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The End of Poverty Jeffrey Sachs Director, UN Millennium Project.

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Presentation on theme: "The End of Poverty Jeffrey Sachs Director, UN Millennium Project."— Presentation transcript:

1 The End of Poverty Jeffrey Sachs Director, UN Millennium Project

2 Portrait of 4 Countries Malawi –The perfect storm Bangladesh –On the ladder of improvement India –Center of an export services revolution China –The rise of affluence http://www.terradaily.com/images/epidemics-aids-malawi-malnourished-afp-bg.jpg Malawi

3 Malawi A perfect storm Villages devastated by AIDS –Only children and grandmothers left Poor soils, poor yields –No one to work the fields Little food to eat Malaria, but no medicines –No nearby clinics In cities, are clinics –No AIDS medicine –Patients come to die. $1 a day could save them Grandmother with 15 orphaned children

4 Bangladesh On the ladder to development Per capita income doubled since independence (1971) –Infant mortality 1/3 Sweat shops in Dhaka –Women walk 2 hours to work –First step out of extreme poverty Microcredit more available Health care more available –And birth control Women now more empowered –Want education –Want fewer children Rice milling http://courses.dce.harvard.edu/~phils4/3406.JPEG

5 India Center of an Export Services Revolution Several steps up the ladder of development Information Technology companies –College grads earn $250- 500/month –Service U.S. companies –Buy U.S. computers Northern India still largely rural and poor IT workers in Bangalore, India http://newsimg.bbc.co.uk/media/images/41089000/jpg/_41089458_indiaintel203.jpg

6 China The rise of affluence Beijing: one of the world’s economic capitals. –Average Annual income > $4,000 per capita Urban professionals –Affluence, travel, trendy Foreign investment –And technology Competitive enterprises –Exported $400 billion in 2004 http://i1.trekearth.com/photos/32961/beijing1.jpg Beijing

7 Ascending the ladder of economic development Rural Population –Malawi: 84% –Bangladesh 76% –India 72% –China 61% –USA 20% Employment in Services –Malawi 25% –USA 75% Rural India http://filer.case.edu/org/uisa/images/index/comingtomeeting.jpg

8 Ascending the ladder of economic development 5 billion people are on the ladder of economic progress –Poor, low, middle, & high income –Rising incomes, education, sanitation, health, possessions 1 billion people are not on the ladder of economic progress –Extreme poor –Unable to escape from extreme material deprivation –Trapped by disease, physical isolation, climate stress, environmental degradation, extreme poverty Mexico: on the ladder http://www.loscabosguide.com/tequila/cabowabo.htm

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10 Our generation’s challenge The end of poverty –Help the poorest escape extreme poverty To get a foothold on the ladder of development –Ensure that the moderately poor have a chance to climb the ladder Give development assistance Eliminate trade barriers World Bank water project, S. Africa http://web.worldbank.org/WBSITE/EXTERNAL/OPPORTUNITIES/GRANTS/DEVMAR KETPLACE/0,,contentMDK:20200526~pagePK:180686~piPK:180184~theSitePK:205098, 00.html

11 Effect of the Industrial Revolution

12 Effect of Industrialization Urbanization –Due to improved agriculture Food prices fall Employment in cities Social Mobility –Hierarchies unravel Market based economy –Gender roles change Employment rather than child- rearing for women Division of Labor –Specialization increases –Efficiency goes up Urban worker, Brazil

13 How does prosperity spread? Transmission of technologies Science-based methods to organize production Historical examples: –Steam engine –Factory machinery –Railroads –Global steamers Suez, Panama canals –Electrification –Internal Combustion engine –Nitrogen-based fertilizer http://indiana-transit-museum.visit-indianapolis.com/

14 Why some countries fail to thrive Poverty trap –Poor rural villages lack Trucks Paved roads Power generators Irrigation channels –Human capital is low Hunger Disease Illiteracy –Natural capital is depleted Trees cut down Soil exhausted –Need more capital, but unable to save for future Rural village, Sierra Leone http://imageevent.com/dyet/october;jsessionid=vzm4aori21.lion_s

15 Why some countries fail to thrive Physical geography –Landlocked high mountains No coast, navigable rivers, or harbors –Ex: Bolivia, Ethiopia, Tibet –Arid –Tropical diseases Malaria –Problems can be overcome But it costs more Sahara desert http://www.curious-software.com/images/desert.jpg

16 Why Some countries fail to thrive Fiscal Trap –Government cannot pay for infrastructure Population poor –taxation not feasible Government corrupt, or incapacitated – cannot collect tax Debt load too high –Revenue goes to interest –Debt cancellation may be only solution http://www.worldvision.com.au/seekjustice/readmore.asp?sectionid=7&articleid=117

17 Why Some countries fail to thrive Governance Failures –Governments should: Promote infrastructure Create an environment conducive to investment –Crime free –Bribery free –Protect property Defend borders –Poor governance results in State Failure –War, revolution, anarchy –Economic failure Singapore http://www.asiatravel.com/singapore/panpac/index.html

18 Why Some countries fail to thrive Cultural Barriers –Religions that block the role of women Deny economic or political rights Deny education Result: –Undermines half the population’s contribution to development –Slows demographic transition –Blocking religious or ethnic minorities Prevented from jobs, schooling Extreme: ethnic cleansing http://politicalhumor.about.com/library/images/bltalibanwomen.htm

19 Why some countries fail to thrive Geopolitics –Trade barriers erected by foreign countries Impede economic development May target a despicable regime –Often ends up impoverishing population –Without toppling the regime North Korea http://www.rotten.com/library/history/countries/north-korea/ South Korea

20 Why some countries fail to thrive Lack of innovation –Small market for new inventions No profits = no inventions –Endogenous growth cycle: Big markets encourage invention Inventions promote big markets –Low income countries: 37% population 11% GDP 1% patents –Need foreign investment to bring technology Key to East Asian economies Sweat shops are first step Starts at port cities Sweat Shop in Dhaka, Bangladesh http://www.siu.edu/~perspect/05_fall/images/sweatshop.jpg

21 Why some countries fail to thrive The demographic trap –High fertility rates in the poorest countries –Poor families choosing to have many children Disastrous –Cannot invest in each child –High fertility next generation –Demographic transition can occur fast Ex. Iran –1980 fertility = 6.7 –2000 fertility = 2.6 Education for girls is key Iran http://www.middle-east-online.com/pictures/big/_10613_iran-women-13-7-2004.jpg

22 Five Development Interventions 1. Boost Agriculture –Fertilizers –Cover crops –Irrigation –Improved seeds –Storage facilities HomeHome > FAQ > Natural Resources > Food > Annual Fertilizer Use Per Hectare of Cropland > maps > Map of Fertilizer User Per Hectare of Cropland By Country - AfricaFAQNatural ResourcesFoodAnnual Fertilizer Use Per Hectare of Croplandmaps Overpopulation.Com 119 to 4,800 63 to 118 26 to 62 5.00 to 25 0 to 4.99 Kg fertilizer/Ha of cropland http://www.overpopulation.com/faq/Natural_Resources/Food/fertilizer_per_hectare/maps/africa.html

23 Five Development Interventions 2. Improve basic health –Village clinics: One doctor for 5,000 –Free anti-malarial bed nets –Effective medicines Malaria Aids –Birth attendants –Reproductive health services Sierra Leone Hospital http://www.kambiahospital.org.uk/

24 Five Development Interventions 3. Invest in Education –Meals for all children at primary school Improve quality of education Improve attendance –Vocational training Modern farming Computers Electrical wiring Diesel mechanics Carpentry –Adult Education Hygiene, HIV/AIDS School meal, Ghana http://newsimg.bbc.co.uk/media/images/41111000/jpg/_41111190_10_schoolhildyghana.jpg

25 Five Development Interventions 4. Power, Transport and Communications –Electricity in villages Lights, computers, pumps, refrigeration, food processing –Trucks, roads Bring fertilizers, fuels Transport harvest to market Transport people to hospital –Mobile phone Connect with outside world Kenya village

26 Five Development Interventions 5. Safe drinking water and sanitation –Health benefits –Save hours of toil for women and children Carrying water, Zimbabwe http://www.bobjanet.demon.co.uk/urchin/4life/zim.htm

27 Five Development Interventions Total cost to village: –$70 per person/year Benefits –Double or triple food yields –Reduction of chronic hunger –Improved school attendance –Reduction of water-borne disease –Rise in cash incomes Sales of grain and cash crops Food processing, carpentry, small manufacturing, horticulture, aquaculture, animal husbandry –Reduction in AIDS deaths Bumper crops, Malawi http://news.scotsman.com/topics.cfm?tid=503&id=1434172002

28 The giving gap The U.S. is far behind –on its pledge of 0.7% GNP Usual excuses –Corruption and misrule Thus money down the drain Bush (2004) –“…the greatest power on the face of the earth, we have an obligation to help the spread of freedom. We have an obligation to feed the hungry.” U.S. aid to sub-Saharan Africa: –$3 per African (2002) 6 cents per African received after expenses and emergency aid http://www.hebdo.bf/actualite2/hebdo304/george-bush.gif


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