assignment 1

HIGHER GROWTH IS THE BEST FOR REMOVING MASS POVERTY AND UNEMPLOYMENT

Mass Poverty –it is the inability to fulfill the minimum requirements of life. It includes food, clothing, housing, education and health facilities of these minimum needs are not fulfilled, and man undergoes pains and suffering. There is a loss of health and efficiency .They start accepting as way of life. “Poverty breeds itself or multiple itself”.

There are two variants of poverty:

      Relative poverty: It refers to poverty in relation to different, classes, regions or countries.

      Absolute poverty: The concept of poverty line is used as a measure of absolute poverty. Poverty line refers to that line which expresses per capita average monthly expenditure incurred by people to satisfy their minimum needs.

Causes of poverty

      Low level of national product

      Inflationary pressured

      Heavy pressure of population

      Low rate of growth

      Lack of infrastructure

Unemployment

An individual is considered to be unemployed when he is ready and willing to work at prevailing rate of wages but does not get work.

Unemployment, as defined by the International labour organization, occurs when people are without jobs and they have actively looked for work within the past four weeks.

Economic Growth

Economic growth is the increase of per capita GROSS DOMESTIC PRODUCT (GDP) or other measure of aggregate income, typically reported as the annual rate of change in real GDP.

GDP is the market value of final goods produced within the domestic territory of a country during one year inclusive of depreciation.

Economic growth is the "only way to remove mass poverty and unemployment"

HIGHER GROWTH REMOVES MASS POVERTY

From the historical record it is clear that the single, most effective way to reduce world poverty is economic growth. Western countries began discovering this around 1820 when they broke with the historical norm of low growth and initiated an era of dramatic advances in material well-being. Living standards tripled in Europe and quadrupled in the United States in that century, improving at an even faster pace in the next 100 years. Economic growth thus eliminated mass poverty in what is today considered the developed world. Taking the long view, growth has also reduced poverty in other parts of the world. In 1820, about 75 percent of humanity lived on less than a dollar per day. Today  about  20 percent live under that amount.

The pattern of poverty reduction we see around the world should not be surprising. It generally follows the relationship found by a recent World Bank study that looked at growth in 65 developing countries during the 1980s and 1990s. The share of people in poverty, defined as those living on less than a dollar per day, almost always declined in countries that experienced growth and increased in countries that experienced economic contractions. The faster the growth, the study found, the faster the poverty reduction, and vice versa. For example, an economic expansion in per capita income of 8.2 percent translated into a 6.1 reduction in the poverty rate. A contraction of 1.9 percent in output led to an increase of 1.5 percent in the poverty rate.

That relationship explains why some countries and regions have done better than others. "Between 1987 and 1998, there was only one region of the world that saw a dramatic fall in both the number of people and the proportion of the population living on less than a dollar a day. That region was East Asia," observes economist Martin Wolf. "But this was also the only region to see consistent and rapid growth in real incomes per head."

High growth allowed East Asia to reduce the share of its poor during this period from 26 to 15 percent and the number of poor from 417 million to 278 million people. With annual growth rates of nearly 9 percent since 1979, when it began introducing market reforms, China alone has pulled more than 100 million people out of poverty. The more modest but increasing growth rate in India during the past decade means that the outlook of the poor in the two countries that make up half of the developing world's population is noticeably improving.

HIGHER  GROWTH  REMOVES  UNEMPLOYMENT
A growing economy creates jobs for people entering the labour market for the first time. And, it provides employment opportunities for people currently unemployed and looking for work.

The chart above shows the level of real national output (GDP) and total employment in the economy since 1980. In both of the last two recessions (1980-81 and 1990-92), the number of people in work has fallen sharply. But a period of sustained economic growth (as experienced by the UK from 1993-2001) has led to a significant increase in employment levels. Indeed by the summer of 2001, employment in the British economy was at record levels. This has helped reduce the official measures of unemployment to a level not seen for over twenty-five years.

 

 Before and after financial crisis

Before financial crisis Global economies growth is 5.2% at 2007 and drops significantly to 0.6% at 2009. Forecast for 2011 of Global economies growth is only 4.3% and it means Global economies growth is still below the number before the financial crisis.

Growth in percent	2007	2008	2009	2010	2011
Global economies	5.2	3.0	0.6	4.2	4.3
Advanced economies		0.5	-3.2	2.3
Emerging and Developing economies		6.1	2.4	6.3

REFERENCES:

wikipedia.org

tutor2u.net

http://www.cato.org/research/articles/vas-0109.html

Submitted to: Mr. Gurdeepak singh

Submitted by: Pooja

MBA- 1

Section-B