Poverty Indicators in Developing Countries
The World Bank produced its first global poverty estimates for developing countries. These estimates are found in the world development report of 1990, which used house hold survey data for 22 countries (Ravallion, et al., 2001).
By incorporating data collected during the last fifteen years, that database has expanded considerably and now it includes 440 surveys representing almost 100 developing countries (Jimenez, 2007).
The commonly used ‘a dollar a day’ standard indicator for determining poverty rates at the household level was instituted in the 1990 report. Because this indicator failed to effectively capture the different economic situations of many poor countries, another yard stick for measuring poverty in poor countries was formulated.
This standard is known as ‘purchasing power prices’ (PPPs). It was chosen by the World Bank for use in determining the poverty rates of poor countries.
The most used Poverty indicators for developing countries includes according to world bank includes; percentage of poverty gap at national level, percentage of Poverty gap at rural level, ‘Poverty headcount ratio at 1.25 dollars a day (purchasing power prices) of the percentage population’, ‘Poverty headcount ratio at national poverty level of the percentage population, Poverty headcount ratio at rural poverty level of the percentage rural population and lastly poverty headcount ratio at urban poverty level of the percentage urban population.
Types of Industries that Characterize Impoverished Countries
Developed nations gain from their trade because they produce and export industrial commodities, whereas the poor countries specialize in primary goods production and lack enough commodities for export. Technological progress in the world seems to work to their disadvantage (Singer and Ansari, 2004).
The essential difference between the rich and poor countries is not that they produce different types of commodities but the main difference between the two is that, the rich nations produce a different mix of goods and services while the poor countries produce a single mix of goods and services (Singer and Ansari, 2004).
In many poor countries of the world, national income and productivity usually increase at a very insignificant rate. These two factors hinder poor countries from taking on new investments, increase their production rates and lower their imports (Soubbotina, 2004).
Most poor countries are affected by political instability which hinders investors from investing in those countries. This also makes the already established industries in those countries to relocate to much stable countries. All this negatively affects the economic growth of the poor countries.
Actions to Spur Economic Development in Poor Countries
Based on the review of the experience of the last decade and extensive research on the nature and causes of poverty, a multidimensional approach to poverty reduction is recommended to liberate the poor nations from poverty (World Bank, 2002).
Poor countries should develop an expanded framework with actions at the country level planning. They should do all they can to create vast economic opportunities for their people, empower their citizens and enhance their security development (World Bank, 2002).
Opportunity is crucial to the creation of opportunities which are actions that support healthy economic growth. Empowerment means strengthening the capacity of poor people to affect decisions that have a bearing on their lives and removing barriers that prevent them from engaging effectively in political, social and economic activities.
Security is the resilience and preparedness to shocks such as illnesses, disasters and economic downturns. In order for development in poor nations to be fast tracked, it is necessary for the Nations to collaborate with industrialized countries, international organizations, private companies, research communities and other global players across abroad spectrum.
Conclusion
It can be noted that, the World Bank whose mandate is to improve the world’s economic status has been able to offer assistance to several countries in the world. Poor countries are given first considerations in programming and implementing of the World Bank’s projects.
Most Non-Governmental Organizations and Donors have also been at the fore front of alleviating poverty and human suffering in poor nations. It is therefore upon the leaders of the poor nations to initiate an enabling environment for development to take place.
References
Jimenez, E. (2007). Development and the next generation. Washington, DC: World Bank Publication.
Ravallion, M., Galasso, E. and Salvia, A. (2001). Assisting the transition from workfare: A randomized experiment. Washington D.C: World Bank Policy Research Working Papers Series. Print.
Singer, H. and Ansari, J. (2004). Rich and Poor Countries: Consequences of International Disorder. USA: Routledge.
Soubbotina, T. (2004). Beyond economic growth: an introduction to sustainable development. Washington, D.C.: World Bank publication.
World Bank. (2002). Poverty reduction and the World Bank: progress in implementing WDR 2000/2001. Washington D.C: World Bank corporation.