What is Poverty Trap?
507 reads · Last updated: December 5, 2024
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 to escape poverty. When individuals lack this capital, they may also find it difficult to acquire it, creating a self-reinforcing cycle of poverty.
Definition
A poverty trap is a mechanism that makes it difficult for people to escape poverty. It forms in an economic system when escaping poverty requires significant capital, and individuals lacking this capital find it hard to acquire it, creating a self-reinforcing cycle of poverty.
Origin
The concept of the poverty trap originated in development economics, particularly in the mid-20th century, when economists began to focus on the causes of persistent poverty in developing countries. This concept helps explain why some countries and regions struggle to achieve economic growth and development.
Categories and Features
Poverty traps can be categorized into several types, including economic poverty traps, educational poverty traps, and health poverty traps. Economic poverty traps refer to persistent poverty due to lack of funds and resources; educational poverty traps arise from lack of educational opportunities; health poverty traps are due to economic difficulties caused by health issues. The common feature of these traps is the lack of resources and opportunities, making it difficult to break the cycle of poverty.
Case Studies
A typical case is many countries in Sub-Saharan Africa, which are trapped in poverty due to weak infrastructure, low education levels, and severe health issues. Another example is certain rural areas in India, where despite overall economic growth, residents struggle to escape poverty due to lack of education and healthcare resources.
Common Issues
Investors might ask how to help break the poverty trap. Solutions typically include increasing investment in education and health, improving infrastructure, and providing microfinance services. A common misconception is that poverty traps are solely due to individual laziness or lack of effort, ignoring the presence of structural barriers.
