...coefficient or Gini index is an economic measure of inequality in income distribution. Gini coefficient is specified as a ratio between 0 and 1. A society that tallies 0.0 on the Gini scale is said to possess perfect equality in income distribution. A society with a score of 1 suggests total inequality. Gini coefficient expects that no person in a society has negative wealth or net income. The coefficient is named after its inventor, the Italian statistician Corrado Gini (23rd May, 1884-13th March, 1965). The Gini coefficient is usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y axis) that is cumulatively earned by the bottom x% of the population (see diagram). The line at 45 degrees thus represents perfect equality of incomes. The Gini coefficient can then be thought of as the ratio of the area that lies between the line of equality and the Lorenz curve (marked 'A' in the diagram) over the total area under the line of equality (marked 'A' and 'B' in the diagram); i.e., G=A/(A+B). The Gini coefficient can range from 0 to 1; it is sometimes multiplied by 100 to range between 0 and 100. A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality. To be validly computed, no negative goods can be distributed. Thus, if the Gini coefficient is being used to describe...
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...Abstract: The last decade has presented a new global economic scenario lead by emerging markets. BRICS countries (comprised by Brazil, Russia, India, China and South Africa) have been at the forefront in this phenomenon. During these years, the real Gross Domestic Product (GDP) growth of the world (annual percent change - A% c) averages 3,83. It is worth mentioning that the above referenced countries reached 6,01 (157,02% more); and Advanced Economies - not yet recovered since the last financial crisis - reached 1,6 (47,78%). Meanwhile, different measuring models have found that in the world, just the top 20% of the population controls over 70% of the global revenue. These economies have been growing as well. The importance of this investigation is answering the questions: Are they reversing this lack of equality trend? And, Would be relevant to add equity in the development agenda?. This paper offers an analysis of these points and studies them as a strategy for sustainability and continuous growth. Key words: BRICS countries growth; National income distribution; Equity in the development agenda. 1. Introduction BRICS Countries are leading the growth of the economy in the world, and have done so for over 10 years. The International Monetary Fund (IMF) projected that from 2013 to 2017 it will maintain its growth at least 26% above World Growth GDP. Note: GDP, will be the measure utilized in this paper when referring to growing economies. This information comes from...
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...Discuss the problems for a developing country of measuring its GNP and interpreting these statistics. Most countries use Gross National Product (GNP) as an indication of the economic welfare of a country. However, there are numerous problems involved when calculating the GNP. This is especially true in developing countries. The first problem that a developing country might encounter is the existing use of barter in the economy. Barter is not included in the proper records of economic activity. Therefore governments in developing countries find it hard to gather the statistics for the calculation of the GNP. It is even possible for countries to not even have proper records of economic activity. Furthermore, a developing country might lack the resources or skills required in order to collect the data needed. They may not be able to afford allocating skilled manpower and other resources to collect data. The government themselves may be incompetent or inefficient which may lead to inaccurate and unreliable measurements of the GNP. In developing countries, non-marketed goods and illegal goods may distort the values of the GNP. Unpaid services such as housewives, self-consumed output and payment in kind lead to the inaccuracy in the GNP. Since many developing countries depend on their primary sector heavily, such as farming, include goods that are kept for subsistence purposes. Such goods are not recorded in the GNP statistics. Even if the GNP statistics were accurate...
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...GINI Index GINI index measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. The GINI index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus a GINI index of 0 represents perfect equality, while an index of 100 implies perfect inequality. GINI of Income A table containing the GINI indicator of income of Bangladesh over the years is given below: Year | National | Rural | urban | 1973-74 | .36 | .35 | .38 | 1981-82 | .39 | .36 | .41 | 1983-84 | .36 | .35 | .37 | 1985-86 | .38 | .36 | .37 | 1988-89 | .38 | .37 | .38 | 1991-92 | .39 | .36 | .40 | 1995-96 | .43 | .38 | .44 | 2000 | .45 | .39 | .50 | 2005 | .47 | .43 | .50 | 2010 | .46 | .43 | .45 | Table: GINI of income for Bangladesh from 1973 to 2010 A graphical representation showing the comparative difference among national rural and urban GINI for income in Bangladesh is given below: Figure: Income GINI index by rural urban area GINI of Expenditure A table containing the GINI indicator of Expenditure of Bangladesh over the years is given below: Year | National | Rural | Urban | 1991-1992 | .26...
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...income, while the poor keep getting poorer. The gap between the top earners and the low-income earners keeps widening in an income inequality situation. In America, almost 95% of the national wealth is under 5% ownership; this situation leaves 95% of the population to scrounge for the limited 5% wealth (DeNavas et. Al, 2005). Introduction In order to understand the complexities of economic inequality, the best specimen to use for the study is a family. In the study, the family’s income is under analysis, and then the family members ranked from the lowest income earner to the highest income earner. After the ranking, the incomes aid in establishing a Lorenz curve that is important in analysis of income. In order for a Lorenz curve to be correct, the incomes of the family members have to be divided into fifths (Lorenz, 1905). A Lorenz curve enables analysis of data by adding the percentage value of the lowest fifth to the next higher fifth, which becomes the first point of the curve. The second point in the curve comes about through adding the first...
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...3.2 Theoretical development The theoretical view in economic inequality has a long history. The deliberation of fair distribution can be old-fashioned to classical economist David Recardio and leftist theoretical matters as Karl Marx. These theorists have already documented the magnitude of distribution in the society, and among different classes of the people. 3.2.1 Kuznets Hypothesis: A reasonably moderate theory which has prevailed in the mainstream academia for about half a century is attributed to Kuznets (1955), which argues that income inequality would change as economic growth changes or more precisely, income inequality would rise first and then decline with economic growth. This theory is related with factor movement between sectors where there is inequality, which permits income distribution does not need to be fully equalized. This theory implies that fairer distribution may lead to higher productivity.[1] Kuznets curve is the graphical representation of Simon Kuznets's theory ('Kuznets hypothesis') that economic inequality increases over time while a country is developing, then after a critical average income is attained, begins to decrease. Figure 3.1: Graphical representation of Kuznets curve One theory as to why this happens, in early stages of development, when investment in physical capital is the main mechanism of economic growth, inequality encourages growth by allocating resources towards those who save...
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...Entomology- the scientific study of insects etymology- the study of the history of words and how their form and meaning have changed over time. 2, The Legacy of Ethology Konrad Lorenz- He developed the idea of an innate releasing mechanism to explain behaviors that are instinctive. Experimented with supernormal stimuli such as giant eggs or dummy bird beaks that could release the fixed action patterns more powerfully than the natural objects for which the behaviors were adapted. He shared a Nobel Prize in 1973 with Karl von Frisch and Niko Tinbergen in the area of Physiology or Medicine. Most of his work surrounding ethology was done between 1949 and his death in 1989. Niko Tinbergen- He is well known for developing the four questions he believed should be asked about any animal behavior regarding Proximate and Ultimate Mechanisms. A Major portion of his research surrounded supernormal stimuli and he was known for collaborating with Konrad Lorenz based around the fact that one could build an artificial stimulus more effective than the original stimulus. The majority of his work was done in the 1960’s and early 1970’s. Karl Von Frisch- An Australian ethologist whose work centered around the sensory perceptions of European honey bees. He was awarded the Nobel prize in 1973 along with Konrad Lorenz and Niko Tinbergen for his work in behavior physiology regarding communication between insects. The majority of his work was done after retirement between 1953 and 1974. d...
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...Stanley Parker 2-8-12 International Business Chapter 7 1. Economic forecasting is to appraise the overall outlook of the economy and the access the economic impact of economic changes on the firm. Question 4 Managers must use GNI per capita with caution. To arrive at GNI government economists impute monetary values to various goods and services not sold in the market place, like food for personal consumption. Many goods and services are bartered in both low-income nations (because they have little cash) and high income countries (because people wish to reduce reported income and thus pay less income tax.) Transactions like this are said to be part of the underground economy. Question 5 The underground economy is the part of the nation’s income that because of unreporting or underreporting is not measured by official statistics. A general rule for the underground economy is that the higher level of taxation and the more oppressive the government red tape, the bigger the underground economy will be. The existence and level of an underground market is important to managers because they want to pay the least amount of taxes back to the government. The underground economy however, can result in distortions of economic data, which managers must take into account when making business decisions using off of the data attained. Question 7 Income Distribution is a measure of how a nation’s income is apportioned among it’s people, commonly reported as the percentage of income...
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...Group Members No. | Name | Id | 1. | MD. Jakir Hossain Kiron | 1321558 | 2. | Kamrul Islam | 1320013 | 3. | MD. Ahsan Kabir | 1320848 | 4. | Mohammad Mazbahul Islam | 1320417 | 5. | MD. Tareq Islam | 1220229 | | | | Letter of Transmittal April 03, 2015 Mehadi Mansur Lecturer, School of Business Independent University, Bangladesh. Bashundhara, Dhaka-1212 Subject: Submission of Report. Dear Sir, It is indeed our pleasure to submit the report titled ‘Impact of Globalization on Developing Countries Income Distribution’to you for your kind appraisal.During information collection, we got support by many other sources and we also got huge amount of support from you when we prepared the report. The experiences we have gathered will be very helpful in our professional life. We believe, this report will be quite interesting and fulfill your expectation. We have tried to give our best efforts to prepare a comprehensive report. We will be grateful if you accept our report and your kind consideration will be highly appreciated. Sincerely Yours, Group Members of "Group No: 03" Acknowledgement This report would not have been possible without the dedication and contribution of all the researchers of our group members. In IUB we studied the subject “International Business” as a part of our course. We went through the textbook, according to the syllabus. Hence, we are grateful to our course instructor Mr.Mehadi Mansur for describing...
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...Urban-rural Rising Income Inequality in China As a developing country, China is trying to develop its economy and solving the threat of poverty since the economic reform. As a well-known economist Arthur Lewis said that "development must be inegalitarian because it does not start in every part of the economy at the same time" in 1954 (Lewis, 1954). It is also true for China. The income inequality issue between poor and rich increased faster, which has a negative impact as China tries to become a more stable society. The gap between rich and poor is caused by complex factors. This paper is intended to discover and explain the issue of income inequality through urban-rural gap, and also give some suggestions according to today’s situation. Historical Analysis In pre-reform, China is very poor and has about 90% rural population (Knight et al., 2004). At that time, Gini coefficient measure income distribution is 0.280 (0 means perfect equality, and 1 means extreme inequality) (Naughton, 2007, p.217), which shows that Chinese people has almost equal income across the whole republic. Although it is good to show China is “one of the most equal countries in the world”(Naughton, 2007, p.217), the truth is that everyone is equally poor at the same time. In order to decline poverty and connect the new republic to the world, the Chinese leader Deng Xiaoping institute market reform and said “let some people get rich first”(The economist, 2001). Since then, China has maintained rapid growth...
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...INTERPRETATION Human Development Index (HDI) HDI measures the relative distance between a country’s achievement and what is possible based on socio-economic indicators of life expectancy, combine primary, secondary and tertiary school enrolments, adult literacy, and PPP GDP per capita. The value of the HDI index can vary between 0 and 1. Thus: HDI > 0.800: High Human Development economy 0.500 < HD < 0.799: Medium Human Development economy HDI < 0.500: Low Human Development economy For a country with HDI of 0.47, the interpretation would be that this country has, on average, attained 47 percent of what is possible and can be classified as low human development economy. This country therefore has a shortfall of 53 percent from the maximum value on the HDI components of life expectancy, school enrolments, adult literacy, and PPP GDP per capita. Gini index Gini index measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution. The Gini index can vary between 0 and 1 or can be expressed as a percentage. Gini index of 0 means that the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution is 0 percent implying that there is perfect equality (or everybody has the same income) and Gini index of 1 means the extent to which the distribution of income among individuals...
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...population. | | A quintile is 20% of the population and the bottom quintile is the poorest group of 20%. 3. | If we compare income mobility in absolute terms, we would measure whether a person's income: *A. | is higher than her parents' income. | B. | places her higher up in the income distribution than her parents' income. | C. | is higher at the end of her career compared to the beginning. | D. | places her higher up in the income distribution over the course of her work-life. | | Income mobility measures inter-generational changes in income. The absolute mobility is A) whereas the relative mobility is B). 4. | Which curve summarizes inequality visually? *A. | Lorenz curve | B. | Laffer curve | C. | Income Inequality curve | D. | Gini curve | | The Lorenz curve measures inequality visually. The Laffer curve is a measure of tax revenue and we did not discuss C) or D) though we did discuss the “Gini coefficient”. 5. | A Gini coefficient of zero indicates: *A. | perfect equality. | B. |...
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...Running head: INCOME DISTRIBUTION IN THE UNITED STATES Income Distribution in the United States and the Lorenz Curve 1 Market economies are favored and well-known for generating macroeconomic growth and progress in industrialized nations, such as the United States. Numerous academic studies and economic research have been done not only to measure economic growth, but also to analyze any disparities in income distributions among the general American population. This paper will examine trends and patterns of American wages since the 1970s, focusing on shifts in income distributions to see if these shifts can be interpreted as income inequality across different sectors of our society. Furthermore, this paper will study two important and interlinked methods of measuring income inequality, which are the Lorenz Curve and the Gini Coefficient Index. The Executive Branch of our federal government and the U.S. Congress keep a close eye on income distributions throughout the entire nation. These bodies rely heavily on data collected and analyzed by non-partisan agencies such as the U.S. Census Bureau, the Internal Revenue Service (IRS), the U.S. Bureau of Economic Analysis, the Congressional Budget Office (CBO), and academic institutitions that provide data and statistical analysis to assist in economic and budgetary decisions made by elected officials concerning a wide array of policy issues such as taxes, social insurance programs and other issues that impact the overall economy...
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...ASSIGNMENT ON GINI COEFFICIENTAND LEARNING CURVES Submitted to: Dr. Muhammad Ziaulhaq Mamun Professor Course Instructor: Operations Management (P-301) IBA, DU Submitted by: Shatabdi Biswas RH-12, Section-A BBA 21st Batch 6 September 2015 Institute of Business Administration, University of Dhaka 1. Gini Coefficient 1.1 Definition The Gini coefficient measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. It is the most commonly used measure of inequality (World Bank). This coefficient, which ranges between 0 and 1 and is based on residents' net income, helps define the gap between the rich and the poor, with 1 representing perfect inequality where only one household has any income and 0 representing perfect equality, where all households have equal income (U.S. Census Bureau, 2012). It is named after its developer, Corrado Gini (1884-1965), an Italian statistician of the early 20th century. As with all statistics, when collecting the income data initially, there will always be systematic and random errors. If the data is less accurate, then the Gini coefficient has less meaning. Also, countries may measure the Gini coefficient differently, thus reducing the utility in comparison of the coefficient values between countries (The University of Texas at Austin, 2005). 1.2 Gini Coefficient for income of Bangladesh (as...
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...Australia and China have adopted different economic systems in order to cater for the society. The Chinese and Australian economies have many similarities and differences from Australia’s market based economy to China’s planned economy. Like all economies, they both face the problem of scarcity of resources, what to produce, how much to produce, who will produce. Both of these economies have adapted to changing the world in order to allow their economies to grow and develop. These similarities and differences include the economic growth and quality of life, the environment, employment and unemployment, distribution of income and the government role. Australia and China Australia have very little similarities in terms of economic growth and quality of life. Australia is a democracy and China is a one party rule socialist party. The quality of life also comes in the size and the population of the country. Australia’s area of 7,682, 300 sq km is 80% of China’s 9,595, 960 sq km, yet its population is 22 million which is only 1.7% of China’s 1.35 billion. For Australia’s GDP per capita is $43,000 ranking 10th in the world and China’s is only $7945 which is 98th in the world. Due to the extreme difference in the density of population and per capita income. Basically there isn't a lot of similarity except the large gap between rich and poor and for a few wealthy individuals who could afford the same luxuries. Employment and unemployment are one of the many similarities and differences...
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