1. What are the main causes and consequences of poverty?
Provide examples
Factors that are Responsible for Poverty
1.Economic Relations: Unemployment and underemployment are critical
economic factors. When people are unable to get a well-paying job, they are
unable to earn enough money for family needs.
2.Social Inequity : People who belong to a particular ethnic group or a
certain gender face discrimination to ensure that they do not have a fair
access to basic necessities
3.Political Risk: Politics and many wars may lead to the crime and poor
economics making people incapable of working, and might also lead to hate
among people.
4.Ecology: Ecological factors such as climatic changes, famine or storms can
put people out of business especially those who depend on farming.
Consequences of Poverty:
1.Health- Care Issues: Most of the families living in poverty show high
mortality rate because they are unable to receive sufficient medical assistance.
It becomes a trend to not have enough food to eat in most families especially
children.
2.Children Education: Learning for children is deprived because of poverty
making them bring up in teenage with no qualification for higher paying jobs.
3.Society Agitation: People who fall under poverty are subject to bullying
resulting in not being able to live with peace in the community.
3.Low Economic Growth: When people fail to meet their basic requirements,
the poverty rate escalates which in turn tends to discourage economic
development by reducing consumer spending and increasing reliance on
social welfare programs.
For example, in Pakistan, lack of clean water and nutritious food are
significant issues, affecting millions and contributing to the cycle of poverty
Addressing these root causes is essential for creating sustainable solutions
and improving the quality of life for those affected.
Q2.Analyse the impact of foreign aid on economic development
and growth.
Foreign aid would affect the economic development and growth of a country
significantly, but this effect is dependent on several factors
positive impacts:
1. Infrastructure Development: Foreign aid is funneled into critical
infrastructure such as roads, schools, and hospitals to boost an economy
through increased productivity and quality of life.
2. Human Capital Development: Foreign aid directed toward education and
health improves human capital that would lead to a more skilled and healthier
workforce.
3. Economic Stability: During crises, foreign aid often proves to be the
crucial assistance needed to stabilize economies, allowing them to avoid
more profound recessions and facilitating recovery.
Negative impacts:
1. Dependency: A prolonged dependence on foreign aid results in
dependency and reduces the willingness of governments to carry out the
necessary economic reforms.
2. Corruption: Sometimes, aid misappropriated by corrupt officials manages
to be diverted before reaching the needy and hence doesn't serve the
purpose of development.
3. Distorted Market: Aid distorts local markets, particularly large-scale food
or other commodity donations which compete with local producers.
For example Pakistan, where foreign aid helped in the establishment of
development projects, its provision has also been mooted as a subject of
criticism on dependency and corruption, thus making foreign aid largely
contingent on governance and economic policies of the country receiving it as
well as on its priority and local need alignment.
Q3.. Discuss the concept of economic development and its
measurement.
It contains the overall changes in the welfare of the people in the economic,
political, and social aspects. Economic development doesn't mean growth in
the economy's production or increases in income in absolute numbers, but
rather it refers to significant improvements that tend to develop the quality of
life in broad terms.
Major Components of Economic Development:
1. Growth of Income: While economic growth is one dimension,
development will also include how that increase translates into income for the
people.
2. Structural Changes: Such alterations are those most typically related to
the move from agriculture toward industries and services, increasingly
diversified and resilient economies.
3. Human Development: This means the improvement in education and
health and standards of living.
Measurement of Economic Development:
1. Gross Domestic Product (GDP) and Gross National Income (GNI):
These are old measures of total economic production and income for a
country. However, they do not divide accounts into income distribution or non-
economic factors.
2. Human Development Index (HDI): This is an index developed by the
United Nations that would measure development for the newest nations and
would use life expectancy, education and per capital income to arrive at a
picture.
3. Gini Coefficient: Measures income inequality in a country, revealing
differences that GDP doesn't answer to
4. Multidimensional Poverty Index (MPI): This is beyond income measure
which considers health, education, and standards of living
For instance, even though GDP growth has been phenomenal for Pakistan,
the education and health sectors indicate that there is a need for a more
integrative approach towards developmenth Proper measurement and
targeted policies are the specific barometers of sustainable economic
development.
Q4. Examine the effects of globalization on economic development
and inequality?
Globalization has always affected economic development and inequality in
positive and negative ways.
Benefits of Economic Development:
1. Increased Trade and Investment: Globalization has made possible the
movement of foreign goods, services, and capital across borders, which, for
many states, improves their economic positions. In fact, foreign direct
investment (FDI) introduces capital, resources, and expertise which ultimately
facilitate-industrialization and generation of jobs.
2. Technological Advances: The networks through which technologies and
innovations have been diffused have contributed towards better productivity
and efficiency.
3. Market Access: Developing countries have access to broader markets for
exporting goods and services, which may lead to economic diversification and
subsequent growth.
negative aspect of inequality is
1. Increasing Disparities of Income: The number of them who have been
lifted out of poverty by globalization is not matched by the number of widening
income gaps within countries and between countries Wealth is created by
globalization, but it has benefited from the similar accumulated wealth by the
already wealthy and increased inequality.
2. Job Displacement: Competition internationally can often cause job losses
in such industries, especially those unable to compete with cheaper imports.
3. Exploitation of Labor: Globalization has also sometimes engendered a
poor and exploitative work environment in developing nations where
production costs can be cut.
For example, globalization in Pakistan is a cause of economic growth due to
trade and investment; however, it also substantiates serious income inequality
and raises labor issues.Balancing out benefits and challenges from
globalization is vital for durable development and equitable growth.
Q5.. Compare and contrast different development theories (e.g.,
modernization, dependency).
The disparity evident between countries can be explained through two
important theories of how societies evolve, these being the Dependency
Theory and the Modernization Theory.
Modernization theory:
According to this theory, all the developing planets are bound to develop in
the course of time by Westernizing themselves culturally, politically and
technologically.
Reasons for Underdevelopment: It considers underdevelopment to have
been caused by internally directed factors such as traditional culture,
absence of modern institutions, and poor levels of technological
development.
• Capitalism: It places importance on the application of capitalism as a
factor of economic growth and development as the developmental process
has moved forward.
• Development Approach: It stresses the role economic growth,
industrialization and modernity in the Development process as the key
driving factors.
Dependency Theory:
• Focus: It is contrary to the Modernization theory as the Dependency
Theory regards Third world countries as in dependent condition which is
sustained by western beneficial domination.
• Causes of Underdevelopment: It sees the link between
underdevelopment and the developed and underdeveloped countries as
exploitative which has both internal and external causation, with external
causation being the focus.
• Capitalism Role: Capitalism in the Dependency theory is presented as a
system seeking dependency orientation that creates and expands
dependency and exploitation.
• Perspective of Development: That structural changes and other
processes consistent with development advanced.
