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6 (a) With reference to the information provided, explain the distinction between absolute poverty and relative poverty - Edexcel - A-Level Economics A - Question 6 - 2018 - Paper 2
Question 6
6 (a) With reference to the information provided, explain the distinction between absolute poverty and relative poverty. Absolute poverty refers to a condition wher... show full transcript
Worked Solution & Example Answer:6 (a) With reference to the information provided, explain the distinction between absolute poverty and relative poverty - Edexcel - A-Level Economics A - Question 6 - 2018 - Paper 2
Step 1
With reference to the information provided, explain the distinction between absolute poverty and relative poverty.
Answer
Absolute poverty refers to a condition where individuals are unable to meet basic needs for survival, such as food, shelter, and clothing, often defined by a specific income threshold, such as living on less than $1.90 a day as recognized by international standards. On the other hand, relative poverty considers an individual's economic status in comparison to others in society. It emphasizes inequalities in living standards within a particular context or location, illustrating that someone may be considered poor if they lack the means to participate in normal activities, even if their basic needs are met.
Step 2
With reference to the information provided and your own knowledge, examine two factors that might explain the differing rates of decline in absolute poverty in East Asia and Sub-Saharan Africa.
Answer
The decline in absolute poverty rates has differed significantly between East Asia and Sub-Saharan Africa largely due to two primary factors: economic growth and government policies. East Asia has experienced sustained economic growth driven by globalization, robust manufacturing sectors, and investment in infrastructure, allowing more individuals to gain employment and exit poverty. In contrast, Sub-Saharan Africa has grappled with slower economic growth, political instability, and conflicts, which hinder development efforts and limit job creation.
Step 3
With reference to Extract A, discuss how macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation.
Answer
Governments could implement fiscal policies designed to increase disposable incomes and boost consumption, such as tax reductions or direct cash transfers to low-income households. Moreover, investing in education and training programs can enhance workforce skills, thus improving employability and productivity. There could also be initiatives aimed at strengthening local businesses to ensure they can compete effectively in a global market, hence promoting sustainable economic growth.
Step 4
Assess the view that some level of inequality is desirable to maintain an appropriate incentive to work in society.
Answer
While some level of inequality may provide incentives for individuals to work harder and innovate, excessive inequality can undermine social cohesion and economic stability. A balanced approach is necessary to ensure that incentives do not lead to outcomes where the gap between the rich and the poor becomes unmanageable, potentially resulting in societal tension.
Step 5
Discuss the role of the financial sector in the growth and development of developing countries.
Answer
The financial sector plays a crucial role in facilitating economic growth and development by providing the necessary capital for businesses to invest, expand, and innovate. By improving access to credit and financial services, it enables entrepreneurs to start new ventures. Additionally, a well-functioning financial system helps to mobilize savings, allocate resources efficiently, and drive investment in key sectors such as infrastructure and education, ultimately fostering sustainable economic development.