Economics

Give reasons why the poor remain poor. Can you suggest solutions to this?

Rich world should 'give till it heals'-Jeffrey D.sachs, 2/4/2005
Working out an escape from poverty-Juan Somavia 12/9/05
Diamonds are a despot's best friend
Equity and growth go hand in hand
Why the millennium goals won't work

1)Corrupt governance
People in power misuse country development funds to advance own selfish interests like amassing own wealth. Eg: President Mr Mobutu in Congo. Between 1972 and 1992, despite the inflow of a considerable sum of aid the country remained shrouded in poverty. The president misused the aid for his own personal enrichment, government expenditures on social services plunged from 17% to 0% while spending on the presidency skyrocketed from 28% to a whopping 95%. As a result, the poor in the country cannot benefit from the aid given.Also, most if not all of the profits earned from the country's sale of resources also end up in the pockets of corrupt politicians. Instead of utilising the financial resources to develop infrastructure to assist the people in escaping poverty, the money is used to fund the corrupt politicians' own vested interests. As such, the people in these countries remain poor.
Solution: Push for removal of corrupt governments. Ensure transparency and accountability of government action that will serve to protect the rights of people.

2)Lack of educational opportunities for self-improvement to earn more money and rise oneself up the social ladder. One of the Millennium Development Goals is to achieve universal primary education. A main function of education would be to empower people with knowledge necessary for them to break out of the vicious cycle of poverty and move up the social ladder. A line of argument would be that when they learn better farming methods to increase their productivity, and their profits increase. With more money earned, they can improve their lives. A larger part of the population can realise their economic potential and this bodes well not only for the country but for the citizens as well.
Solution: As the economies of these countries are usually not well-developed yet, a rudimentary system of schooling could first be introduced. And after the economy is stable, the system can be continually upgraded to suit changing needs.

3)Saddled by debt
Many poor and Third World countries owe the West billions of dollars of debt. Because these countries are required to service the debt, as such they are left with insufficient funds to develop the country
SolutiON: Write off the debts of these countries. For example, the G-8 writing off the debts of 18 poorest nations in the world. The money gained if they don't have to continually service the debt allows them to put it to better uses to develop the economy and improve lives of their citizens.

4)Underemployment or a lack of jobs. Working poor or not having a job at all.
Unemployment is growing at a rate of 26% in the past 1 years.More people are unable to find jobs to sustain themelves and to get out of the poverty trap.


5)Insufficient foreign aid.
Countries promised to provide aid to the poorest countries equal to 0.7& of their GNP. However, many countries are falling behind this goal, for example, US, which just spends 0.15% of its GNP on aid compared to the sizeable 4% of GNPit spends on its military. Foreign aid is necessary to provide the starting blocks from which countries can utilise aid to set the economic foundations of the country like that in Uganda which used to depend solely on foreign aid to set up its economy as it had no natural resources. Therefore, a shortage of aid means less resources to improve the economy to alleviate poverty, as such the poor remain poor.

6) Many of the poor are in Third World countries that are faced with a barrage of unpredictable disasters. These people survive mainly on agriculture and such disasters impose a heavy toll on them. They make heavy losses and take a long time to recover. Coupled with inefficient farming methods, some of them will sink down to abject poverty. To eke out a living based on the unpredictable means that their livelihood is not stable and secure, such that they even have trouble making ends meet. They remain poor as they are unable to eliminate the problems disasters cause them.
Solutions: Try to adopt measure that subject them to minimum impact of weather conditions. Also, set up disaster relief funds and come up with disaster plans so as to spur rapid economic recovery and resilience after a disaster.

7)Many Third World countries are finding difficulty trying to access to EU's and US's agricultural markets so that they can export and sell their produce to earn a living. The high import tariffs imposed on the goods makes gives them a competitive disadvantage. Moreover, farmers in these countries often receive hefty government subsidies to grow their goods as well, for example, cotton farmers. Such an economic setting serves to further disadvantage the poverty-ridden Third World countries. When farmers cannot sell their produce at a profitable price, they can only languish in poverty. Also when the country at a whole is not able to fare well economically, there are insufficient funds to alleviate the people from poverty as well.
SOLUTION: Rich countries remove import tariffs. However, this has shown not to be viable, as can be seen from the failed Doha Round of talks. An alternative could be to suggest to affluent countries to lower their tariffs in intervals and phase them out after some time. However, this solution might not work very well as rich countries still have their own national interests to protect so they might not be very willing to cooperate. Without the success of the trade talks, import tariffs remain high and poor people in ThirdWorld countries will not be able to export their goods. Their markets drastically decreaes and they remain poor.

The primary solution should be first to eliminate corrupt governance, or else the profits and funds garnered from the other solutions mentioned will not go to the intended target group which is the abject poor. After that, there can be focus on spurring economic activity within the country and to teach people proper technology so that they are able to increase productivity adn increase profits. There could also possibly be a larger market for export produce if the Western countries are able to cooperate and remove their export tariffs...