Question

1. True / False / Uncertain - Explain your answer in a sentence when necessary 1. A majority of the world's population living on less than $2/day is in Africa 2. The highest incidence rate of $2/day poverty is in Africa. 3. $2/day poverty is in decline in all parts of the developing world. 4. If it were possible to end poverty by giving people cash, it would be cheaper to end poverty in Peru with a head count rate of 17 percent and poverty gap of 6 percent than in Vietnam with a head count rate of 18 percent and poverty gap of 3 percent (assume poverty lines and total populations are the same in Peru and Vietnam). 5. Rates of return on physical investment are higher in developing countries than in high income countries 6. Capital may not be flowing to poor countries, because they lack access to the same technologies available in rich countries. 7. Poor countries are poor because the burden of infectious diseases is higher in these countries.

Answer 1

1) True.
Africa is a rich in natural resources but political instability and fighting as well as armed conflicts in the region means there is no incentive for the investment. Further, Sub-Saharan Africa is one of the poorest region in the world.
There is no significant change in the income growth in last 25 or 30 years and around 40% is still live on less than $2/day.

2) True.
The poverty is defined by the income level. Actually, three levels are used for poverty line and $2/day is the lowest level.
Poverty is everywhere in the world but Africa is the poorest region in the world and it has been unable to lift itself up.
The people below $2/day were almost 50% in the 1990s and that has been hovering around 40% presently.

3) True.
The developing countries such as China and India have successful to lift its population from the poverty and China actually is the 2nd biggest economy in this world. Other developing countries also able to alleviate poverty in comparison with Africa.
For example, East Asia and Pacific countries had 61% of its population below $2/day in the 1990 but now it is less than 5%.

4) True
The poverty can not be abolished by giving money or cash. Any such action will only push the inflation and taxpayer's burden.
It needs investment in human capital and infrastructure which can stoke the skills development and employment generation.
Handing out cash will yield exactly opposite results.