government expenditure

Per capita development expenditure Social sector expenditure

Causes of PovertyLack of education The literacy rate of Pakistan is very low. Most of people do not have any concept

about the modern earning sources. Most people are unable to adopt technology for their business needs, that’s why

business do not meet international standards and results as decrease in revenue which lead the society to poor financial conditions.

Materialism In our society social bonding are gradually becomes thinner and thinner. A race of

material object has been started even no one tried to understand the problems of others.

Every one is gradually changing from human to a bioman which only know about his needs and have no concept about the limitations of others. People are not ready to help each other. At last every one has lose his trust on others which effect our social and economic system and it is another cause of poverty.

Large Scale Import The import of Pakistan is greater than export. Big revenue is consumed in importing

good every year, even raw material has to import for industry. If we decrease import and establish own supply chains from our country natural

resources the people will have better opportunities to earn.

Division of Agricultural Land Pakistan is an agricultural country. Most of people are farmers by

profession. One has land which is fulfilling the needs of his family but he has to divide the land into his children when they got young.

After division the land is not sufficient to support a family. Now the families of his children are suffering and spending their lives below poverty line.

Moral Culture The main reason for poverty is the social dishonesty and irresponsible

behavior of people. Every one is trying to get rich by using unfair means. A shop keeper is ready to get whole money from the pocket of customer. People doing jobs are not performing their duties well.

Criterion of Poor The criterion of poor is that if a person is not earning US $367.00 per

is year considered poor but this was repeated later on the criterion is changed and now it’s US $ 1.25 per day per person.

Effects of Poverty Diseases are more widely spread because poor people cannot

afford hygienic foods and pure drinking water which is much expensive.

Many infants born into poverty have a low birth weight, which is associated with many preventable mental and physical disabilities.

Poor families experience much more stress than middle-class families. Besides financial uncertainty, these families are more likely to be exposed to series of negative events and “bad luck,” including illness, depression, eviction.

Homelessness, or extreme poverty, carries with it a particularly strong set of risks for families, especially children. Homeless children are less likely to receive proper nutrition and immunization. They experience more health problems.

Homeless women experience higher rates of low-birth-weight babies, miscarriages, and infant mortality, probably due to not having access to adequate prenatal care for their babies.

Homeless families experience even greater life stress than other families, including increased, family relationships, and friendships.

Solutions to Poverty Poverty will never end unless there are real solutions to end it; solutions

based on economic justice and political changes. The full equality between men and women in public as well as private

areas of life.The guarantee of shelter, healthcare, education, food and drinking water

as basic human rights that must be provided free to all. A total redistribution of idle lands to landless farmers and the imposition

of a 50% cap on arable land devoted to products for export per country, with the creation of a worldwide subsidy for organic agriculture.

An end to private monopoly ownership over natural resources, with a minimum of 51% local communal ownership in corporations, which control such resources as well as the termination of intellectual property rights on pharmaceutical drugs.

The cancellation of third world debt with no reciprocal obligations attached and the payment of compensation to Third World countries for historical as well as ecological debt.

An obligation of total transparency for any corporation with more than 100 employees and a 1% tax on all benefits distributed to shareholders of corporations to create unemployment funds.

The termination of tax havens around the world as well as free flow of capital in developing countries.

An equal voting for developing countries in international organizations such as IMF, World Bank, WTO, and the termination of veto right for the permanent members of the UN Security Counsel.

A commitment by industrialized countries to decrease carbon emission by 50% over a ten-year period as well as reducing by 25% each developed country%u2019s consumption of natural resources.

Poverty Head Counts & Millennium Development Goal Targets

Using consistent consumption based poverty estimation methodology, shows that poverty declined from 34.4 percent in 2000-01 to 22.3 percent in 2005-06, and subsequently, overall poverty situation in 2010-11 appears to have improved.

Poverty headcount, based on consistent consumption based estimates, comes to around 12.4 percent in 2010-11, with 7.1 percent in urban areas and 15.1 percent in rural areas.

Poverty Indices in Pakistan

(% of population living below national poverty line)

THANKS