INSTITUTE OF ACCOUNTANCY ARUSHA (IAA)
PROGRAM: BACHELOR IN ECONOMICS AND FINANCE
MODULE CODE: EFU 07421
DUE DATE: 18th JUNE, 2013
MODULE FACILITATOR: WILLSON G. MTETI
| ANGELLO, VALERIUS R.
| MSECHU, JERRY F.
| KIPESHA, MANSWETUS
| Question 3:
Discuss The Foster Greer- Thorbecke Index as a method of measuring poverty. Table of Contents
CATEGORIES OF POVERTY
The absolute poverty standard
Measuring Absolute Poverty
Relative poverty standard:
CRITERIA FOR DESIRABLE POVERTY MEASURE
The anonymity principle
The population independence principle
The monotonicity principle
The distributional sensitivity principle
THE FOSTER, GREER and Thorbecke (FGT) Index
Poverty Indices (Planning):
Incidence of poverty
Intensity of poverty
Inequality of poverty
Advantages for class of poverty measures
Measures of poverty reduction
Increasing personal income
Cultural factors to productivity;
Removing constraints on government services;
According to The Scottish Poverty Information Unit (Information), “Poverty is defined relative to the standards of living in a society at a specific time. People live in poverty when they are denied an income sufficient for their material needs and when then these circumstances exclude them from taking part in activities which are an accepted part of daily life in that society.” According to The Government of Tanzania (Tanzania), generally poverty is a result of many and often mutually reinforcing factors including lack of productive resources to generate material wealth, illiteracy prevalence of diseases, natural calamities such floods, drought and man-made calamities such as wars. At the international level, an unequal economic and political partnership, as a reflected in unfavorable terms of trade and other transactions for developing countries is also a major cause of poverty in developing countries. Some causes of poverty are not direct for example, traditions and norms which hinder effective resource utilization and participation in income generating activities. The assessment of poverty levels is complicated by lack of consistent information and absence of officially recognized poverty lines. The poverty line of One US$ per day in real terms has been used to facilitate comparison with other countries. Poverty is the state of one who lacks a certain amount of material possessions or money. CATEGORIES OF POVERTY
According to Poole and Henderson (J. Vernon Henderson, William Poole., 1991), poverty can be defined in categorized in terms of absolute term or relative term. Below the absolute and relative poverty are illustrated. The absolute poverty standard
The absolute poverty standard refers to the cost of a specific bundle of goods (food, clothing, and housing/shelter) defined just sufficient to maintain a minimum, adequate standard of living. Hence, it is the income just adequate to buy that adequate bundle of goods. People with income below the absolute poverty standard are termed as poor. The term just sufficient or adequate means that depends in part on how well-off a society is. We defined the extent of absolute poverty as the number of people who are unable to command sufficient...
References: Information, P. (n.d.). http://www.powerfulinformation.org. Retrieved June Sunday, 2013, from Powerful Information: http://www.powerfulinformation.org/page.cfm?pageid=pi-poverty
J. Vernon Henderson, William Poole. (1991). Principles of Economics. Pennsylvania State University: D.C. Heath.
Kerby, R. (2013). Sage knowledge. Foster, Greer and Thorbecke Index.
Michael P. Todaro, Stephen C. Smith. (2012). ECONOMIC DEVELOPMENT (11th ed.). United States of America.: Addison-Wenly, Pearson Education, Inc.
Planning, M. o. (n.d.). measuring poverty. Retrieved June Tuesday, 2013, from www.nscb.gov.ph: www.nscb.gov.ph/poverty/.../1_Cambodia%20-%20Poverty%20measure.
Series, I. f. (2010, April). The Foster–Greer–Thorbecke (FGT) Poverty Measures: Twenty- Five Years Later. 3.
Tanzania, G. o. (n.d.). www.tanzania.go.tz/poverty.html. Retrieved June Sunday, 2013, from Tanzania National Website: www.tanzania.go.tz/poverty.html
wikipedia. (n.d.). Retrieved June Tuesday, 2013, from https://en.wikipedia.org: https://en.wikipedia.org/wiki/Poverty
worldbank. (n.d.). http://info.worldbank.org/etools/docs/library. Retrieved April Saturday, 2013, from worldbank: http://info.worldbank.org/etools/docs/library/93518/Hung_0603/Hu_0603/Module4MeasuringPovertyMeasures.pdf.
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