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Poverty
Introduction
The aspect of poverty occurs both in developing and the developed nations. Some studies
put forward that poverty is inevitable regardless of the various measures that came into act to
reduce the scourge. The following article illustrates the various causes of poverty and the
variables that may cause either an upsurge or a reduction in poverty. The article also provides
details in the measurement of poverty. More insight of inequality and growth are also a
composition of the script. The relationships between the poverty levels, the inequality and the
growth in a particular place form part of the discussion. A provisional reference list appears at
the end of the document in an instance of authenticating the propositions therein.
Definition
Poverty in general relates to the lack of material possessions or money. However,
absolute poverty depicts the lack of the basic needs by humans. The primary necessities include
food, clothing, and shelter. Poverty tends to be the world's most common scourge with billions
living in poverty. The level of [poverty however differs with the level of growth of a particular
economy. The level of poverty in developing economies tends to be very high while debt in the
developed economies is very little (Klump, 2006).
Poverty measurement
The measure of poverty is possible through the use of economic indicators. Some of the
useful indicators are the Growth Domestic Product. The other levels that measure poverty
include the level of dependency in a particular area. The other size frame is the standards of
living of the people that are under study. The difference in social classes whereby there is a
comparison in the number of the wealthy in the society in relation to the poor becomes useful in
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the measurement of the poverty levels. Other measures include the rates of savings as well as the
rates of investments. The presence of high savings and high levels of investment implicate that a
particular area has low levels of poverty. The other relative measure is the levels of literacy that
attribute to a particular area. Other significant measures are the per capita income that determines
the individual income in a particular area (Felicitas Nowak-Lehmann D. & Inmaculada Martinez
Zarzoso & Stephan Klasen & Dierk Herzer, 2009).
Causes of poverty
The causes of poverty tend to vary depending on the attributes that make up the political,
economic and social aspects of the community. The primary determinant of poverty is the
deficiency of an equal distribution of resources within the region. The unequal distribution tends
to make one region better off than another thus the lack of a Pareto efficient situation in that area.
The other cause of poverty is a large population. High population tends to create pressure for the
existing resources (Bourguignon, 2002). The level of dependency tends to increase while
simultaneously increasing pressure in the social amenities that are available for a particular
group in the society. Population increase also leads to a reduction in the capacity of planning for
the population by the state. Another cause of poverty is bad management. Bad management
creates the room for corruption that in turn becomes a source for unequal distribution of the
existing resources. Other factors that cause poverty include natural calamities. The natural
disasters such as famines, droughts and floods may be sources of poverty
Inequality
Definition
Variation relates to the differences in the endowment of resources that characterizes
different regions, institutions, groups or even individuals. Difference in a region reflects the level
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of poverty in that region. The other implications of variation include bad governance as well as
the lack of proper planning by the state. The goal of every policy maker is thus in an attempt to
reduce the inequality levels in a bid to reduce the poverty that escalates from the term.
Concepts of inequality
The concept of difference tends to encompass various areas. The inequality may attribute
to the following fields
Economic inequality
The inequality regards to the differences in the economic developments of different
aspects that affect the human population in a particular region. The economic inequality relates
to the differences that the economy can service the human population that resides within its
borders (Bourguignon, 2005).
Gender inequality
The type of imbalance depicts the differences that exist for the provisions of the different
sexes. The differences may include the opportunities and the rewarding of those opportunities,
the differences in the rights that are prevalent for the different genders and the discrimination
that may arise from a person’s gender.
Racial and ethnic inequality
The concept relates to the advantages or bias that a person experiences due to his or her
belonging to a particular race or ethnicity background. The aspect is one of the major causes of
conflict and may lead to poverty in many areas in a particular region (Short, 2010).
Health inequalities
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The differences in the access of health services are what create the health inequalities that
attribute to a particular region. The provisions of services and the quality of the services illustrate
the happening of the inequality.
Age inequality
The concept of age is the most common. The term refers to the differences in the age of different
humans. Some people may move in discrimination of the age of others or on the contrary action
in the advantage of those people.
Evolvement of difference concepts over the past sixty years
History considers the concept of global income inequality. The instance refers to the
change that encounters different people in the reception of their conception with relation to their
areas. The global income imbalance is the problem that creates the issue of the difference in the
economies with accordance to the regions. The aspect marks the evolvement of the global north
and the formation of the global south.
The evolvement of the concepts of inequality dates back to the happenings of significant
revolutions ion the world. The nature of the industrialization process, for example, did create a
wealthy class in Europe but also did create a disadvantaged group in the same area. The point
saw the circumnavigation whereby different parties from Europe made an exploration of the
world. The character led to the tirade that was the first formation of the globalization process.
The investigation process made an impact that saw the creation of business. The nature of
business made some people better off while others became worse off. The example saw the
creation of difference. The other aspect was the creation of business that was harmful such as the
institution of slavery (Britta Rennkamp, 2012). The issue gave an advantage to the global north
while the global south did not increase any benefit. The aspect of the evolvement of the
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inequality as per the regions also has an attachment of the same fact. The other instance was the
settlement process. The concept of expansion also gave the room for imperialism. The example
saw the absence of a Pareto efficient scenario whereby the colonizers were better off. The
example saw the creation of a significant regional inequality that would accrue into a difference
in the global compensation of people. The other aspect in the evolvement process is the
happenings such as the global warming. The issue has led to the occurrence of natural calamities
in distinct areas. The effect creates a difference in the endowments of a particular region thus
inequality.
In the past sixty years, there have been various economic events that have had adverse
effects on the globe. Examples include the economic depression that had an effect on all
countries and the rise in fuel costs in the1970s. The creation of the inequality was possible since
some people lost property while others lost their sources of income. The differences in ideologies
from the cold war and the corresponding alignments before the 19990s were also another cause
of the difference. The countries that were capitalist nations saw an increase in economic growth
more than the socialists’ nations thus creating differences in economic growth (Bourguignon F.
o., 2013).
Growth
Definition
Growth depicts an increase in the value of products that a country produces in the market,
another aspect of growth relates to the percentage increase in the GDP. Growth also marks an
increase in the per capita income that relates to the GDP increase with respect to the number of
the population. The primary determinant of growth is the efficient use of critical inputs in the
production; processes. The other aspect is the redistribution of resources within the region to
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ensure Pareto efficiency occurs. Growth may also be due the exploitation of new opportunities or
resources. Some of the exploitation may include the venture into minerals, the shift from rain-fed
agriculture to irrigation or even the broadening of the market. The population control acts may
also lead to growth in the long run. The measurement of growth is mostly annual and nationally.
The level of inflation reflects the level of growth in a particular country. Effects of growth on the
distribution
The relationship between growth and distribution is one of the best markers towards that
shows a reduction or an increase in the same. The aspect also creates the best frame to measure
the economy of a particular region. Research establishes that the apprehension of growth
demands for an equal distribution of opportunities. Growth, therefore, relates to a reduction in
the inequalities that encompass the redistribution of opportunities.
Relationship between Poverty, Inequality, and Growth
The three factors tend to have a relationship that may act as an advantage or a
disadvantage of a particular region. Poverty and inequality tend to have a positive relationship. In
addition, poverty tends to be the dependent factor while inequality in the instance tends to be the
independent variable. The increase in inequality in an area leads to a constant increase in the
poverty levels in that particular area. A reduction in the same causes a reduction in the poverty.
The relationship between poverty and growth is inversely proportional. Growth tends to be the
dependent variable while poverty is the independent variable in the model. The poverty levels
tend to dictate the level of growth in the economy. An increase in the levels of poverty results in
a decrease in the level of economic growth.
The relationship between growth and inequality is inverse proportional. The increase of
one factor leads to the automatic decrease in the value of the other variable. Growth is the
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dependent factor while inequality acts as an independent factor. The increasing inequality leads
to a reduction in the growth of the region experiencing the upsurge in inequality. The reduction
of inequality also leads to an automatic increase in the growth levels of that particular area.
Debt reductions
The process of reducing poverty requires that the policy makers reduce the factors or
variables that cause the prevalence of the poverty levels in the region. The primary goal of
poverty reduction is to enhance the individuals experiencing poverty to produce own wealth in
an instance to put an end to the institution of debt. The central issue of poverty reduction takes
into consideration the cause factors that create poverty in a society. For instance, some of the
persons are inadequate in a voluntary manner whereby the poor play victim to religious or even
philosophical beliefs. In the aspect of religion especially in the Christian ideology, the nuns plus
the monks tend to take a pledge that requires them to abstain from any forms of luxurious living.
The persons may thus experience poverty from the beliefs (Bourguignon, 2002).
The greatest measure in the reduction of poverty includes the redistribution of resources.
Priority favors the areas with disadvantages or the places that are experiencing alarming poverty
rates. The instance tends to reduce the inequality levels thus enabling the reduction of poverty.
The reduction of poverty is through the availability of income to poor persons with the reduction
in the dependency levels that accrue. In many regions, there is an acceptance that poverty is
inevitable. The governments thus act in an attempt to reduce as well as provide it (Klump, 2006).
Measures to reduce poverty
Liberalization of the economy
The strategy encourages the extension of the protection of property rights to the poor in
the society. The security of the resources such as land is some of the best reformations that a
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nation can implement ion the elimination of poverty. Area in particular is one of the resources
that act as an asset to most societies especially those experiencing poverty rates that are alarming
(Bourguignon, 2002).
Another liberalization procedure is the reduction in the bureaucracies that existing in an
economy. Many economic systems tend to delay the delivery of products to the market. The
opening of business in accordance to the procedures may take a lot of time to establish legally.
The instance should, therefore, act in the encouragement of trade through saving of time. Less
bureaucratic procedures will increase in foreign investment in a particular destination. The aspect
will tend to increase the income of the region and consequently reduce the poverty levels.
Infrastructure, technology and capital
The long run growth of an individual is due to the abundance that a person has in terms of
money and the advancement in technology. The capital; may be physical or human. The
availability of health thus is easy to access creates a healthy human capital that can create
growth. Education is also a form of human capital. Education builds skills that are an advantage
in the reduction of poverty (Short, 2010).
The other important factor is the infrastructure. The support includes the availability of
transport, communication and auxiliary services that provide financial aid. Good support makes
sure that there is easy accessibility of the work and the redistribution of resources.
Technology is one of the best methods of reducing poverty. Technology makes sure that the poor
access information that is useful in ensuring efficiency in carrying out of their work. Technology
also creates the economic freedom that ensures the accessibility to the financial services by the
poor. The poor also know the safe places to save their money and the best places to invest their
savings. The instance creates the reduction in poverty.
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Labor productivity and employment
The provision of employment and the consequent increase in the productivity of labor
eliminates poverty significantly. The provision of employment creates income to the poor. An
increase in the productivity, on the other hand, tends to increase the efficiency of the resources in
a way that the resources can serve a broader segment of the population. The output from the
available resources tends to increase thus causing a reduction in the poverty levels and increase
in the economic growth (Klump, 2006).
The other inclusion factor to the reduction of poverty is aid. Aid is the assistance that a
country gets in the form of finances or in kind in order to stimulate the economic growth.
Economic growth in turn reduces the poverty in a particular region. Study shows that most
developing countries require an external stimulus and the injection of capital (Nowak-Lehmann,
Martinez , Klasen & Herzer, 2009). The reason is that the injection of capital creates investments
that act as a kind of economic growth. The instance delivers the poverty-stricken countries from
the vicious circle of poverty. Other aspects include the relief of debt burdens for countries. The
relief creates room for borrowing and investing in poor countries.
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References
Bourguignon, F. (2002). The growth elasticity of poverty reduction : explaining heterogeneity
across countries and time periods. Paris: DELTA Working Papers.
Bourguignon, F. (2005). Comment on "Measuring Poverty in a Growing World (or Measuring
Growth in a Poor World)" by Angus Deaton,". The Review of Economics and Statistics,
87(1), pp. 20-22.
Bourguignon, F. o. (2013). The Poverty-Growth-Inequality Triangle. London: The World Bank.
Britta Rennkamp, A. M. (2012). Reducing Inequality and Poverty while Mitigating Climate
Change: Key Challenges for Research and Practice in Middle Income Countries in Africa
and Latin America. 33-36.
Felicitas Nowak-Lehmann D. & Inmaculada Martinez Zarzoso & Stephan Klasen & Dierk
Herzer. ( 2009). Aid and Trade - A Donors Perspective. Courant Research Centre:
Poverty, Equity and Growth (p. Discussion Papers 7). New York: Courant Research
Centre PEG.
Klump, D. H. (2006). Poverty, Government Transfers, and the Business Cycle: Evidence for the
United States. New York: Ibero America Institute for Econ. Research (IAI).
Short, T. I. (2010). Identifying the Poor: Poverty Measurement for the U.S. from 1965 to 2005.
Review of Income and Wealth 56(2), 237-258.
