Causes And Effects Of Poverty Economics Essay

Primarily, poverty means is a defiance of options and prospects and abuse of human self-esteem. Poverty is also referred to as inability of a human being to effectively contribute to the society. It also means that a person does not have enough food or clothing for a family, does not have access to hospital or a school, does not own a land on which he can grow food, does not have a job to earn one’s living and does not have access to money. It refers to powerlessness, uncertainty, and barring of individuals from participation in society. It means vulnerability to hostility, and frequently entails leading a life in marginal environments, with no access to sanitation and safe drinking water. Poverty is a relative term. It exists when a large number of people are unable to meet their basic requirements and earn under $1 (U.S) per day. It is the non-existence of the basic needs of people which include shelter, food, clothing, money, access to clean water, education, sanitation, education etc. It can be simply stated that it is the lack of money or a barrier in performing the tasks of everyday life. It does not have any clear and concise definition; it is a multi-faceted and a complicated concept.

Poverty can be classified as ‘relative poverty’ and ‘absolute poverty’. According to Copenhagen Declaration, absolute poverty is a state illustrated by strict deficiency of fundamental human requirements, which include food, clean water for drinking, cleanliness facilities, education, health, information and shelter. Absolute poverty not only depends on income earned by a human being but also the access which he has to social services. More so, absolute poverty is often taken as a synonym for extreme poverty. It also means a predefined standard which is constant over time and among countries of the world. In 1990s, the World Bank set a standard per day earning of $1, below which absolute poverty line started. The World Bank revised the absolute poverty measure in 1993 and it was set at $1.08 a day till 2005, on the basis of purchasing power parity. It was again revised in 2005 and was altered according to the high cost of living. Now, extreme or absolute poverty is defined as living on or earning less than $1.25 a day. In the year 2011, studies suggest that 1.1 billion people earned less than a dollar a day and 2.7 billion people earned less than two dollars a day. However, standard of absolute poverty is not true in countries other than US, by simply converting the amount through forex rates. It is looked at the amount of local currency required the same items which $1 can purchase in US.

On the other hand, Relative poverty is said to exist within a country. For example, people in a country might be earning more than $1 per day but are still poorer as compare to other rich people in their country. Since these poor people are earning more than $1 per day, but still they would be considered relative poor since they are poorer than people around them or as compared to the rich population in the country. These people will not be living in absolute poverty, but are poor therefore they will be said to be living in relative poverty. Therefore, relative poverty is a measure of inequality prevailing in the society rather than the deprivation of wealth. The measurement of relative poverty takes into account the yearly income of a person however, his total wealth is not accounted for in this measure.

According to research the extreme poverty of the developing regions around the world fell from 28% in the year 1990 to 21% in the year 2001. According to World Bank reports this downfall in extreme poverty has mostly occurred in Asian region where the poverty head count has dropped from 69% in 1990 to 29.5% in the year 2006 and further to 27% in the year 2007. However, a reverse trend was observed in African regions where extreme poverty increased to 46% in the year 2001 as compared to 41% in the year 1981 which is mainly attributable to growing population and fewer chances of earnings.

Keeping these things in mind, the question arises that what are the causes of poverty and how does it affect the global population in general.

Poverty is a remarkably complex social fact, and to discover the causes of poverty is equally complex. The simplest form of explanation to this phenomenon which is generally given is that it is the poor which are a cause of their own poverty. Many experts have blamed the poor for their own condition because they do not think of the future and just live their lives for the moment. Still others believe that poor have lost all hope for a better future and do not strive for one either. This kind of attitude has led them to feel neglected, powerless, and inferior. Poverty is caused by many reasons and it has a great many effects on people, not only on a regional scale, but also on global level. The most evident cause of poverty is hunger; however it can also be an effect of poverty. Hunger is the absence of basic food requirements of an individual or a number of people and it deprives the people of carrying out necessary daily tasks or skills to engage in productive work. Facts about poverty show that during 1998 and 2000, around 840 million of the world population was underfed. Poverty also affects children and it has been estimated that due to malnutrition, 6 million children die each year before reaching the age of five. The total number of children in the world is around 2 billion and every second child in the world (around 1 billion children) lives in poverty. Hunger also affects the physical and mental growth of people. It affects the overall growth pattern of the body, resulting in slighter and smaller body frames, which in turn cause the individuals to perform less in physical labor jobs, affecting the overall poverty of the community and the country. Efforts to eradicate hunger from the global scene may also lead to poverty as most of the funds of the government and other global organizations would be consumed in eradicating hunger, thus increasing the levels of poverty and minimizing the provision of services to the masses.

Let us now turn our attention to the effects which poverty has on individuals, societies and countries. Most of the experts believe that by understanding the causes of poverty can poverty reduction strategies have a real impact on the lives o the poor. The most resounding effect of poverty is “powerlessness”. Due to poverty, individuals tend to lose control of their own lives as they do not have any say on the issues which directly or indirectly affect their daily lives. This scenario in turn leaves them at the mercy of the existing economic and social structure. People who are living in poverty usually have no political influence or power and at most of the time, they are exploited by the state. They have no power over the political matters of the country or state and therefore, are subjected to accept the decisions of the state on as-it-is basis. Due to this, they are less protected, and often suffer lack of attention and care from the state. They are also deprived of basic healthcare and educational facilities. Poverty also effects the social system in the society, where in some cases, rich are given priority over the poor. This creates problem for the poor people and becomes a reason for widening the gap between the rich and the poor. Therefore, poor individuals or groups become dependent on those who have better access to services and commodities of daily life. For example poverty forces individuals to depend on government to provide for healthcare, housing and education requirements and the same group of individuals is more likely to suffer the ills of substandard housing, healthcare and education.

Another profound effect of poverty is “vulnerability”. Vulnerability is often taken as an outcome of poverty because it makes the poor individuals or groups more exposed to emergencies and stress and being poor either due to lack of capital or other resources, the poor are unable to cope with these contingencies. Therefore, vulnerability can be divided into two parts; the external vulnerability in which an individual is exposed to dangers, natural calamities, shocks, famine and stress whereas, the internal vulnerability in which the individual feels defenseless in the face of the emergencies. This feeling apart from causing physical damage to individuals can also harm them psychologically. Thus vulnerability can damage the individuals or groups in many ways: making them physically weak, economically broke, communally reliant or disgraced. Moreover, the life of a poor individual is at a greater risk than with more resources at their disposal because the poor community lacks buffers required to save them from shocks and natural disasters. Even if they have few resources at their disposal, the efficacy of these buffers in inadequate to save them from potential hazards. Experts are of the opinion that such individuals, when faced with calamities, tend to become poorer due to their response to the situations. For example a poverty stricken individual may withdraw his children from school, cut down on basic health expenses, cut down on quality meals or even engage in child labor. All these responses drive the individuals into deeper poverty dilemma instead of helping them revive. As a result, it becomes impossible for the individual or a group to escape poverty.

Poverty is most broadly the barriers which one faces in daily life. These barriers may be in the form of shortage of quality meals, lack of adequate finances or non-availability of access to quality education and healthcare. The supply of these basic services and needs may be restricted due to corruption in public sector, natural calamities, debt or brain drain from the country. No matter what the reason for a community or a country may be of poverty, it becomes almost impossible for the community to get out of this dilemma. People feel voiceless when stricken with poverty and are deprived of opportunities to engage in decision making. They tend to lose control of their own lives and are considered as second class citizens of a community. They are forced to accept decisions of the rich and affluent class without question and reasoning. Poverty also brings itself the stigma of vulnerability. Individuals are vulnerable to natural disasters, stress and psychological problems. They have a dearth of buffers to save them from these calamities and therefore cause both internal and external damage. Presently, poverty has become a main issue around the world and global organizations e.g World Bank and UN are involved in vigorous poverty alleviation programs.