Poverty Countries Income
Set out what appears to be the main causes of poverty in developing countries. Suggest policy measures to reduce such poverty.
''Poverty is the parent of revolution and crime” as stated rightfully by Aristotle. Since time immemorial, developed countries from across the world have tried to attain the most accurate definition of poverty, a prominent issue in most developing societies.
“People are living in poverty if their income and resources (material, cultural and social) are so inadequate as to prelude them from having a standard of living which is regarded as acceptable by Irish society generally.” The Irish Government's National Action Plan for Social Inclusion uses this definition of poverty.
Poverty is the state for the majority of the world's people and nations. Is it enough to blame poor people for their own predicament? Have they been lazy, made poor decisions, and been solely responsible for their plight? Who is to blame?
If carefully observed, one will realize that poverty is not just caused by individual experiences but instead, by major inequalities built into the structure of less developed economies. Some of the main causes of this inequality and poverty are access to work and hence income, education, housing as well as health and services. Poverty, as stated by many, is a relative concept which describes the people in a society that are not provided the opportunity to participate in the activities that most people take for granted in a society.
The main cause of poverty in less developed countries is that they are majorly overpopulated and do not have sufficient resources to support such a vast population. The governments in such countries are not able to manage and sustain so large a population, which hence, results in low standards of living and low income levels. In Pakistan, which is ranked in the top ten most populace countries in the world, about 40% of the population lives on or below the poverty line. This means that a little less than half the population is unable to afford the basic necessities of life i.e., food, clothing and shelter.
Therefore, it follows that many people working and trying to support a family on a minimum wage, which is often not well-established, struggle to meet basic costs of living each passing week. Moreover, the large and growing population prevents everyone from joining the workforce. There aren't enough jobs available to accommodate the entire working population. This is perhaps due to the economic structure of most developing countries. Most of them are heavily dependant on the agricultural sector, which constitutes a major portion of their GDP, while all other industries are relatively underdeveloped. More so, agricultural products are normally not grown year round, perhaps on account of seasonal requirements. Hence, labour that is employed in the agricultural sector is redundant during most of the year, leading to a great deal of unemployment in the economy. Studies have shown that unemployment is much more concentrated in the suburbs rather than in the urban areas, i.e. in smaller towns and villages where people have no access to no source of education let alone any schools and colleges.
Another major cause of poverty that is a very prominent characteristic of less developed countries is low levels of literacy, in other words, low education levels which can be linked indirectly, to unemployment and subsequently the risk of living in poverty. Families with low educational qualifications often cannot afford to better educate their own children. Similarly, individuals who do not educate themselves decrease the chances of job opportunities that would otherwise have come their way. Hence it can be stated that the lesser the education received, the greater the chances of the individual being jobless in future.
However, it is important to note that it is not always up to the individuals to educate themselves. Many a times, individuals are not granted the opportunity to earn education, perhaps due to financial restrictions. Also, in most developing countries, a wide portion of the population, especially those living in rural parts of the country, do not have access to schools and colleges. Therefore, children are kept from school by their parents because they are needed at home so as to support their family with additional income.. Unfortunately thus, lack of education keeps children from obtaining jobs that would lift them and their families out of poverty.
In addition to the above, the uneven distribution of wealth also leads to poverty in less developed countries. For instance, in India, the top 10% of income groups earn 33% of the income. As evident, despite significant economic progress, one-fourth of the nations population earns less than the government specified poverty threshold of $0.40 per day. In fact, a 2007 report by the state-run National commission for Enterprises in the Unorganised Sector (NCEUS), found that 25% of Indians, or 236 million people, lived on less than 20 rupees per day, with most working in the `informal labour sector', hence with absolutely no proper job or social security.
Also, poor health decreases the amount of work that impoverished individuals can do, lowering their income and driving them deeper into poverty. The onset o disease, such as HIV/AIDS or malaria, can result in death, which often cuts off a major source of income for the family and also imposes high medical costs that the poor and deprived cannot afford to fulfil.
To top this off, the governments of most developing countries are often dysfunctional, unstable and highly corrupt. Corruption is as evident, one of the biggest problems today in developing nations and sadly, it exists at higher levels of administration as well, i.e. ‘grand corruption`. For instance, high ranking government officials sometimes take large cuts of money from public service projects such as roads, for their own selfish consumption. Moreover, such corrupt activities affect the poor much more than others. Even a small bribe can drastically affect a poor family's income since poorer people are much more easier to manipulate and take advantage of. In Cambodia for example, low-income families spent 2.3% of their earnings on bribes while on the other hand, more well off families spent only 0.9%.
Apart from this, the lack of government infrastructure i.e. pubic sanitation, schools, social welfare etc, can be crippling for the poor. One must also realize the fact that the part of the population living in poverty in these less developed countries, have very limited economic choices. They are often prevented from receiving loans and other financial benefits. Hence, this makes it difficult for them to establish business, increase their income as well as break out of poverty.
Jane Jacobs, in her book, ‘The Economy of Cities' (1969), states, “Poverty has no causes. Only prosperity has causes.” In making this assertion, she further claims that the only way to eradicate poverty is through economic development, which would involve the population to become part of the labour force and hence be able to earn enough money in order to afford at least, the basic necessities to sustain themselves and their families. The first step towards economic development and hence economic growth is for the government of developing countries to implement certain policies to not only help eradicate poverty but also to accelerate the eradication of poverty in their respective countries.
Moreover, since poverty mainly exists in rural areas, any policy measures implemented should involve raising the income levels of farmers, perhaps by increasing their productivity and the income received from their products. This means that governments should implement policies in an attempt to establish farmer support services facilities in rural areas so as to improve agricultural sector incomes. One method of doing so could be to set a minimum wage rate so as to raise the income earned by those being exploited. This would prevent employers from exploiting labour and paying them a lower wage than what should be paid for the amount of services offered. This would in turn, help raise the level of income of the powerless and in future, raise the general standard of living.
Apart from this, policies should focus on reducing the risk associated with lending. Development of collective investment schemes should be prompted in order to open up investment opportunities for small savers as well as increase the mobilization of domestic savings. Another measure that governments could implement is to adopt a progressive tax system so as to reduce income inequality in the country. Therefore, the tax revenue earned should be utilized in the improvement of health services, transport systems, the education system as well as in providing more public and merit goods.
Furthermore, not-for-profit cooperatives such as credit unions an savings and credit cooperatives should be encouraged by the government to further support savings mobilization. Banks could perhaps be made to improve the services they provide to small-scale farmers and enterprises by syndicating small loans with community banks.
More importantly, governments need to identify critical infrastructure requirements and address them on a priority basis. This is mainly because rural infrastructure plays a significant role in empowering people as it provided the rural population with access to various political and decision-making entities.
Other policy measures to alleviate poverty could include the establishment of agricultural commodity insurance, strategies to promote export diversification etc. it is almost natural that governments of less developed countries would not always have the financial resources to implement and manage such measures and hence should obtain financial assistance from developed countries in the form of loans and aid.
As evident, there is now increasing awareness of the importance as well as the urgency to eradicate poverty and hence, with the efficient implementation of these policy measures by the government and other institutions, the number of people living in poverty will decrease soon enough, ensuring a bright future for generations to come.
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