Syndicate content  Aid allocation: Should equally poor countries
be treated equally?  Paolo Verme's picture   Both GDP per capita
and the poverty rate are two powerful instruments to describe
the welfare of countries. GDP per capita has the advantage of
being simple, transparent, and available for virtually all
countries in the world while the poverty rate provides a simple
measure of poverty and is now available for almost all
developing nations. The question we want to address here is
whether these two indicators are sufficient to allocate aid
according to income criteria. GDP per capita ignores the
distribution of income and is not always a good measure of
household income. At times, GDP per capita and household income
per capita can significantly diverge, especially in resource
rich countries. The poverty rate, on the other hand, provides a
focus on the poor but ignores incomes of the non-poor.  As a
simple example, consider two countries, country Red and country
Black, and two different scenarios, scenar