BASU, FOSTER, SUBRAMANIAN Literacy- Pervasive influence on economically relevant variables, such as productivity, health and earnings, quite

apart from its intrinsic value as a vitally important goal of development. Traditionally society's literacy measured by literacy rate. But, distribution of literates across households ALSO matters Benefit from one living in a household !ith a literate person This is the Basu and Foster argument"#$$%& 'effective literacy' rate The simple idea underlying this paper is that literacy, too, is something like a public good in that a literate agent confers a positive externality on the illiterate agents in the household by sharing the benefits of his or her literacy. (n the broadest possible sense, the intra household e)ternality from literacy contributes to an e)pansion of each illiterate member*s capability and !elfare. +o! any given illiterate belongs either to "a& a household !hich has one or more literate members or "b& a household !ithout any literate member. ,ollo!ing Basu and ,oster "#$$%&, call the first type of illiterate a pro)imate illiterate "to suggest his or her pro)imity, from an intra household perspective, to a literate person&, and the second type of illiterate an isolated illiterate. Of the + L illiterates in the society under revie!, let - be the number of pro)imate illiterates and ( the number of isolated illiterates. ".& r/ 0 "L1e-&2+ Letting p stand for the rate -2+ of pro)imate illiterates, from "#& and ".& !e obtain3 "4& r/ 0 r 1 ep 5ffective literacy rate "r/& is al!ays 6 or 0 literacy rate "r& Bangladesh and (ndia 7ata dra!n for e)periment Too8 a loo8 at (ncome"9& and Age"A& along !ith literacy 5fficient inter household distribution of literates, !hich literacy is spread equitably across the households. (n this particular conte)t, therefore, the goals of efficiency and equity are perfectly congruent. Typically, the higher the literacy coefficient, the higher 'e' is. e is magnitude of

5)ternality A third and crucially important household characteristic has to do !ith the gender of the literate member of household. Stronger positive e)ternality of mothers literacy over fathers. :. ;O+;L<7(+= OBS5>?AT(O+S This paper has been concerned to advance one simple idea @ namely that in assessing the literacyA status of a society it is important to rec8on the intra household e)ternality arising from literacy. Allo!ing for such e)ternality has implications for the measurement, for the inter household distribution, and for the gender dimension of literacy. Bhile these implications have been spelt out in the main te)t of the paper, an important message !hich emerges is that in order best to ta8e advantage of the intra household e)ternality from literacy, a special effort !ould have to be made in ensuring an equitable distribution of literacy across households, and in especially promoting female literacy.

POV !T"# $OT %&'%"( ')T* +(

The world has an astonishing chance to take a billion people out of extreme poverty by 2030
n 1990, 43% of the population of developing countries lived in extreme poverty By 2010 it was 21% the poverty line was then $1.25 a day The global poverty rate had been cut in half in 20 years. If 21% was possible in 2010, why not 1% in 2030? president of the World Bank, Jim Yong Kim said 2030 global target to end poverty

Growth Decreases Poverty GDP, is not necessarily the best measure of living standards and poverty reduction. It is usually better to look at household consumption based on surveys Growth alone does not guarantee less poverty. Income distribution matters, too Two optimistic trends: One is that fast-growing developing countries are trading more with each other The other trend is that the two parts of the world with the largest numbers of poor people, India and Africa, are seeing an expansion of their workingage populations relative to the numbers of dependent children and old people MR. Chandy and Mr. Ravallion Similar results for both. Show promising results. Range of possible outcomes is wide, and not symmetrical Geography of poverty will be transformed. Poverty used to be a reflection of scarcity. Now it is a problem of identification, targeting and distribution. And that is a problem that can be solved

F !! )!% 'Cainstream' goeth theory as !e 8no! it, a paper by >obert Solo! in #$DE. >elies on production function ,"F,L& this model inaugurated !hat came to be 8no!n as neoclassical gro!th theory

many models came after, minimally changing but addressing shortcomings of solo!s model. all these models based on !hat came to be 8no!n as 'representative agent' people investigate gro!th as a process of distributional dynamics,

focusing on changes in the entire distribution, rather than only on its mean. This is not to say that the rate of change in the mean is not important. (t is, in fact, terribly important. (t is merely to say that, by loo8ing at gro!th as a process of distributional dynamics, !e can loo8 both at the mean and at a number of other phenomena, such as inequality and inter distributional mobility, FuGnets hypothesis is postulated that gro!th "from the lo! income levels associated !ith predominantly agrarian societies& !ould first lead to an increase, and then to a decrease in income inequality. later found that not ideal because larger siGed samples !ere no! available There !as also, ho!ever, a slightly modified Hdynamic version* of the hypothesis, !hich postulated that fast gro!th episodes tended to lead to higher inequality, regardless of the initial level of income. this is !hat is implied by 'rich get richer, poor get poorer' They concluded that3 Ithere appears to be little systematic relationship bet!een gro!th and changes in aggregate inequalityJ >ecent evidence seems to refute the FuGnets hypothesis about an inverted < relationship bet!een the level of income and the level of inequality. And outside transition economies, gro!th episodes do not on average seem to be associated !ith contemporaneous increases in inequality 7o not confuse inequality and poverty

Bhile !e can not find an empirical lin8 bet!een gro!th and contemporaneous inequality, there is no! no doubt that gro!th helps to reduce poverty. 5ffect of distribution on =ro!th But does the fact that contemporaneous changes in mean incomes and inequality do not seem to be systematically related necessarily imply that there is no lin8 bet!een the t!o variables at allK classical vie!, distribution plays central role in determining other aspects of economic performance. mpirically, the proposition that initial inequality seemed to be associated !ith lo!er gro!th rates !as put for!ard by -ersson and Tabellini "#$$L& and Alesina and >odri8 "#$$L&. both studies found that inequality variables had significantly negative coefficients in gro!th regressions. 7eininger Squire database !hich is superior to those available to -ersson and Tabellinior to Alesina and >odri8, both in number of countries and in time spans covered. 5conometric problems in ne! data sets appear to be specific to inequality variables definined in the (ncome"or e)penditure&. 7eininger and Squire themselves, for instance, find that the negative coefficient on initial income inequality in their gro!th regressions becomes insignificant only !hen a variable for asset inequality is introduced. Birdsall and Londono3 "using 7eininger squire database&I...initial inequalities in the distribution of land and of human capital have a clear negative effect on economic gro!th, and the effects are almost t!ice as great for the poor as for the population as a !hole.J " The empirical issue is clearly not settled. +evertheless, it !ould seem

fair to report the current state of the debate as follo!s3 !hile initial income inequality may not directly affect an economy*s aggregate gro!th potential, others thing being equal, it does pro)y for more fundamental inequalities of !ealth. Once measures for those are included, there seems to be a significant negative relationship bet!een asset inequality and gro!th.
Hmedian voter theorem*

"(& preferences for some such policy variable "say3 a proportional ta) rate"& vary monotonically across the distribution of some attribute of the population "say, their incomes&, and "((&, each person has one vote "!ith equal !eight&, then the preference of the voter !hich occupies the median position in that distribution !ill be the outcome of the voting process. The proponents of the importance of political economy considerations as central to the relationship bet!een inequality and gro!th have thus turned a!ay from ta) choice, and to!ards the role of political instability and its effect on investment behavior. Alesina and -erotti "#$$E& is a prominent e)ample.

;apital Car8et A more basic channel, in fact, is that productive opportunities might vary along the !ealth distribution. -ut simply3 poor people may not have the same chances in life as richer people, and may thus never quite realiGe their full productive potential. Cost of them formaliGe the differences in opportunities along the income distribution by assuming non conve)production sets (n =alor and Meira "#$$4& or Aghion and Bolton "#$$:&, there is a single, fi)ed scale of production, or HproNect siGe*. (n ,erreira "#$$D& there is a minimum scale or proNect siGe, above !hich the production set is conve).

Bhatever the particular details, the idea is that there are fi)ed costs, or minimum Hlumpy* investments. These models all share another basic property3 at least one capital mar8et must be either missing or imperfect. The most obvious case is a missing or imperfect credit mar8et.
(n some cases, the equilibrium distribution is ergodic ",erreira, #$$D&. "poor people !ill cla! out of poverty.& "=alor and Meira,#$$4& poor people CA9 remain trapped in poverty forever.

n this case, this rich group becomes a class of rentiers, lending their !ealth rather than investing. (n this case, it is an insurance mar8et failure !hich leads to a group "no! the rich& not investing in the most productive activity. This is the essence of BanerNee and +e!man "#$$#&.

Social conflict channels (n sum, income and !ealth distributions can no longer be seen as mere outcomes of the general equilibrium of an economy. The central processes that determine resource allocation @ through capital mar8ets, through the political system, and through social circumstances @ are influenced by the distribution of !ealth in important !ays. Core unequal societies tend to develop larger groups of people !ho are e)cluded from opportunities others enNoy @ be they a better education, access to loans, or to insurance @ and !ho therefore do not develop their full productive potentials. Both theory and empirical evidence suggest that these incomplete realiGations of economic potential are not of concern only to those !ho care about equity per se. They also affect aggregate economic potential, and therefore aggregate output and its rate of gro!th. The inverted < relationship bet!een gro!th and inequality suggested by FuGnets has not survived recent empirical scrutiny terribly !ell. (nstead, it is gradually being replaced by a perception that the main flo! of causation may be in the other direction, !ith inequality hampering the

rate and quality of economic gro!th. The debate is not over, either conceptually or empirically. But its very liveliness attests to the importance of the question. To paraphrase Tony At8inson, inequality is unli8ely to go bac8 out into the cold periphery of economic analysis any time in the foreseeable future

7emocracy Avert ,amineK Cr. ACA>T9A S5+ !inner of #$$% +obel priGe
helped the <nited +ations devise its Ouman 7evelopment (nde) used measure of ho! !ell nations meet basic social needs. today the most !idely

8no!n for !or8 on ,amine.

''+o famine has ever ta8en place in the history of the !orld in a functioning democracy,'' because governments ''have to !in elections and face public criticism, and have strong incentive to underta8e measures to avert famines and other catastrophes.''
'it !ould be a misapprehension to believe that democracy solves the problem of hunger.''

Sen did studies on famines Cr. Sen found that food production in countries had not declined. >ather, food prices had soared !hile farm !ages had sagged, ma8ing it hard for rural !or8ers to buy food. causing salvation problems in these countries
(t is Cr. Sen's !ritings on democracy, not famine, that have troubled some scholars.

The boo8 had little to say about the high rates of malnutrition, illiteracy and infant mortality that persist in (ndia and many other democracies, and ho! they can be overcome
This has led some to conclude that Cr. Sen is naPve about ho! democracies !or8 in the real !orld

''Oaving a free press and a democratic process is important for all 8inds of reasons,'' Cr. 7evereu) noted, ''but that doesn't address poverty and the conditions thatlead to famine.'' Bith the spread of laisseG faire economic policies, he added, governments have less ability to ''step in and provide food security.
Other scholars, ho!ever, say that government itself is the problem.

(n fact, in his more recent !ritings, Cr. Sen has paid more attention to the shortcomings of democracy and ho! they can be addressed. The 8ey, he said, is not to Nettison

democracy but to find !ays of ma8ing it !or8 better for society's underdogs.

(CAL T5+<>5 A+7 ;L(CAT5 A7A-TAB(L(T9

;onte)t affects Bangladesh*s city d!ellers* ability to adapt to climate change. Security of tenure is particularly important for poor urban d!ellers. 7ifferent types of tenure arrangements @ legal, illegal or informal @ lead to differing levels of security. Tenure arrangements that enable people to claim o!nership of land and2or d!ellings, as in squatter settlements, ma8e a big difference to people*s e)perience of vulnerability and, crucially, their ability to adapt. Fey -olicy points Q Systematically include tenure security in official policies, emphasising both squatter and lo! income
private settlements.

Q (dentify and analyse ho! informal land mar8ets operate for the poor, and ho! mar8et conditions can be
improved.

Q -rovide information on climate change adaptation to informal land mar8et actors, and conditional
grants for financially constrained developers2o!ners of lo! income settlements.

5conmist .4 7ecember#$$$

Like herrings in a barrel

In 1,000 years, the human race has multiplied 20-fold. Todays 6 billion people may be 9 billion by 2050. Yet the increase has slowed; rich nations breed less

a pioneer statistician, Gregory King, had predicted that the human race would double from its then total of around 650m in about 600 years time Malthus time Benjamin Franklin had persuaded him that, unless checked, most populations were likely to double every 25 years, increasing at a geometric rate(1,2,4,8,16 and so on), while food supplies would grow at only an arithmetic rate (1,2,3,4,5and so on). Sooner or later the food was bound to run out
'-ositive' chec8s !ars, plagues and famines to reduce sustainable levels '-reventative' chec8s to ensure fe!er children born."e). 7elaying marriage& Calthus !as !rong e)pecting population to double every .D years. since, in reality has shrun8 to about LR. 5arth's resources are finite. Later came the Idemographic transitionJ

comes a decline in mortality, leading to a short population explosion; then, after an interval of variable length, a steep decline in the birth rate, which slows, halts or may even reverse the rise in numbers From about 1000 to 1300, Europe enjoyed a spurt of economic growth
5nter, in #4L:, via the Cediterranean, the Blac8 7eath By #LRR 5uropes pop had shrun8 by #24 Cid #$th century 5urp0ope !as in the first stage of the demographic transition less famines, epidemics, food shortages etc. big part due to public health and medical care. #%RR #$RR 5uro pop doubled.

the !ay societies alter as the get richer.First

But something else was happening there that would have taken Malthus by surprise: as people came to expect to live longer, and better, they started to have fewer children.
they no longer needed several babies Nust to ensure that t!o or three !ould survive

Worse, with too many children, a mother would find it

hard to take and keep a job number of people born throughout human history is 80 billion100 billion One thing is sure: even if from tomorrow every couple on earth practised Malthusian restraint and stopped at two children, the momentum built up by the huge population growth in developing countries since 1950 will keep numbers rising fast for decades to come; the UNs medium forecast for 2050 is 8.9 billion people. But, fingers crossed, soon thereafter even the poorest countries may have lost their enthusiasm for large families, while couples in some richer countries maymayhave rediscovered that two children are, and have, more fun than one. A century or so from now, if mankind survives that long, its number may have reached a new (and surely better) steady state

Bangladesh out of the basket &essons from the achievements of Bangladesh last .R years Bangladesh has made improvements in almost every indicator of human !elfare Life up, female education up, less deaths due to pregnancy2 ne! borns ,emale ,actor Ta8e !omen seriously as agents of development ;ountry embar8ed upon a program of voluntary family planning. !or8ed !ell not only halved rate of fertility !ithin generation but increased !omen's influence !ithin households. for the first time !ives controlled the siGe of families. te)tile industry too8 off, !omen L2D of !or8ers

Bangladesh has shown that countries can transform the lives of the poorest without having to wait for economic growth. But it does not show that growth is

irrelevant. The country would surely have done better still if its economy had expanded faster, as it could have done. As peoples education and expectations rise further, it will be all the more important to provide new jobs and opportunities for advancement. delta force Moreover, Bangladeshs achievements remain vulnerable to political interference.

SENS LIMITATIONS FOur limitations of the entitlement approach. 1. There can be ambiguities in the specification of entitlements 2. WHile the entitlement relations convent ate on the rights within the given legal structure in that society, some transfers involve violations of the rights, such as looting or brigandage. 3. Peoples actual food consumption may fall below their entitlements for a variety of other reasons, such as ignorance, fixed food habits, or apathy. 4 Finally, the entitlement approach focuses on the starvation, which has to be distinguished from famine mortality, since many of the famine deaths(in some cases most of them) are caused by epidemics. Entitlement analysis is predicted on the implicit assumption that a food shortage triggers an automatic behavioral response. "salvation set" -those endowment bundles such that the exchange entitlement sets corresponding to the contain no bundles satisfying his maximum food requirements. sometimes people CHOOSE to survive. in the short run to enhance their future entitlements.