Are poverty traps real?

Yes
96% (22 votes)
No
4% (1 vote)
Total votes: 23

Comments

• A "poverty trap" can be understood as a set of self-reinforcing mechanisms whereby countries start poor and remain poor: poverty begets poverty, so that current poverty is itself a direct cause of poverty in the future. • The idea of a poverty trap has this striking implication for policy: much poverty is needless, in the sense that a different equilibrium is possible and one-time policy efforts to break the poverty trap may have lasting effects. • But what does the modern evidence suggest about the extent to which poverty traps exist in practice and the underlying mechanisms that may be involved? The main mechanisms we examine include S-shaped savings functions at the country level; "big-push" theories of development based on coordination failures; hunger-based traps which rely on physical work capacity rising nonlinearly with food intake at low levels; and occupational poverty traps whereby poor individuals who start businesses that are too small will be trapped earning subsistence returns. We conclude that these types of poverty traps are rare and largely limited to remote or otherwise disadvantaged areas. • We discuss behavioral poverty traps as a recent area of research, and geographic poverty traps as the most likely form of a trap. • The resulting policy prescriptions are quite different from the calls for a big push in aid or an expansion of microfinance. The more-likely poverty traps call for action in less-traditional policy areas such as promoting more migration.
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Total votes: 11
Peer vote
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Total votes: 1
Expert vote

Many countries have managed to lift themselves out of poverty through government policies to raise the capital stock of the economy. This was the case in Brazil. However, the same prescription would not be enough to make the country rich, regardless of fiscal restrictions. Even less in the 21st century, due to technological advances. The difficulties are of two kinds. The first is more technical: investment in infrastructure and installed capital generates GDP growth, but with decreasing intensity over time. Getting rich requires steps beyond just productivity gains, which in itself already depends on many variables. The second difficulty is political. It is necessary to have an institutional arrangement of well-structured public policies with constant supervision, which can offer cultural development, in order to build consensus on pro-growth policies, as only the good will of government officials is not enough. The programs will only be successful if the beneficiaries are aware that the shortage must be a transitional state and not that they should stay the rest of their lives depending on public policies. There is a broad consensus among economists around the world that quality education is a key variable for a country to escape poverty traps. However, in middle-income countries, there is no mobilization of political actors in this direction, nor is there any involvement of society. In Brazil it is no different and, to make matters worse, the technical debate is not yet mature enough.
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Total votes: 12
Peer vote
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Total votes: 1
Expert vote

Poverty traps are real and are very frequent in every country, more exactly in rural places. The people that work in agriculture for themselves do not have the chance to develop economically as long as what they are aiming for is stability and not a business (not that they would not want to). For example, my parents were in a poverty trap. As I was growing up, my family had an unstable financial situation. My parents were dealing only with personal agriculture, as householders. The money that they gained from selling milk and other animal products were used for survival and my education. However, they were unable to invest the money. The money that came, were gone very quickly. But in time, my father succeeded to get employed and now they can invest (especially, because I got employed too and I can take care of myself on my own). So they escaped the poverty trap. This is a happy ending. Even so, there are a lot of families that deal with this poverty trap all their life and I do not think that the situation will change in time. Because even tho someone gets the luck to win in a month more than usual, something unexpected will happen and they have to use that money for survival. The money won't be invested. Many people from many countries (no matter how developed) are found stuck in this trap and are unable to escape. So, the poverty trap is real and creates many problems for many people and, not to mention, for our entire global economy.
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Total votes: 10
Peer vote
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Total votes: 1
Expert vote

The Sudanese government has begun preparing the national document for the poverty reduction strategy, covering a period of five years, starting from 2019, and has begun to attract support from development partners and donors and involve them in preparing the document. The government and the Islamic Solidarity Fund have also embarked on a study to establish an economic empowerment fund to integrate the poor, youth and vulnerable segments into the real economy. However, poverty level statistics in Sudan are still causing controversy among specialists who say that the poverty rate has reached significant levels, exceeding official figures. A government study conducted in 2017 revealed that the poverty rate in Sudan decreased to 28%. While the data of the Central Bureau of Statistics in 2016 showed that the poverty rate in Sudan decreased to 36.1%, depending on the prices of 2014. While the official estimates of poverty in 2009 recorded 64.5%. This raised doubts among experts about the numbers and results of the studies. Experts say that the lack of a real and clear percentage of poverty constitutes a great concern for all parties that seek to establish real projects to combat and reduce poverty. Especially since the division of the population according to the degree of their poverty is important for directing programs that target each segment separately.
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Total votes: 10
Peer vote
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Total votes: 1
Expert vote

Truly poverty traps exist everywhere in the world ranging from different levels but it is mostly seen in the developing and under-developing countries: specifically Africa. Poverty traps are spiralling mechanisms that force people to remain poor: and once the people are trapped in it is very difficult for them to escape or come-out of it unless it takes the intervention of an outsider. In Ghana, some poor people are trapped in the poverty cycle as a result of low-income earners. People under the poverty line struggle(threshold) to make ends meet. In such regard, education becomes expensive since they earn very low. And without adequate education, they are unable to get better jobs to secure their future. Others also not be given loans to expand their small scale business from the banks and some microfinance companies because they are already poor and do not have collateral. In some African countries, the population is engulfed in the poverty trap as a result of war and conflict, corrupt governance, environmental degradation, and many more. To tackle the problem of the poverty trap there is the need for government in Africa to introduce welfare programs and policies and seek assistance from the world bank and other non-governmental organizations like Friends of the Earth, civil society, etc. In 2008, the government of Ghana Introduced Livelihood Empowerment Against Poverty (LEAP), a cash transfer program to the extremely poor and vulnerable households. Again, the Ghana School Feeding Programme (GSFP) commenced in 2005 with the intermediate objective of reducing hunger and malnutrition; increasing school enrolment, retention, and attendance, and to boost local food production. Lastly, Free Secondary High School (Free SHS) education policy in Ghana,2017. All the above had helped a little to reduce poverty levels in Ghana.
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Total votes: 11
Peer vote
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Total votes: 1
Expert vote

A poverty trap is a mechanism that makes it very difficult for people to escape poverty. A poverty trap is created when an economic system requires a significant amount of capital in order to earn enough to escape poverty. When individuals lack this capital, they may also find it difficult to acquire it, creating a self-reinforcing cycle of poverty. This survey reviews models of self-reinforcing mechanisms that cause poverty to persist. Some of them examine market failure in environments where the neoclassical assumptions on markets and technology break down. Other mechanisms include institutional failure which can, by itself, perpetuate self-reinforcing poverty. A common thread in all these mechanisms is their adverse impact on the acquisition of physical or human capital, and on the adoption of modern technology. The survey also reviews recent progress in the empirical poverty trap literature. In order to escape the poverty trap, it is argued that individuals in poverty must be given sufficient aid so that they can acquire the critical mass of capital necessary to raise themselves out of poverty. This theory of poverty helps to explain why certain aid programs that do not provide a high enough level of support may be ineffective at raising individuals from poverty. If those in poverty do not acquire the critical mass of capital, then they will simply remain dependent on aid indefinitely and regress if aid is ended.
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Total votes: 7
Peer vote
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Expert vote

Poverty is probably one of the most addressed subjects worldwide currently. Most likely because the implications that poverty have on individuals and on countries, when talking about individuals as a group, are extremely important. In its most common sense, poverty refers to lack of resources in order to cover basic human needs; a minimum standard of living. When we talk about poverty-stricken households, we imagine people without proper medical attention, bare minimum of food or water. Each country has its own poverty threshold measurement – as a determinant of the number of people that live in poverty. Talking about poverty traps, I prefer the term of vicious cycle of poverty. In order to escape the poverty trap, individuals will need a higher amount of capital earned in order to escape it. However, when individuals lack the capital, then in most cases working your way to acquire it may prove extremely difficult. As a solution to rise out of poverty, it is argued that aid should be given to acquire capital and help them raise out of poverty. How effective is that is still subject to arguments, one of which is the potential for them to remain dependent on aid indefinitely or even regress when aid stops being available. A lot of poor countries have low savings aids. The saving trap can only be overcome if you pass a certain level of capital. Higher amounts of aid will help economies move to a higher savings schedule, enabling them to converge. If we are referring to population, then poor countries are faced with high fertility rates; whilst developed countries are known to have lower increases in population. These are factors that are somehow reinforcing the poverty traps some economies are facing. As Sachs points out, the major kinds of capital that need investment in order to try and end the circle of poverty are as follows: - Human capital: health, education, nutrition; - Infrastructure: roads, power, water, environmental conservation; - Public institutions: judicial system, public administration, police - Natural capital: ecosystems, biodiversity - Knowledge capital: scientific research for health, agriculture, energy Most times, a mix of these factors; depending on the specificities of a country, form the basis of the poverty trap. Economies that suffer from poverty traps find alleviating poverty difficult. Most likely, multi-pronged solutions need to be tailor made and addressed in order to contribute to eradicating poverty worldwide. I believe we are all part of the solution and worldwide the civic society has increased its programs to address poverty.
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Total votes: 8
Peer vote
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Total votes: 1
Expert vote

The poverty trap is a reality, without any discussion. But what is very important is to find out how to get out of the loop. Most studies have been done in Africa because it is an entire continent affected by this problem. Initially, rich countries distributed humanitarian aid and financed infrastructure investments. After all this, there was no substantial increase in living standards. Renowned economists such as Jeffrey Sachs and William Easterly disagree on this issue. Of course, this statement is not 100% certain because no segment did not receive aid and that would serve as a comparison. Various organizations have considered that increasing the level of education will make a decisive contribution to reducing poverty. Comparative studies were done and it turned out that, this time too, the results were not satisfactory. So, another organization started a drug treatment for de-worming. It was the most successful because it had as consequences the improvement of the health condition, the drastic decrease in the number of reinfections, the decrease of the absenteeism from school, the increase of the education level. However, from this small-scale study, we could conclude that improving the health system in poor countries would be one of the best solutions to break the poverty spiral. Given the small size of the research, the results are not necessarily certain, but I believe that investing in human health is desirable and how humanity will evolve.
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Total votes: 8
Peer vote
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Total votes: 1
Expert vote

I think poverty traps are real because sometimes is very hard cu deal with all problems, when you have to spend some money for something you have to think twice, and in the end results the fact that you should to know priorities, what is the most important for me now, and etc. I will say the education is important, but this is for me, I have no problems with other things, another one will say „ for me is important this car” , or ” this house” or ” food”. This is the reason the poverty traps are very real, people know they should spend for education, clothes, or anything else, they don t have enought for all of this, and because of this, in time, will be very hard to succeed.
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Total votes: 6
Peer vote
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Expert vote

I believe that the poverty traps are a real thing. Poverty is a problem all around the world. Of course, a relative one can be overcome, but there is the extreme poverty, the struggle for survival - the one caught in the trap. Poverty can be analyzed from the development of a country’s perspective, it’s growth perspective, or even for an individual, a family. Either way, the theory of the poverty trap follows the same principle. From an individual’s perspective, a low income family stays poor, or can take several generations to break out of poverty. Their problem is that even if they manage to have some savings, or a permanent income, there is a big possibility that the money saved would disappear because of an unexpected negative event or more. So, because it is a poor country and there is no health or house insurances, it is very hard to find money to borrow, you go back in poverty in a moment. That is the trap. Although there is a certain point, that can be reached in time, where you have enough savings or capital to cover the unexpected expenses. That is the escape. When there are many people caught in the poverty trap, it escalates and affects the entire country. The poverty trap from development’s perspective also starts from the low income, which drives to low productivity, than to low levels of human capital, reaching low levels of education and health care, than getting all the way back to the low income. The growth, unfortunately follows the same road: from low income to low levels of savings, to low levels of investment, and low economic growth, going back to low income. This never-ending cycle, this trap of poverty can be escaped only in time and with external help. The poor have no savings to invest in order to expect future income, so they need a lot of external support to rise and get pass that crucial point where prosperity is closer than poverty. But the main issue is that nobody feels secure to invest or land money or … mainly anything to a poor country. It is considered a risk. So poor countries remain poor unable to escape this trap.
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Total votes: 7
Peer vote
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Total votes: 1
Expert vote