Presentation on theme: "Economic Conditions Analysis Chapter 2 part II"— Presentation transcript:
1 Economic Conditions Analysis Chapter 2 part II Jamshed uz Zaman
2 Human Poverty Index Human Development Index Source UNDP, Human Development Report-- Human Development Index (HDI)-- Human Poverty Index (HPI)
3 Human Development Index HDI is based onLife expectancy at birth (25-85 years)Educational Attainment (Adult literacy, 2/3 weight) (0-100%) and (combined enrolment ratios, 1/3 weight)Standard of Living (Real PCY at PPP) $100 -$40,000) (complex)Actual Value – Minimum ValueIndex =Maximum Value – Minimum Value
5 Human Poverty Index (HPI) The percentage of the population not expected to survive to the age of 40 (P1),The adult illiteracy rate (P2),A deprivation index based on average of two variables: the percentage of the population without access to safe water and the percentage of underweight children under five years old (P3).
7 Can the poor countries ever catch up Y Dt = current level of per capita income in developed countries say $25,000YDCt = current level of per capita income in poor countries say $1200rD = per capita income growth of developed countries,rDc = per capita income growth of poor countries,Y D* = assumed PCY in 2020, say $45,000 of developed countriesrDC* = required per capita growth rate of the poor countries.How long it would take to catch up?YDt = YDCt (1 + rDC)nOr,Or n = log(2500/1200)/log(1.02)
8 Can the poor countries ever catch up? (contd.) n = log(2500/1200)/log(1.02)= 153 yearsAt a growth rate of 2% poor countries would require 153 years to reach current living standard of the developed countries.
9 Elimination of per capita income gap How many years would it take [log(2500/4000)] / [log(1.06)- log (1.03)]= 64 yearsYDt ( 1+rD)n = YDCt ( 1+rDC)nn =[log(YDt/ YDCt )]/[log(1+rDC)- log(1+rDC)]