Macroeconomics...........case5 Case Study Example | Topics and Well Written Essays - 250 words

Macroeconomics...........case5 - Case Study ExampleEconomist Paul pitman, of Oxford Univesity in England, has examined what went wrong with these trapped countries. Based on decades of research, he identifies some poverty traps. About 750 million hoi polloi of the bottom billion catch recently lived through, or are still in the midst of, a civil war. Such wars mountain drag on for years with economically disastrous consequences. For example, the ethnic encroach in Burundi between the Hutus and the Tutsis has lasted three decades, which helps explain that countrys poorest-in-the-world ranking. Unfortunately, the poorer a country becomes, the much likely it is to succumb to civil war. And once a country goes through wizard civil war, more are likely. Ethnic conflict, or civil war, is Colliers first poverty trap.But why, past from poverty itself, are so many sub-Saharan countries mired in civil war? He finds that three factors heighten the risk of such conflicts (1) a relatively high proportion of young, uneducated custody with few job prospects (who, thus, have a low opportunity cost) (2) an imbalance between ethnic groups, with one tending to outnumber the rest and (3) a supply of natural resources like diamonds or oil, which both creates an incentive to rebel and helps finance that rebellion. The presence of mineral wealth in an otherwise poor country can also undermine democracy itself. disposal revenue from mineral sales reduces taxes, which dampens public debate close how taxes should be spent. For example, because of oil revenue, the Nigerian government relies less on taxes, so there is less nip for government accountability, and hence fewer checks and balances on a corrupt government. Thus, misuse of resource wealth is Colliers second poverty trap. About 300 million of the poorest billion live in countries that have fallen into this trap.This leads us to the third poverty trap a dysfunctional or corrupt government. Government