1. Why are some countries
rich/poor?
How can we
reduce poverty?
What role does/can
Capitalism play?

2. Joke of the Evening

5. Why are some countries
rich/poor?
How can we
reduce poverty?
What role does/can
Capitalism play?

6. Hypotheses for the Week
Human prosperity and social cooperation develop spontaneously in societies that protect private property rights and encourage voluntary trade.
Developing an economic way of thinking empowers people to understand and explain the world in which we live.

7. Economic Reasoning Proposition #5
ERP-5: Understanding based on knowledge and evidence imparts value to opinions.
Opinions matter and are of equal value at the ballot box. But the value of an opinion is determined by the knowledge and evidence on which it is based.
Statements of opinion should initiate the quest for economic understanding, not end it.

14. Why are some countries rich and others poor?
Low, Middle, & High Income Nations
Economic reasoning tools developed this week will help us to answer this and other questions about world poverty
Why are some countries rich and others poor?

19. 2013: Just over 700 Million People Live in “Extreme Poverty” ~World Bank
World Bank Update October 2015: The number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015, according to World Bank projections… giving fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030.
The Bank uses an updated international poverty line of US $1.90 a day, which incorporates new information on differences in the cost of living across countries (the PPP exchange rates). The new line preserves the real purchasing power of the previous line (of $1.25 a day in 2005 prices) in the world’s poorest countries. Using this new line (as well as new country-level data on living standards), the World Bank projects that global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, this year. .
World Bank October, 2015

20. Source: World Bank Poverty Data www.worldbank.org
China led the way by reducing its poor population by 475 million people. While in 1990, 37% of the world's poor were found in China by 2005 the number had declined to 15%.
Source: World Bank Poverty Data

21. China led the way by reducing its poor population by 475 million people. While in 1990, 37% of the world's poor were found in China by 2005 the number had declined to 15%.

22. Poverty Fact
We have seen significant decreases in the number of people living in extreme poverty. What factors contributed to this decline?

23. Real Gross Domestic Product Per Capita (1990 $)
Area
1000
1500
1700
1820
1900
1952
2003
2008
Western Europe
$427
$772
$997
$1,202
$2,892
$4,963
$19,912
21,672
USA
527
1,257
4,091
10,316
29,037
31,178
India
550
533
599
629
2,160
2,975
China
450
600
545
537
4,609
6,725
Africa
425
414
421
420
601
928
1,549
1,780
World
566
615
667
1,262
2,260
6,477
7,614
Sources: Development Centre Studies The World Economy: Historical Statistics, Maddison World Population, GDP and Per Capita GDP, AD, Maddison, 2007, and for 2008 data

27. Extreme Poverty = below $1. 25 per day
Extreme Poverty = below $1.25 per day. Poverty is falling everywhere… including Sub-Saharan Africa
The poor in China are one of the greatest beneficiaries from economic growth.

28. Even the poor benefit when a nation experiences economic growth – and even in countries with communist governments.

31. The Secret to Economic Growth: Productivity
The output produced from a given set of resources in a given period of time.
Increasing productivity means that greater output is produced from a given set of resources in a given period of time.

32. Institutions Shape Incentives Nobel Prize in Economics 1993
Douglass North
Nobel Prize in Economics 1993
Make this point very clear! Use the analogy of this program and classroom setting or their own classroom at school.
Capitalism “A particular set of institutions
governing the production and exchange of goods and services.”

33. Institutional Variation
practice varies along continuum
Less Open
More Open
Institutional Variation
Explain how institutions and capitalism can be measured on a continuum rather than in absolutes.

34. Measurement: Fraser Institute
Economic Freedom:
Size of government and taxation
Protection of private property and the rule of law
Soundness of money
Trade regulation and tariffs
Regulation of business, labor and capital markets 34

35. Background: Economic Freedom Project
25 year project
Transparency is a highly valued part of the project
Based entirely on third party data from World Bank, International Monetary Fund (IMF), Global Competitiveness Report, etc. (based on both objective and survey data)
They rank 144 countries representing 95% of the world’s population according to the extent to which they permit their citizens to be economically free 35

36. World Average Economic Freedom Over Time
Source: The Fraser Institute, 2012

37. Per Capita Income and Economic Freedom Quartiles
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, 2013

38. Growth Per Capita and Economic Freedom Quartiles%
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, 2013.

39. Income Share of the Poorest 10% and Economic Freedom Quartiles
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, 2013.

40. Income of the Poorest 10% and Economic Freedom Quartiles
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, 2012.

42. Consider the “slice of pie”
Source: World Development Indicators, Table 1.1, “Size of Economy” and Table 2.7, “Distribution of Income or Consumption” (2009 data)
Source: World Development Indicators, 2011.

43. Poverty by Economic Freedom Quartiles

44. Life Expectancy at Birth and Economic Freedom Quartiles
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, 2013.

45. Quality of Health Care by Economic Freedom Quartiles, 2009
Based on the question: “How would you assess
the quality of healthcare provided for ordinary
citizens in your country? 1 = Very poor, 7 =
Excellent, among the best” (Executive Opinion
Survey).

46. Literacy by Economic Freedom Quartiles (% of population) Male Female
Most Free ……………. Least Free
Sources: The Fraser Institute; World Development Indicators 2013

47. Educational Quality by Economic Freedom Quartiles, 2009
Based on the question: “How well does the
educational system in your country meet the
needs of a competitive economy? 1 = Not well at
all; 7 = Very well” (Executive Opinion Survey).

48. Most Free ……………. Least Free
Economic Freedom and Political Rights Low scores indicate high level of rights
Most Free ……………. Least Free
Sources: The Fraser Institute; Freedom House, Freedom in the World
Country Ratings, 2013, available at

49. Most Free ……………. Least Free
Economic Freedom and Civil Rights Low scores indicate high level of rights
Most Free ……………. Least Free
Sources: The Fraser Institute; Freedom House, Freedom in the World
Country Ratings, 2013, available at 49

50. Economic Freedom and Corruption High scores indicate low corruption
Most Free ……………. Least Free
Sources: The Fraser Institute; Transparency International, Corruption
Perceptions Index, 2012 available at

51. Overall Economic Freedom Index and the Bottom 10
Source: The Fraser Institute, 2012

52. Overall Economic Freedom Index and the Bottom Ten
Source: The Fraser Institute

56. The Two Dollar Challenge
What is Challenge Week?
Live on two dollars a day and follow other RULES for a week, and record your experiences for others to read. Fundraise for economic development as you abstain from purchasing goods.
Why Participate
Begin to understand firsthand the hardship that half the world's population endures. Nurture a new respect for impoverished persons.
Participants have many reactions throughout Challenge Week as demonstrated in these blog entries from past years. Students face additional, unexpected obstacles and struggle with the emotional discomforts of "playing poverty."

58. The Big Picture
Until the 1750’s extreme poverty was the standard for all of human history.
Since 1750 economic growth has lifted large sections of humanity to levels of wealth unheard of previously.
The engine of economic growth is reducing poverty rates worldwide.
Capitalism consists of institutions that help promote economic growth.

69. Hans Rosling 200 Countries 200 Years, 4 minutes
Or use Hans Rosling & The Magic Washing Machine