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  • Print publication year: 2009
  • Online publication date: June 2014

2 - Running simple regressions

Summary

The test of our progress is not whether we add to the abundance of those who have much; it is whether we provide enough for those who have too little.

US President Franklin D. Roosevelt, 2nd inaugural address, 1937.

Economic issues include:

Poverty reduction – the role of investment and trade

Millennium Development Goals (MDGs)

Development economics and development institutions

Econometric issues include:

Correlation coefficients

Running OLS regressions ‘by hand’

Single hypothesis tests: Student's t test

Point estimates and confidence intervals

Goodness of fit and the coefficient of determination

Data issues include:

Quantitative indicators of development

A qualitative indicator – the Human Poverty Index

The issue

How can we reduce poverty and improve living standards for the poor? There are no easy answers and in addressing the problems of global poverty, the world's heads of state met in September 2000 to discuss a universal framework for development, agreeing on targets to promote development. The then 189 UN member states agreed to the eight Millennium Development Goals (MDGs) listed in Box 2.1. Poverty reduction was one of these primary goals and the UN member states pledged to halve world poverty by 2015. These goals were reaffirmed at the World Summit held in September 2005, and the issue has been kept alive ever since by a number of high-profile awareness-raising and fund-raising events, backed by a diverse range of people – rockstars included.

Box 2.1 The Millennium Development Goals (MDGs)

• Eradicate extreme poverty and hunger

• Achieve universal primary education

• Promote gender equality and empower women

• Reduce child mortality

• Improve maternal health

• Combat HIV/AIDS, malaria and other diseases

• Ensure environmental sustainability

• Develop a global partnership for development

Source: www.un.org/millenniumgoals/

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Further reading
Books
Addison, A., Hulme, D. and Kanbur, R. (2008) Poverty Dynamics, Oxford: Oxford University Press.
Lipsey, R. and Chrystal, A. (2007) Economics (11th edition), Oxford: Oxford University Press. Chapters 33–34.
Sen, A. (1981) Poverty and Famines, Oxford: Oxford University Press.
Thirlwall, A. P. (2005) Growth and development (8th edition), London: Macmillan. Chapters 1, 2 and 16.
Academic articles and working papers
,Asian Development Bank (ADB) (2008), ‘Special chapter: Comparing poverty across countries: the role of purchasing power parities’, in Key Indicators for Asia and the Pacific 2008, Manila: ADB, pp. 3–54.
Atkinson, A. B. (1987) ‘On the measurement of poverty’, Econometrica vol. 55, no. 4, 749–64.
Chen, S. and Ravallion, M. (2000) How Did the World's Poor Fare in the 1990s, Washington: World Bank.
Collier, P. and Dollar, D. (2001) ‘Can the world cut poverty in half? How policy reform and effective aid can meet International Development Goals, World Development, vol. 29, no. 11, 1727–802.
Mankiw, G., Romer, D. and Weil, D. (1992) A Contribution to the Empirics of Economic Growth, NBER Working Paper, No. 3541.
Ravallion, M., Chen, S. and Sangraula, P. (2008), A Dollar a Day Revisited, World Bank Policy Research Working Paper No. 4620, Washington:World Bank.
Rodrik, D. (1999) The New Global Economy, Making Openness Work, Policy Essay No. 24,Overseas Development Council, Washington D.C.
Solow, R. (1956) ‘A contribution to the theory of economic growth’, Quarterly Journal of Economics, vol. 70, 65–94.
Swan, T. (1956) ‘Economic growth and capital accumulation’, Economic Record, vol. 32, no. 2, 334–61.
Policy reports
,UNMillennium Development Goals Report 2007, Geneva: United Nations.
,UNCTAD (2008) Least Developed Countries Report, Geneva and New York: United Nations.
,UNDP (annual), Human Development Report, Geneva: United Nations Development Program.
,World Bank (annual), World Development Report, Washington: World Bank Group.