Economic Inequality and Microfinancing

Economic Inequality and MicrofinancingBy: Renan de lima

Income DisparityOne of the most challenging issues facing our generationDeveloping countries and emerging economies all suffer from inequalityGini coefficient measures income distribution

Convergence TheoryOutput per person across countries naturally convergeDeveloping countries have growing labor forces and increasing capitalConvergence is limited to OECD and Asian nations

Convergence Theory (Continued)CountriesAnnual growth of output per person (1950-2004)Real output per person (1950)Real output per person (2004)Increase in real output from 1950-2004France3.3$5,920$26,1684.4Japan4.6$2,187$24,66111.2U.K.2.7$8,091$26,7623.3U.S.2.6$11,233$36,0983.2

MicrofinanceSmall loans without collateralRepayment rate over 90 percentOpportunities for those living in impoverished communitiesGrameen Bank and Kiva