Causes of poverty mainly concern reasons behind the low wealth and productivity of the poor or, conversely, the shortage and inflation of the goods they consume.  Obstacles to productivity Street children sleeping in Mulberry Street - Jacob Riis photo New York, United States of America (1890) People experiencing homelessness living in cardboard boxes in Los Angeles, California. 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. This lack of economic freedom inhibits entrepreneurship among the poor. 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. 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. Such costly barriers favor big firms at the expense of small enterprises, where most jobs are created. In India before economic reforms, businesses had to bribe government officials even for routine activities, which was a tax on business in effect. War and political instability also discourage investment. Lack of opportunities can further be caused by the failure of governments to provide essential infrastructure.. Opportunities in richer countries drives talent away, leading to brain drains. Brain drain has cost the African continent over $4 billion in the employment of 150,000 expatriate professionals annually. Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion annually. Poor health and lack of affordable 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 also Health and intelligence. Similarly substance abuse, including for example alcoholism and drug abuse can consign people to vicious poverty cycles. 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. As a result of the business cycle, poverty rates can increase in recessions and decline in booms. During the Great Depression, in 1933, 25% of all workers and 37% of all nonfarm workers in the United States were unemployed. In New York, one child in every five was hungry. In The Protestant Ethic and the Spirit of Capitalism, Max Weber first suggested that cultural values could affect economic success, arguing that the Protestant Reformation led to values that drove people toward worldly achievements, a hard work ethic, and saving to accumulate wealth.
Others expanded on Weber‘s ideas, producing modernization theory and putting forward a process that all nations should follow to become advanced industrial nations. However, researchers 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. Cultural factors, such as discrimination of various kinds, can negatively affect productivity such as age discrimination, stereotyping, gender discrimination, racial discrimination, caste discrimination.  Shortage of basic needs Hardwood surgical tables are commonplace in rural Nigerian clinics. Rises in the costs of living make poor people poorer. Poor people spend a greater 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 Shocks to food prices. For example in late 2007 increases in the price of grains led to food riots in some countries. The World Bank warned that 100 million people were at risk of sinking deeper into poverty. Threats to the supply of food may also be caused by Drought and the water crisis. Intensive farming often leads to a vicious cycle of exhaustion of soil fertility and decline of agricultural yields. Approximately 40% of the world's agricultural land is seriously degraded. 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. Health care can be widely unavailable to the poor. The loss of heath care workers emigrating from impovrished countries has a damaging effect. For example, an estimated 100,000 Philippine nurses emigrated between 1994 and 2006. There are more Ethiopian doctors in Chicago than there are in Ethiopia. Overpopulation and lack of access to birth control methods.[clarification needed] Note that population growth slows or even become negative as poverty is reduced due to the demographic transition. Again in a developed nation council houses in Seacroft, Leeds, UK have been deserted due to poverty and high crime.  Effects of poverty See also: Malnutrition and sanitation The effects of poverty may also be causes, as listed above, thus creating a "poverty cycle" operating across multiple levels, individual, local, national and global.  Health Main article: Diseases of poverty Homeless man on bench, Hermosillo, Sonora, Mexico One third of deaths - some 18 million people a year or 50,000 per day are due to poverty-related causes: in total 270 million people, most of them women and children, have died as a result of poverty since 1990. Those living in poverty suffer disproportionately from hunger or even starvation and disease. Those living in poverty suffer lower life expectancy. According to the World Health Organization, hunger and
malnutrition are the single gravest threats to the world's public health and malnutrition is by far the biggest contributor to child mortality, present in half of all cases. Every year nearly 11 million children living in poverty die before their fifth birthday. 1.02 billion people go to bed hungry every night. Poverty increases the risk of homelessness. There are over 100 million street children worldwide. Increased risk of drug abuse may also be associated with poverty. According to the Global Hunger Index, South Asia has the highest child malnutrition rate of world's regions. Nearly half of all Indian children are undernourished, one of the highest rates in the world and nearly double the rate of Sub-Saharan Africa. Great Depression: man lying down on pier, New York City docks, 1935.  Education Research has found that there is a high risk of educational underachievement for children who are from low-income housing circumstances. This often is a process that begins in primary school for some less fortunate children. In the US educational system, these children are at a higher risk than other children for retention in their grade, special placements during the school‘s hours and even not completing their high school education. There are indeed many explanations for why students tend to drop out of school. For children with low resources, the risk factors are similar to excuses such as juvenile delinquency rates, higher levels of teenage pregnancy, and the economic dependency upon their low income parent or parents. Families and society who submit low levels of investment in the education and development of less fortunate children end up with less favorable results for the children who see a life of parental employment reduction and low wages. Higher rates of early childbearing with all the connected risks to family, health and well-being are majorly important issues to address since education from preschool to high school are both identifiably meaningful in a life. Poverty often drastically affects children‘s success in school. A child‘s ―home activities, preferences, mannerisms‖ must align with the world and in the cases that they do not these students are at a disadvantage in the school and most importantly the classroom. Therefore, it is safe to state that children who live at or below the poverty level will have far less success educationally than children who live above the poverty line. Poor children have a great deal less healthcare and this ultimately results in many absences from the academic year. Additionally, poor children are much more likely to suffer from hunger, fatigue, irritability, headaches, ear infections, flu, and colds. These illnesses could potentially restrict a child or student‘s focus and concentration.  Violence Areas strongly affected by poverty tend to be more violent. In one survey, 67% of children from disadvantaged inner cities said they had witnessed a serious assault, and 33% reported witnessing a homicide. 51% of fifth graders from New Orleans (median income for a household: $27,133) have been found to be victims of violence, compared to 32% in Washington, DC (mean income for a household: $40,127).
 Poverty reduction World GDP per capita Main article: Poverty reduction Unbalanced scales.svg The neutrality of this article is disputed. Please see the discussion on the talk page. Please do not remove this message until the dispute is resolved. (February 2009) Historically, poverty reduction has been largely a result of overall economic growth. Before 1800, poverty had been accepted as inevitable as non-industrialized economies produced very little and the population grew almost as fast as the economy. The dawn of the industrial revolution led to high economic growth, eliminating mass poverty in what is now considered the developed world. In 1820, 75% of humanity lived on less than a dollar a day, while in 2001, only about 20% do. However, besides economic growth, aid can help too and is essential in providing better lives for those who are already poor, particularly in medical and scientific areas such as the green revolution and the eradication of smallpox. Economic growth in agriculture is, on average, at least twice as effective in benefiting the poorest half of a country‘s population as growth generated in nonagricultural sectors. Long run economic growth per person is achieved through increases in capital (factors that increase productivity), both human and physical, and technology as well as the institutions that help provide them.  Economic liberalization Extending property rights protection to the poor is one of the most important poverty reduction strategy a nation could take. Securing property rights to land, the largest asset for most societies, is vital to their economic freedom. The World Bank concludes increasing land rights is ‗the key to reducing poverty‘ citing that land rights greatly increase poor people‘s wealth, in some cases doubling it. It is estimated that state recognition of the property of the poor would give them assets worth 40 times all the foreign aid since 1945. Although approaches varied, the World Bank said the key issues were security of tenure and ensuring land transactions were low cost. In China and India, noted reductions in poverty in recent decades have occurred mostly as a result of the abandonment of collective farming in China and the cutting of government red tape in India. Trade liberalization increases total surplus of trading nations and foreign investment and export industries helped fuel the economic expansion of fast growing Asian nations. However, trade rules are often not free as they block access to richer nations‘ markets and ban poorer nations from supporting their industries and agriculture. Deals can sometimes be negotiated to favor the developing country such as in Thailand, the 51 percent rule compels multinational corporations starting operations in Thailand give 51 percent control to a Thai company in a joint venture.  Investments in capital and technology Improving human capital, in the form of health, is needed for economic growth. Nations do not necessarily need wealth to gain health. For
example, Sri Lanka had a maternal mortality rate of 2% in the 1930s, higher than any nation today. It reduced it to .5-.6% in the 1950s and to .06% today. However, it was spending less each year on maternal health because it learned what worked and what did not. Knowledge on the cost effectiveness of healthcare interventions can be elusive but educational measures to disseminate what works are available, such as the disease control priorities project. Promoting hand washing is one of the most cost effective health intervention and can cut deaths from the major childhood diseases of diarrhea and pneumonia by half. Human capital, in the form of education, is an even more important determinant of economic growth than physical capital. UN economists argue that good infrastructure, such as roads and information networks, helps market reforms to work. China claims it is investing in railways, roads, ports and rural telephones in African countries as part of its formula for economic development. It was the technology of the steam engine that originally began the dramatic decreases in poverty levels. Cell phone technology brings the market to poor or rural sections. With necessary information, remote farmers can produce specific crops to sell to the buyers that brings the best price.  Good institutions Efficient institutions that are not corrupt and obey the rule of law make and enforce good laws that provide security to property and businesses. Efficient and fair governments would work to invest in the long-term interests of the nation rather than plunder resources through corruption. Researchers at UC Berkely developed what they called a "Weberianness scale" which measures aspects of bureaucracies and governments Max Weber described as most important for rational-legal and efficient government over 100 years ago. Comparative research has found that the scale is correlated with higher rates of economic development. With their related concept of good governance World Bank researchers have found much the same: Data from 150 nations have shown several measures of good governance (such as accountability, effectiveness, rule of law, low corruption) to be related to higher rates of economic development.  Examples of good governance leading to economic development and poverty reduction include Thailand, Taiwan, Malaysia, South Korea, and Vietnam, which tend to have a strong government, called a hard state or development state. These ―hard states‖ have the will and authority to create and maintain policies that lead to long-term development that helps all their citizens, not just the wealthy. Multinational corporations are regulated so that they follow reasonable standards for pay and labor conditions, pay reasonable taxes to help develop the country, and keep some of the profits in the country, reinvesting them to provide further development. The United Nations Development Program published a report in April 2000 which focused on good governance in poor countries as a key to economic development and overcoming the selfish interests of wealthy elites often
behind state actions in developing nations. The report concludes that ―Without good governance, reliance on trickle-down economic development and a host of other strategies will not work.‖  Despite the promise of such research several questions remain, such as where good governance comes from and how it can be achieved. The comparative analysis of one sociologist  suggests that broad historical forces have shaped the likelihood of good governance. Ancient civilizations with more developed government organization before colonialism, as well as elite responsibility, have helped create strong states with the means and efficiency to carry out development policies today. On the other hand strong states are not always the form of political organization most conducive to economic development. Other historical factors, especially the experiences of colonialism for each country, have intervened to make a strong state and/or good governance less likely for some countries, especially in Africa. Another important factor that has been found to affect the quality of institutions and governance was the pattern of colonization (how it took place) and even the identity of colonizing power. International agencies may be able to promote good governance through various policies of intervention in developing nations as indicated in a few African countries, but comparative analysis suggests it may be much more difficult to achieve in most poor nations around the world.  Aid Main article: Aid See also: Development aid and Debt relief Some think tanks and NGOs have argued that Western monetary aid often only serves to increase poverty and social inequality, either because it is conditioned with the implementation of harmful economic policies in the recipient countries , or because it's tied with the importing of products from the donor country over cheaper alternatives, or because foreign aid is seen to be serving the interests of the donor more than the recipient. Critics also argue that some of the foreign aid is stolen by corrupt governments and officials, and that higher aid levels erode the quality of governance. Policy becomes much more oriented toward what will get more aid money than it does towards meeting the needs of the people. Problems with the aid system and not aid itself are that the aid is excessively directed towards the salaries of consultants from donor countries, the aid is not spread properly, neglecting vital, less publicized area such as agriculture, and the aid is not properly coordinated among donors, leading to a plethora of disconnected projects rather than unified strategies. Supporters of aid argue that these problems may be solved with better auditing of how the aid is used. Immunization campaigns for children, such as against polio, diphtheria and measles have save millions of lives. Aid from non-governmental organizations may be more effective than governmental aid; this may be because it is better at reaching the poor and better controlled at the grassroots level. As a point of comparison, the annual world military spending is over $1 trillion. One of the proposed ways to help poor countries that emerged during the 1980's has been debt relief. Given that many less developed nations have
gotten themselves into extensive debt to banks and governments from the rich nations, and given that the interest payments on these debts are often more than a country can generate per year in profits from exports, cancelling part or all of these debts may allow poor nations "to get out of the hole". However the effectiveness of debt relief is uncertain and whether or not it has lasting effect is disputed. It may not change the underlying conditions that have led to less long-term development in the first place. One of the most popular of the new technical tools for economic development and poverty reduction are microloans made famous in 1976 by the Grameen Bank in Bangladesh. The idea is to loan small amounts of money to farmers or villages so these people can obtain the things they need to increase their economic rewards. A small pump costing only $50 could make a very big difference in a village without the means of irrigation, for example. A couple of hundred dollars for a small bridge linking a village to a city where it can market farm products is another example. A specific example is the Thai government's People's Bank which is making loans of $100 to $300 to help farmers buy equipment or seeds, help street vendors acquire an inventory to sell, or help others set up small shops. Welfare states have an effect on poverty reduction. Currently modern, expansive welfare states that ensure economic opportunity, independence and security in a near universal manner are still the exclusive domain of the developed nations. commonly constituting at least 20% of GDP, with the largest Scandinavian welfare states constituting over 40% of GDP. These modern welfare states, which largely arose in the late 19th and early 20th centuries, seeing their greatest expansion in the mid 20th century, and have proven themselves highly effective in reducing relative as well as absolute poverty in all analyzed high-income OECD countries.  Demographics Percentage of population living on less than $1.25 per day. UN estimates 2000-2006. Percentage of population suffering from hunger, World Food Programme, 2006 Life expectancy. The Human Development Index. The Gini coefficient, a measure of income inequality. Life expectancy has been increasing and converging for most of the world. Sub-Saharan Africa has recently seen a decline, partly related to the AIDS epidemic. Graph shows the years 1950-2005. Main article: Poverty by country  Absolute poverty Poverty is usually measured as either absolute or relative poverty (the latter being actually an index of income inequality). Absolute poverty refers to a set standard which is consistent over time and between countries. The World Bank defines extreme poverty as living on less than US $1.25 (PPP) per day, and moderate poverty as less than $2 a day. It
estimates that "in 2001, 1.1 billion people had consumption levels below $1 a day and 2.7 billion lived on less than $2 a day." The proportion of the developing world's population living in extreme economic poverty fell from 28 percent in 1990 to 21 percent in 2001. Most of this improvement has occurred in East and South Asia. In East Asia the World Bank reported that "The poverty headcount rate at the $2a-day level is estimated to have fallen to about 27 percent [in 2007], down from 29.5 percent in 2006 and 69 percent in 1990." In SubSaharan Africa extreme poverty went up from 41 percent in 1981 to 46 percent in 2001, which combined with growing population increased the number of people living in poverty from 231 million to 318 million. In the early 1990s some of the transition economies of Eastern Europe and Central Asia experienced a sharp drop in income. The collapse of the Soviet Union resulted in large declines in GDP per capita, of about 30 to 35% between 1990 and the trough year of 1998 (when it was at its minimum). As a result poverty rates also increased although in subsequent years as per capita incomes recovered the poverty rate dropped from 31.4% of the population to 19.6% World Bank data shows that the percentage of the population living in households with consumption or income per person below the poverty line has decreased in each region of the world since 1990: Region 1990 2002 2004 East Asia and Pacific 15.40% 12.33% 9.07% Europe and Central Asia 3.60% 1.28% 0.95% Latin America and the Caribbean 9.62% 9.08% 8.64% Middle East and North Africa 2.08% 1.69% 1.47% South Asia 35.04% 33.44% 30.84% Sub-Saharan Africa 46.07% 42.63% 41.09% Other human development indicators have also been improving. Life expectancy has greatly increased in the developing world since WWII and is starting to close the gap to the developed world. Child mortality has decreased in every developing region of the world. The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s. Similar trends can be observed for literacy, access to clean water and electricity and basic consumer items. There are various criticisms of these measurements. Shaohua Chen and Martin Ravallion note that although "a clear trend decline in the percentage of people who are absolutely poor is evident ... with uneven progress across regions...the developing world outside China and India has seen little or no sustained progress in reducing the number of poor". Since the world's population is increasing, a constant number living in poverty would be associated with a diminshing proportion. Looking at the percentage living on less than $1/day, and if excluding China and India, then this percentage has decreased from 31.35% to 20.70% between 1981 and 2004.
The 2007 World Bank report "Global Economic Prospects" predicts that in 2030 the number living on less than the equivalent of $1 a day will fall by half, to about 550 million. An average resident of what we used to call the Third World will live about as well as do residents of the Czech or Slovak republics today. Much of Africa will have difficulty keeping pace with the rest of the developing world and even if conditions there improve in absolute terms, the report warns, Africa in 2030 will be home to a larger proportion of the world's poorest people than it is today. The reason for the faster economic growth in East Asia and South Asia is a result of their relative backwardness, in a phenomenon called the convergence hypothesis or the conditional convergence hypothesis. Because these economies began modernizing later than richer nations, they could benefit from simply adapting technological advances which enable higher levels of productivity that had been invented over centuries in richer nations.  Relative poverty Relative poverty views poverty as socially defined and dependent on social context, hence relative poverty is a measure of income inequality. Usually, relative poverty is measured as the percentage of population with income less than some fixed proportion of median income. There are several other different income inequality metrics, for example the Gini coefficient or the Theil Index. Relative poverty measures are used as official poverty rates in several developed countries. As such these poverty statistics measure inequality rather than material deprivation or hardship. The measurements are usually based on a person's yearly income and frequently take no account of total wealth. The main poverty line used in the OECD and the European Union is based on "economic distance", a level of income set at 60% of the median household income.  Other aspects Slum in Mumbai, India. 60% of Mumbai's more than 18 million inhabitants live in slums. Economic aspects of poverty focus on material needs, typically including the necessities of daily living, such as food, clothing, shelter, or safe drinking water. Poverty in this sense may be understood as a condition in which a person or community is lacking in the basic needs for a minimum standard of well-being and life, particularly as a result of a persistent lack of income. Analysis of social aspects of poverty links conditions of scarcity to aspects of the distribution of resources and power in a society and recognizes that poverty may be a function of the diminished "capability" of people to live the kinds of lives they value. The social aspects of poverty may include lack of access to information, education, health care, or political power. Poverty may also be understood as an aspect of unequal social status and inequitable social relationships, experienced as social exclusion, dependency, and diminished capacity to participate, or to develop meaningful connections with other people in society.
The World Bank's "Voices of the Poor," based on research with over 20,000 poor people in 23 countries, identifies a range of factors which poor people identify as part of poverty. These include: * * * * * * * * * * Precarious livelihoods Excluded locations Physical limitations Gender relationships Problems in social relationships Lack of security Abuse by those in power Dis-empowering institutions Limited capabilities Weak community organizations
David Moore, in his book The World Bank, argues that some analysis of poverty reflect pejorative, sometimes racial, stereotypes of impoverished people as powerless victims and passive recipients of aid programs. Ultra-poverty, a term apparently coined by Michael Lipton, connotes being amongst poorest of the poor in low-income countries. Lipton defined ultra-poverty as receiving less than 80 percent of minimum caloric intake whilst spending more than 80% of income on food. Alternatively a 2007 report issued by International Food Policy Research Institute defined ultra-poverty as living on less than 54 cents per day. BRAC (NGO) has pioneered a program called Targeting the Ultra-Poor to redress ultrapoverty by working with individual ultra-poor women.  World-systems perspective World-systems perspective predicts that developing nations, referred to as periphery countries, have less long-term economic growth when they have extensive multinational corporate investment from core (developed) nations. Though there is definitely variance among periphery nations, several studies by sociologists have argued that many periphery nations that have extensive investment from the core do in fact have less longterm economic growth. However, all of these studies are at least twenty years old and rely on very weak statistical methodology. More recent research tends to point to evidence that in general foreign direct investment benefits host countries, although the effects are not universal. Depending on some other country characteristics foreign investment may simply have no effect, whether positive or negative, on development. World system theories imply that the best policy a country can pursue is autarky or at most trade only with other developing countries. However, large countries that embarked on this policy program, such as India and China before 1980 experienced stagnant growth and increasing poverty. These trends were only finally reversed when these countries abandoned the policy prescription of Western world systems theory academics and decided to substantially open their economies in the 1980s. A number of Latin American countries which also tried to rely on import substation and inward looking development had a similar experience. There seem to be many reasons for harmful effects of core dominance. The first major reason is the problem of structural distortion. In an undistorted economy
some natural resources lead to a chain of activity that creates profits, jobs, and growth. For example, consider a core nation with an extensive amount of copper deposits. Jobs are provided and profit is made first from mining the copper. Even more jobs and profits are created when the copper is refined into metal and these products are sold by retail firms, once again resulting in jobs and profits. From this whole process there is a chain of jobs and profits that provide for economic growth as well as revenue that can be used for developing things such as roads, electrical power, and educational institutions within the country. When the copper is mined in a periphery nation with ties to core nations the metal is shipped to the core where the rest of the chain is completed. The rest of the jobs and profits from the chain of activities are lost to the core nations. This is an example of structural distortion. Another harmful effect is agricultural disruption. Before the modern world-system, agriculture was for local consumption, and there was little incentive for labor-saving farming methods. As a result of these traditional methods of farming and lack of a large market for their products, food was cheaper, some land was left for peasants, and jobs were more plentiful. However, with export agriculture and labor-saving methods of farming, food is more expensive, peasants are pushed off the land so more land may be used to grow products for the world market, and more machines are doing the work, resulting in less jobs. Profits are made by a small group of landowners and multinational agribusinesses, with peasants losing jobs, land, and income, which prevents them from being consumers needed for an economy to naturally develop. A third difficulty for peripheral nations are class conflicts within the nation. Economic and political elites in periphery nations often become more accommodating to corporate elites because these elites know that the corporations are investing in the country because of low labor costs, low taxes, no unions, and other things such as lax environmental policies, that are favorable to multinational corporate interests.  Voluntary poverty See also: Simple living "'Tis the gift to be simple, 'tis the gift to be free, 'tis the gift to come down where you ought to be, And when we find ourselves in the place just right, It will be in the valley of love and delight." —Shaker song. St. Francis of Assisi renounces his worldly goods in a painting attributed to Giotto di Bondone. Among some individuals, such as ascetics, poverty is considered a necessary or desirable condition, which must be embraced in order to reach certain spiritual, moral, or intellectual states. Poverty is often understood to be an essential element of renunciation in religions such as Buddhism (only for monks, not for lay persons] and Jainism, whilst in Roman Catholicism it is one of the evangelical counsels. Certain religious orders also take a vow of extreme poverty. For example, the Franciscan orders have traditionally forgone all individual and corporate forms of ownership. While individual ownership of goods and wealth is forbidden for Benedictines, following the Rule of St. Benedict, the monastery itself may possess both goods and money, and throughout history some monasteries have become very rich.
In this context of religious vows, poverty may be understood as a means of self-denial in order to place oneself at the service of others; Pope Honorius III wrote in 1217 that the Dominicans "lived a life of voluntary poverty, exposing themselves to innumerable dangers and sufferings, for the salvation of others". Following Jesus' warning that riches can be like thorns that choke up the good seed of the word (Matthew 13:22), voluntary poverty is often understood by Christians as of benefit to the individual – a form of self-discipline by which one distances oneself from distractions from God.  See also