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Poverty is the lack of basic human needs, such as clean water, nutrition, health care,education, clothing and shelter, because of the inability to afford them.[1][2] This is also referred to as absolute poverty or destitution. Relative poverty is the condition of having fewer resources or less income than others within a society or country, or compared to worldwide averages. About 1.7 billion people live in absolute poverty; before the industrial revolution, poverty had mostly been the norm.[3][4]
Poverty reduction has historically been a result of economic growth as increased levels of production, such as modern industrial technology, made more wealth available for those who were otherwise too poor to afford them.[4][5] Also, investments in modernizing agriculture and increasing yields is considered the core of the antipoverty effort, given three-quarters of theworld's poor are rural farmers.[6][7]
Today, economic liberalization includes extending property rights, especially to land, to the poor, and making financial services, notably savings, accessible.[8][9][10] Inefficient institutions, corruption and political instability can also discourage investment. Aid and government support in health, education andinfrastructure helps growth by increasing human and physical capital.[4]
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[edit]Causes
[edit]Scarcity of basic needs
Before the industrial revolution, poverty had been mostly accepted as inevitable as economies produced little, making wealth scarce.[3] In Antwerp and Lyon, two of the largest cities in western Europe, by 1600 three-quarters of the total population were too poor to pay taxes.[11] In 18th century England, half the population was at least occasionally dependent on charity for subsistence.[12] In modern times, food shortages have been reduced dramatically in the developed world, thanks to agricultural technologies such as nitrogen fertilizers, pesticides and new irrigationmethods.[13][14] Also, mass production of goods in places such as China has made what were once considered luxuries, such as vehicles or computers, inexpensive and thus accessible to many who were otherwise too poor to afford them.[15][16]
Rises in the costs of living make poor people less able to afford items. Poor people spend agreater portion of their budgets on food than richer people. As a result poor households, and those near the poverty threshold can be particularly vulnerable to increases in food prices. For example in late 2007 increases in the price of grains[17] led to food riots in some countries.[18][19][20] The World Bank warned that 100 million people were at risk of sinking deeper into poverty.[21] Threats to the supply of food may also be caused by drought and the water crisis.[22][23][24]Intensive farming often leads to a vicious cycle of exhaustion of soil fertility and decline of agricultural yields.[25] Approximately 40% of the world's agricultural land is seriously degraded.[26][27] In Africa, if current trends of soil degradation continue, the continent might be able to feed just 25% of its population by 2025, according to UNU's Ghana-based Institute for Natural Resources in Africa.[28]
Health care can be widely unavailable to the poor. The loss of health care workers emigrating from impoverished countries has a damaging effect. For example, an estimated 100,000 Philippine nurses emigrated between 1994 and 2006.[29] There are more Ethiopian doctors inChicago than in Ethiopia.[30]
Overpopulation and lack of access to birth control methods drive poverty[31][32][33] The world's population is expected to reach nearly 9 billion in 2040.[34] However, the reverse is also true, that poverty causes overpopulation as it gives women little power to plan childhood, have educational attainment, or a career.[35]
[edit]Barriers to opportunities
The unwillingness of governments and feudal elites to give full-fledged property rights of land to their tenants is cited as the chief obstacle to development.[36] This lack of economic freedom inhibits entrepreneurship among the poor.[5] New enterprises and foreign investment can be driven away by the results of inefficient institutions, notably corruption, weak rule of law and excessive bureaucratic burdens.[4][5] Lack of financial services, as a result of restrictive regulations, such as the requirements forbanking licenses, makes it hard for even smaller microsavings programs to reach the poor.[37]
It takes two days, two bureaucratic procedures, and $280 to open a business in Canada while an entrepreneur in Bolivia must pay $2,696 in fees, wait 82 business days, and go through 20 procedures to do the same.[5] Such costly barriers favor big firms at the expense of small enterprises, where most jobs are created.[5] In India before economic reforms, businesses had to bribe government officials even for routine activities, which was a tax on business in effect.[4]
Corruption, for example, in Nigeria, led to an estimated $400 billion of the country's oil revenue to be stolen by Nigeria's leaders between 1960 and 1999.[38][39] Lack of opportunities can further be caused by the failure of governments to provide essential infrastructure.[40][41]
Opportunities in richer countries drives talent away, leading to brain drains. This is mainly caused by richer countries' restrictions on Freedom of Movement of the poor, uneducated class. Entry visas are granted with much higher probability to the rich and educated of developing countries. Brain drain has cost the African continent over $4 billion in the employment of 150,000 expatriate professionals annually.[42] Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion annually.[43]
Poor health and education severely affects productivity. Inadequate nutrition in childhood undermines the ability of individuals to develop their full capabilities. Lack of essential minerals such as iodine and iron can impair brain development. 2 billion people (one-third of the total global population) are affected by iodine deficiency. In developing countries, it is estimated that 40% of children aged 4 and younger suffer from anemia because of insufficient iron in their diets. See alsoHealth and intelligence.[44]
Similarly substance abuse, including for example alcoholism and drug abuse can consign people to vicious poverty cycles.[citation needed]Infectious diseases such as Malaria and tuberculosis can perpetuate poverty by diverting health and economic resources from investment and productivity; malaria decreases GDP growth by up to 1.3% in some developing nations and AIDS decreases African growth by 0.3-1.5% annually.[45][46][47]
War, political instability and crime, including violent gangs and drug cartels, also discourage investment. Civil wars and conflicts in Africa cost the continent some $300 billion between 1990 and 2005.[48] Eritrea and Ethiopia spent hundreds of millions of dollars on the war that resulted in minor border changes.[49] Shocks in the business cycle affect poverty rates, increasing in recessions and declining in booms. Cultural factors, such as discrimination of various kinds, can negatively affect productivity such as age discrimination, stereotyping,[50] gender discrimination, racial discrimination, and caste discrimination.[51]
Max Weber and the modernization theory suggest that cultural values could affect economic success.[52][53] However, researchers[who?] have gathered evidence that suggest that values are not as deeply ingrained and that changing economic opportunities explain most of the movement into and out of poverty, as opposed to shifts in values.[54]
