Poverty Inequality And Economic Growth

1466 Words Nov 22nd, 2015 6 Pages
The purpose of this essay is to investigate the extent in which poverty, inequality and economic growth are related. These three dimensions are regularly perceived as indices of the complex and multidimensional concept of ‘economic development’. This term is not black and white however: it is a concept that is more than just merely income analysis. Poverty can be broken down into two separate definitions: absolute and relative. Absolute poverty describes the position of an individual who is living on less than $2 per day and is incapable of obtaining the ‘minimum levels of income, food, clothing healthcare, shelter and other essentials’ (Todaro & Smith, 2015). Relative poverty on the other hand compares individuals’ means of living in different societies. Subsequently, levels of relative poverty will differ from country to country, for example, the United Kingdom and China. Inequality represents the uneven distribution of income within a region or country. Finally, economic growth is typically measured by gross national income (GNI). GNI is both the total domestic and foreign output declared by the inhabitants of a country (Todaro & Smith, 2015).
If there is an increase in the output of a nation, this growth should cause GDP per capita to increase simultaneously. With this expansion in incomes, individuals theoretically should move out of the absolute poverty level of $1.25 per day. Although this would hypothetically occur, these parties may only emerge from the ‘poverty…
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