A Discussion Of Poverty As A Global Issue Economics Essay

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This report is discuses and examine the poverty, its causes and effects (including hunger), and some of theoretical poverty alleviation approaches. The most logical place to start, therefore, is a discussion of poverty as a global issue.


Start by definition of poverty, both absolute and relative as well as from both the orthodox and alternative points of view. Having defined poverty, I will look into the different causes and effects of poverty and the importance of these causes and effects. I believe it is crucial to understand why we must care about global poverty and therefore I will discuss a couple of arguments against helping the poor before moving on to a critical discussion of development theories. I cannot examine every development theory posed however I will deal with both the orthodox and alternative views, looking into both the World Bank's and United Nations Development Program's development reports. There are many different theories posed as approaches for alleviating absolute poverty. None of these theories are perfect, and therefore I believe that it is not one theory or method, but a combination of many that will help to improve circumstances for the over 1.2 billion people living on less than a $1 a day.

Almost half the world - over three billion people - live on less than $2.50 a day.

At least 80% of humanity lives on less than $10 a day.

More than 80 percent of the world's population lives in countries where income differentials are widening.

The poorest 40 percent of the world's population accounts for 5 percent of global income. The richest 20 percent accounts for three-quarters of world income.

Poverty is complicated to define. It is condition where people needs basic stuffs such as food, clothing, and shelter. Poverty in generally have two types: (1) Absolute poverty, it is equivalent with destitution and occurs when people cannot obtain adequate sources (measured in terms of calories or nutrition) to support a minimum level of physical health. Absolute poverty means about the same everywhere, and can be eradicated as demonstrated by some countries. (2) Relative poverty occurs when people do not enjoy a certain minimum level of living standards as determined by a government (and enjoyed by the bulk of the population) that vary from country to country, sometimes within the same country. Relative poverty occurs everywhere, is said to be increasing, and may never be rid.

The orthodox approach to development sees poverty as a situation suffered by people who do not have the money to buy food and satisfy other basic material needs. The alternative view of development sees poverty as a situation suffered by people who are not able to meet their material and non-material needs through their own effort.

There are many causes and effects of poverty. The most effect of poverty is hunger; however hunger can also be a cause of poverty. This is because hunger decreased their skills and strength to carry their productive work. The latest estimates suggest that about 840 million people were undernourished between 1998 and 2000. Millions of people, including over six million children under the age of five die each year as a result of hunger. One in seven children born in countries where hunger, Hunger affects mental and physical growth, causing undernourished smaller and slighter body frames, which in turn earn less in jobs involving physical labour, contributing to the overall poverty of a country and community.

Powerlessness is a cause and effect of poverty because people living in absolute poverty often have no political power and is subjected to exploitation by the state. They lack protection, and report widespread corruption within state education and health care systems. Poor people in many countries speak of being kept waiting endlessly while the rich of the country go to the head of the queue. Situations like these create more problems for that already in absolute poverty, and continue to divide the rich from the poor without providing any help. The problem with a lack of voice and power as a cause of poverty is that it enforces a lack of voice and power as an effect of poverty, creating a continuous cycle that deliberately separates the poor of a country from the rich.

The last major cause and effect of poverty is vulnerability. Natural disasters, economic crises, and conflict leave the poor very vulnerable, with nobody to help and a lack of resources to use to help themselves. This idea is best expressed through the story of a poor villager from Benin, in the World Development Report 2000/2001: Attacking Poverty. 'Three years ago was a very bad year. The flood washed away all our crops, and there was a lot of hunger around here, to the point that many people actually died of hunger. They must have been at least a dozen, mostly children and old people. Nobody could help them. Their relatives in the village had no food either; nobody had enough food for his own children, let alone the food for the children of his brother or cousin. And few had a richer relative somewhere else who could help.' This is a perfect example of the vulnerability that is both a cause and effect of poverty. The relatively poor can become the poorest through disasters, both economic and natural, and conflict, which causes more vulnerability that affects their ability to escape poverty.

Poverty and conflict are often closely linked. In many developing countries there are huge contrasts in access to power and control of resources, leading to a sense of powerlessness within the poor of the country. This unfair distribution of wealth, power and often land creates conflict, as those with the advantage battle the disadvantaged in order to maintain their advantages. In El Salvador, during the 1980s, Oxfam worked to alleviate poverty and suffering intensified by years of armed conflict. The roots of this conflict lay in the unequal distribution of power, wealth and resources.

Poverty causes, and is effected by, many different other global issues. A set of international development goals were created by the United Nations, the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund (IMF), and the World Bank, to address inequities in income, education, access to health care and the inequalities between men and women. In 2000 these goals were updated and the United Nations Millennium Declaration committed all countries to doing everything possible to eradicate poverty, promote human dignity and equality, and achieve peace, environmental sustainability, and democracy. At this time approximately 1.2 billion people were living on less than $1 (U.S) a day, with an additional 1.6 billion living on less that $2 (U.S) a day. The goal to reduce poverty was seen as an essential part of the way forward. It is crucial to understand why this is seen as a fundamental step and to do this one should look into some of the arguments against helping the poor that philosophers and political theorists pose.

The basic lifeboat ethics argument against helping the poor, argued by Garrett Hardin, states that the world is like a lifeboat. In a lifeboat there is a limit to how many people can be carried, and there is no fair way to choose from among those who need to come aboard. Therefore the only fair alternative is to let everyone who needs to come aboard 'drown'. What Hardin is getting at is that we, the developed world, can not save every person, and therefore how can we fairly choose those that we do save and those that we do not. He argues that it would be much fairer to let everyone in absolute poverty die.

Other arguments against helping the poor include Friedrich von Hayek's 'Game of Catalaxy'. Hayek's theory stems from a liberal laissez-faire view of the global economy. He believed that the global market should characterized by a spontaneous order that happens when individuals pursue their own ends within a framework set by law and tradition. Hayek goes on to argue that his 'Game of Catalaxy' is a game of skill and all players within the global market are different and therefore not all can win. The winners, he believed, won because they took certain chances and therefore deserved to win, while the losers deserved to lose.

Therefore, according to Hayek, countries that have problems with absolute poverty have played the 'Game of Catalaxy' and lost, and deserve to lose. Theoretically these countries will continue to play the game and if they take certain chances they may eventually win. This theory may work but meanwhile the problem of absolute poverty is affecting the rest of the world and therefore we cannot ignore it, or let the 'Game of Catalaxy' sort it out. As Ambassador Jams head Marker, the Permanent Representative of Pakistan to the United Nations, says, 'We are all now in the same lifeboat. The continued health of the North [developed, rich countries] depends on the survival and sustainable development of the South [less developed, poorer countries].' Beyond this argument is a belief that food is a basic human right. If hunger is a cause and effect of poverty and food is a basic human right, then theoretically every country should be doing everything within their power to reduce poverty and create a well-nourished world. This argument is reflected in the Millennium Development Goals.

The United Nations believes that food is a basic human right. On December 10, 1948, the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights. This declaration is the only human rights declaration with 'universal' in its name, and most countries have agreed on it. It can therefore be argued as a legitimate international agreement on the rights of all human beings. Article 25 of the Universal Declaration of Human Rights states that 'Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services'. Therefore, since the declaration is argued to be a legitimate international agreement on the rights of humans, it can be argued that food, along with other basic necessities, are basic human rights.

The orthodox approach to development is the view held by many international regimes like the World Bank and United Nations Development Program (UNDP). The basic concepts behind it are the ideas that the free-market system can create unlimited economic growth, that the 'Western' liberal model and knowledge are superior to anything else, and the belief that the process of free-markets would benefit everyone. Theoretically economies would slowly 'take-off' because of the free-market and from there on the wealth would work its way down to the people actually living in absolute poverty. To do this there would be a production of surplus, with individuals selling their lab our for money, as opposed to producing to meet their family and community needs. This orthodox method is known as the top-down liberal method and relies on external 'expert knowledge', technology, an expansion of privatization, and large capital investments. As already stated, the orthodox approach is based almost entirely on a monetary and material concept of poverty.

In 2000: A Better World For All, the World Bank, United Nations (UN), International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD) state that it is possible to cut poverty rates in half by 2015 if countries follow policies that both reduce social and gender inequalities and, most importantly, create income-earning opportunities for the poor. This is the key for, and a perfect example of, the orthodox approach to development. The UNDP Human Development Report 2003 states that there are six basic policies that should be implemented in order to help the countries reduce poverty. Firstly countries should 'invest early and ambitiously in basic education and health while fostering gender equality. These are preconditions to sustained economic growth.' Second, countries should 'increase the productivity of small farmers in unfavorable environments [environments where hunger and famine are a problem]'. Thirdly countries should 'improve basic infrastructures...to reduce the costs of doing business and overcome geographic barriers.' The last three policies involve developing an industrial development policy, working on promoting democracy, and ensuring environmental sustainability. The World Bank concurs with these ideas, as does the World Trade Organization who state that 'poor people within a country generally gain from trade liberalization.' The orthodox approach to development, portrayed by international regimes including the World Trade Organization, World Bank and United Nations involves liberalizing trade and creating empowerment in order to create faster economic growth, which in turn helps to alleviate poverty.

This approach is both valid and sound, and has been proven to work in some countries, although not as quickly as the international regimes would like. As this approach is the dominant view, it is seen as more likely to work. However a number of development theorists have discovered problems within this dominant view. The idea that the free market can end hunger, if governments just get out of the way, is seen by some theorists as a myth. These theorists believe that the free-market-is-good/ government-is-bad view is far too simplistic and can never help address poverty and hunger. The top-down approach is seen as unlikely to work in most situations due to corrupt governments who will not let the wealth trickle down to those actually living in poverty.

The theory of comparative advantage holds that nations should produce and export those goods and services in which they hold a comparative advantage and import those items that other nations could produce at a lower cost. The problem with this theory, which is also promoted by the World Bank, UN and IMF as a method for alleviating and reducing poverty, is that it falls apart when applied to the real world. Many countries living in absolute poverty can produce large amounts of coffee at a low cost to themselves, however since there are many producing, the price of coffee on the global market is forced downwards and these countries are producing more coffee for less money. These are just two examples of the kind of problems that make the orthodox method for development less viable.

The alternative approach to development is argued by many NGOs like World Vision and the World Development Movement. The core concepts of this approach are the ideas that humans should learn to be self-reliant, that nature, cultural diversity and community-controlled commons (water, air, land, and forest) should be valued, and that democratic participation will help to reduce poverty. This approach relies on participation at the community level, working with local knowledge and technology to create a bottom-up approach to community development. It is a grassroots approach, focusing on helping individuals and communities become self-reliant. This approach is often argued by dependency theorists who believe that the structure of the global political economy essentially enslaves the less developed countries by making them dependent on the capitalist, liberal nations. The alternative approach to development is therefore seen by dependency theorists as one of the only ways to develop less developed countries. Much of the anti-globalist campaign is directed at organizations like the World Bank and IMF because their policies encourage less developed countries to become dependent on foreign aid and investment which continues the poverty and hunger within the less developed countries. Although the alternative approach to development also seems sound and viable, it lacks monetary value and places too much emphasis on the power of communities to change governments.

Neither approach is perfect in its methods for the alleviation and reduction of poverty. I believe it is a combination of the orthodox and alternative approaches that really has the ability to help reduce poverty in today's world. The orthodox approach focuses too narrowly on money and capital, while the alternative approach believe too heavily in the power of communities to affect change at a national level. I therefore believe that international regimes, like the World Bank and United Nations, should attempt to affect changes at the state level, working to create democratic governments. Non-Governmental Organizations should continue to work at the grass roots level, affecting changes for the individuals and communities while helping them to become self-reliant. This approach is not without problems and cannot be called easy, but I believe it deals with both the individuals and the state at the levels needed and could help to halve the number of people living in poverty by 2015. There are no perfect answers for development. Poverty is a complex issue. The key is that we do not ignore those living in poverty but help, in whatever way we believe is best. We are obliged to try our hardest to make circumstances better for them.


In the end, the poverty is a global issue and it has many causes and effects that affect the local of the world before the Universal. As we know this problem linked to what happens to the nature from the increasing carbon dioxide and ozone hole expansion and other factors. To avoid this problem, we have to safe all needs and desires standoff for the individual and society.