Principle of Economics Essay Example

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The Poverties in China, India, and other Developing Countries

Introduction

Poverty has been defined as the measure of purchasing power parity where the expenditure of the citizens on basic commodities like food is used to measure the level of poverty. Countries do have their poverty threshold for determining the number of people who can be considered as poor based on the poverty limits established. The poverty in the developing countries is consumption based where the purchasing power of the citizens is assessed in the process of determining the poverty in the countries. However, an international standard for measuring poverty has been established by World Bank where the poverty line has been set to be $1.25. The people living below the $1.25 on a daily basis are considered to be poor hence living below poverty line (Wade, 2004).

Poverty in India and China

India and China are among the largest developing countries that have been experiencing economic growth over years. The governments have been working towards ensuring that poverty is eradicated by formulation economic strategies that can assist in ensuring economic growth aiming at increasing its ability to eliminate poverty. However, the efforts of these countries of eliminating poverty have been challenged by the increased birth rates where the growth rate of the population has been said to be higher than the rate of economic growth. The governments have been spending a lot in providing basic needs to the citizens hence limiting the capabilities of eradicating poverty (Popkin, et al. 2011). Besides, there has been a high rate of unemployment in the developing countries where the citizens of the developing countries have low incomes or even no income leading to increase in the number of the poor people. China and India have been experiencing improved economic performance leading to a reduction in the levels of poverty. These countries have been working towards reducing the levels of poverty through creation of job opportunities where they have expanded the manufacturing production to create employment opportunities for its citizens. China has been considered as the world workshop due to its manufacturing capabilities while India has been considered as the world’s office due to its IT capabilities (Patel & Kleinman, 2003). These two countries are examples of the efforts that the developing countries are putting in the process of eradicating the poverty they have been facing in the past. Besides, China and India can be used do demonstrate the challenges that the developing countries have been facing in the process of eradication poverty as they have been struggling with meeting the basic needs of the increasing population that is common in many developing countries. This has resulted in economic integration that has led to economic growth in these countries.

Figure 1: showing Poverties in China, India, and other Developing Countries

Principle of Economics

India and China have been facing same economic challenges due to the inequalities and economic growth sustainability. There has been a global financial crisis that does cause uncertainties of the economic development of these countries due to the possible economic turndowns affecting the GDP of these countries. India has been adopting economic strategies that can assist in eliminating poverty where it adopted planned economy that does actively engage the private sector. However, the planned economy that has been adopted in India has expanded the private sector activities but reduced the regulations by the government. The Indian government has been unable to ensure land reforms that have led to increased inequalities in the redistribution of the country resources (Ghosh, 2010). China, on the other hand, has adopted an economic structure that can ensure that do ensure land reforms are implemented to guarantee a healthy political and economic landscape. The Chinese economy has been under transformations where the government has been coming up with the most viable economic strategies that can improve its economic growth (Dollar & Kraay, 2011). The government has been committed to ensuring correction of the macroeconomic factors in the process of eliminating poverty among its citizens.

India and China has shown some progress in the process of reducing poverty levels through ensuring that there are excellent economic strategies aimed at improving the abilities to eliminate poverty. For instance, the countries have experienced an increase in economic growth where Indian economic growth rate of 6% while China 10% (Bhagwati & Srinivasan, 2002). The growth in the economy is an indication that the two countries are moving towards eliminating poverty.

The increased economy growth of China can be associated with increased investment rate that has increased to 45% (Ghosh, 2010). Currently, China is said to have the second largest foreign direct investments globally due to its ability to create a good business environment that has attracted many foreigners. In India, investment rate is approximately 35% making these countries able to increase their GDP as investment result in an increase in output of the countries (Ravallion, Datt & Walle, 2011). Besides, the countries have invested a lot in the infrastructure to attract more private investors who do create job opportunities necessary for reducing poverty levels.

Causes of poverty in China, India, and other developing countries

Poverty in the developing countries can be associated with the poor governance and lack of resources necessary to increase the GDP of the countries. Most of the developing countries such as India and China have been not committed to implementing the formulated strategies geared towards eliminating poverty. Besides, developing countries do experience an increase in population growth causing high pressure on the available resources. The population of most of the developing countries has been growing at a higher rate than the rate their economies have been growing. As a result, most of the developing countries are experiencing poverty due to the limited resources as compared with the population of the countries. For instance, in India around 22% of the population that translates to approximately 277 million people do live below its poverty limit which is $1.25(Ghosh, 2010). The poverty in India has been historical dating back during the colonial periods where diseases and famine were said to kill many Indians. After India had gained independence, famine deaths were reduced by the level of poverty were said to increase. However, India has been experiencing economic growth assisting in reducing poverty to a certain level making almost more than half of the Indians live above the poverty limit but are said to live a very fragile economic life. The fragile economic life for the people living above poverty limit can be associated with the lack of the most essentials in life that can include sanitation, clean water, good infrastructure, and housing. The government has been working toward ensuring that the living conditions of the citizens are improved where much of the GDP has been challenged towards providing the basic amenities for the citizens (Baulch & Hoddinott, 2010). Besides, poor governance policies and corruption among the government officials has been a major cause of poverty in the developing countries as the government officials have not been committed to ensuring successful implementation of its policies.

Conclusion

There have been many policies adapted to eliminate poverty in India, China and other developing states where the governments of these poverty dominated countries have been struggling to ensure that poverty is eradicated. Various approaches have been employed in the process of ensuring that poverty in these countries in the process of assessing the progress of the objectives geared towards poverty eradication. For instance, in India food security has been used as the measure of poverty levels among its citizens where per capita expenditure has been employed in the process of defining the food security aiming at measuring the ability of its citizens to pay for the basic need such as food.

References

Baulch, B., & Hoddinott, J. (2010). Economic mobility and poverty dynamics in developing countries. The Journal of Development Studies36(6), 1-24.

Bhagwati, J., & Srinivasan, T. N. (2002). Trade and poverty in the poor countries. The American Economic Review92(2), 180-183.

Dollar, D., & Kraay, A. (2011). Trade, growth, and poverty. World Bank, Development Research Group, Macroeconomics and Growth.

Ravallion, M., Datt, G., & Walle, D. (2011). Quantifying absolute poverty in the developing world. Review of Income and Wealth37(4), 345-361.

Patel, V., & Kleinman, A. (2003). Poverty and common mental disorders in developing countries. Bulletin of the World Health Organization81(8), 609-615.

Popkin, B. M., Horton, S., Kim, S., Mahal, A., & Shuigao, J. (2011). Trends in diet, nutritional status, and diet-related noncommunicable diseases in China and India: the economic costs of the nutrition transition. Nutrition reviews59(12), 379-390.

Wade, R. H. (2004). Is globalization reducing poverty and inequality?. World development32(4), 567-589.

http://www.un.org/esa/desa/papers/2010/wp92_2010.pdf