BUS 082 Lecture Notes - Lecture 23: Poverty Trap

• School: College of The Sequoias
• Department: Business (BUS)
• Course: BUS 082
• Professor: gradin

Document Summary

Vicious cycle, where low productivity leads to low income, and low income leads to low productivity. Presence of bad geography: country stays poor. Low nutritional status: person remains physically weak. Relates the income you have today with the effort you can exert today (and therefore the income you will have tomorrow. Above 45 line: income tomorrow = more. Below 45 line: income tomorrow = less. Poverty from a to b ; outside poverty trap from b onwards. Countries which have bad geography are in the presence of a poverty trap . This opens up the possibility of a big push (a small action which could have benefits) Need to think how to integrate ecology and economics. Need solutions targeted to specific country conditions. There are reasons to question whether geography is the main cause of differences in economic development across the world. If geography is bad for growth, then its effect should be constant over time.