Problem Set For Economic Development

      Problem Set For Economic Development Name Institution Date     1.  Introduction a) Skim the introductory section (“Summary and Key Messages”) of the 2004 World Bank poverty assessment report (available on iLearn).    What are 3 important policy recommendations it makes regarding poverty and inequality?  Write 2-3 sentences describing each recommendation you list.     Improving public services-social services and social protection  Improving the education services at the secondary and tertiary level will improve the human capital.  Besides human capacity investment, focus on improving health will reduce inequality while there is better access to health care (World Bank, 2004). Managing vulnerability  This seeks to support efficient risk management of the households and redistributive transfers targeting the poor.  As the poor mostly have low insurance coverage, managing vulnerability can reduce inequality (World Bank, 2004). Promoting income growth amongst the poor Supporting income growth increases the disposable income, and the poor spend less share of their income on consumption. The job-creating strategies are among the best approaches to improve the welfare of the poor when they earn higher incomes (World Bank, 2004).  2. Poverty   a) Calculate the mean per capita consumption in each of the two years and compute the annual growth rate (fill in table). How did consumption change over the period?  Write 2-3 sentences describing and interpreting your results.     The mean per capita consumption changed form 991.21 in 1998 to 1642.77 in 2010, which was an annual growth rate of 5.06%. Over the period the change was 651.56, highlighting that the average consumption had changed during this period at approximately 5.06% (65.734%/ 13 years) per year.

1998	2010	Annual growth rate
991.21	1642.77	5.06%

  b) Calculate the P₀ and P₁ indicators for each year (fill in table).  Calculate the annual rate of change in P₀(fill in table). How did poverty rates and the depth of poverty change over the period?  Write 3-4 sentences describing and interpreting your results. The incidence of poverty is measured by the headcount index or ratio (P₀), which is the percentage of the population that is poor (Hicks, 2011). “The poverty gap index (P 1 ) measures the extent to which individuals fall below the poverty line (the poverty gaps) as a proportion of the poverty line” (World Bank, 2005). P₀ changed from 71% to 42 % represented a 40.45% drop while, P 1 changed from 36% to20%, a 44.94% decrease. There was greater reduction in the poverty gap index compared to the incidence of poverty form 1998 to 2010.  

	1998	2010	Change
P0	71%	42%	40.45%
P1	36%	20%	44.94%

  c) Graph the poverty profiles for the two years on a single figure.  Use different colors for the two years, and define these in a legend. Include the poverty line (z) on the graph as well.  (Paste graph into your group results)    

Series 1	1998
Series 2	2010
Series 3	1,300

    By examining the poverty profiles visually, you can infer what happened to the P₂ “severity of poverty” index.  Explain in 3-4 sentences what happened to the P₂index and how that can be inferred from the graph.   There was growth in con...