Image Source: http://deeconometrist.

nl/the-economic-cause-of-income-inequality-now-and-a-century-ago/
Waiting on the
World to
Change
OLS 2 – Development Issues &
Policies (Poverty & Inequality)
Economic Development | 2020
Differentiate
poverty from
inequality
Monetary Approach
Lack of command over resources & goods // income-based // poverty threshold &
subsistence index

Capabilities Approach
Lack of freedom to achieve valuable things // functionings & capabilities // human
development index & human poverty index as measures

Social Exclusion Approach

Lack of participation in social, economic & political life // poverty is social // anchored
on social capital & cultural needs

Participatory Approach
Poor people define what is poverty // multidimensional & rooted in experience // social
mapping & vulnerabilities
How do we address
poverty in
developing
countries?
 “sustainable progress is in the hands
of the poor countries themselves.”

“developed countries should not

abandon the poor to their plight.”

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international trade
HISTORY

ECONOMIC & POLITICAL INSTITUTIONS

ABILITY TO EXPLOIT EXTERNAL ADVANTAGES

INCENTIVES TO DO THE RIGHT POLICIES

BURDENS IMPOSED ON POOR COUNTRIES

development aid
Is economic
inequality a
significant
development
challenge?
My silver spoon has fed me good A
million one, a million cash
 2,095
Total number of billionaires for 2020 (Forbes); 2,153 billionaires in 2019

USD 8 trillion
Total networth of billionaires for 2020 (Forbes); 51% poorer vs 2019

614 456
billionaires billionaires
How do we address
extreme inequality
especially in developing
countries?
“The history of the
distribution of wealth
has always been deeply
political, and it cannot be
reduced to purely
economic mechanisms.”

Thomas Piketty