Principle of Economics (Poverty) Essay

Introduction Poverty can defined as lack of resources when required or something which is not there but it is required the most. Economics is the science of how a particular society solves its economic problems. (Milton Friedman, 1912-2006) In many countries, poverty is quite a big problem and it also gives an idea about the economy of the country. Poverty seems to be a never-ending cycle. Many people in our society nowadays live in a very comfortable and wealthy condition, but more than a quarter of population in this world still live in this poverty condition.

Poverty in general is when unable to conclude the standard of living that appears in their local situations. Although nowadays the standard of living between countries may differ tremendously, the issue of poverty remains the same. Resources such as shelters, food, education, clothing and water which is know as the human’s basic needs is still lacking. The high caste people always exploited the poor low caste people. As a result generation after generation the poor remains poor and the rich always enjoys high standards of living. The example for the countries that is on poverty is Zambia and South Africa.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Gross Domestic Product Rank| Country| GDP – real growth rate (%)| 1| Angola| 16. 3| 2| Sudan| 12. 8| 3| Ethiopia| 9. 8| 4| Liberia| 8. 5| 5| Mozambique| 7. 5| 6| Egypt| 7. 2| 7| Congo, Democratic Republic of the| 7| 8| Gambia, The| 7| 9| Tanzania| 6. 9| 10| Sierra Leone| 6. 8| 11| Sao Tome and Principe| 6. 5| 12| Kenya| 6. 3| 13| Madagascar| 6. 3| 14| Tunisia| 6. 3| 15| Nigeria| 6. 3| 16| Ghana| 6. 2| 17| Zambia| 6| 18| Uganda| 6| 19| Rwanda| 6| 20| Malawi| 5. 7| 21| Burundi| 5. 5| 22| Libya| 5. 4| 23| South Africa| 5| 24| Lesotho| 4. 8| 25| Senegal| 4. 8| 26| Botswana| 4. 7| 27| Algeria| 4. 6| 28| Benin| 4. 5| 9| Gabon| 4. 5| 30| Namibia| 4. 5| 31| Niger| 4. 5| 32| Mali| 4. 3| 33| Burkina Faso| 4. 2| 34| Central African Republic| 4| 35| Guinea-Bissau| 3. 7| 36| Djibouti| 3. 5| 37| Cameroon| 3. 2| 38| Congo, Republic of the| 2. 8| 39| Somalia| 2. 6| 40| Togo| 2. 5| 41| Morocco| 2. 1| 42| Eritrea| 2| 43| Cote d’Ivoire| 1. 7| 44| Swaziland| 1. 6| 45| Guinea| 1. 5| 46| Mauritania| 1. 5| 47| Chad| -1. 3| 48| Zimbabwe| -6| (Source: http://www. indexmundi. com) Gross Domestic Product (GDP) Gross Domestic Product (GDP) is the total money value of all final goods and services produced within a country in a given time period.

According to the data above, Zambia is having a world rank of 17 with the GDP rate of 6%. The reason of Zambia having a high GDP rate is because of Copper mining income of $ 5 billion dollars during the past decade, according to the Declaration of Director-General of the Chamber of Mines of Zambia, Frederick Bantoppons. This is reflected growth of more than 6% of GDP to Zambia , Concrete investments has recorded since 2000, thanks to the constant flow new investment in the mineral sector and direct investments to create new centers to handle copper. (https://www. cia. ov/library/publications/the-world-factbook/geos/za. html) Guinea is the number 45 in the world ranking in terms of the rate of decline in GDP by 1. 5 thus leading Guinea to be one of the least wealthy country in the world. It has the great possibilities of economic unused, particularly for developing agricultural and mining such as bauxite, gold and diamonds. The government has implemented free market reforms since the abandoning of Marxism during the mid-1980s. Despite the country has build up trade ties with France, Guinea is still outside regional block of other previous French colonies. http://www. guinea-mining. com/guinea_economic. htm) CAUSES OF POVERTY There are many causes of poverty basically. For example, too much people, less opportunity in finding a better job, more work but less salary and not provide the possibility of our living. Usually, for basic causes is quite difficult and very hard to eliminate. Some case in point that causes and effects of poverty is some people who are poor they hardly to change their mind to improved themselves rather living as poor.

The main major factors that increase of poverty are overpopulation, the unequal distribution of resources in the world economy, inability to meet high standards of living and costs of living, inadequate education and employment opportunities, environmental degradation, certain economic and demographic trends. Overpopulation: Overpopulation is the situation where the population of the country exceeds its capacity of occupants thus leading to lack of resources such as land, water, food and financial resources to supply to the people. This happens when there is uncontrolled births and decline in deaths.

This causes the rate of poverty to increase because not everyone able to get basic resources. | Global Distribution of Resources: Global distribution of resources becomes a problem when there is unequal distribution of resources to all the countries around the world. Many developing countries faces this problem because of its past legacy of colonialism by others. | High Standards of Living and Costs of Living: Most developed nations have achieve more wealth and resources than those countries whom are still developing itself thus leading their standard of living and cost of living is much higher compare to developing countries.

Therefore those whom have sufficient wealth in developing countries may be considered poor or lack of wealth in developed countries. | Inadequate Education and Employment: Illiteracy and low levels of education often lead to and preserve poverty. without education, most people cannot find income-generating work. Poor people also often leave off schooling in order to focus on making a minimum living. | Environmental Degradation:Environmental degradation is a result from contamination.

Industries in the mining, power generation, chemical production and other main sources of contamination such as automobiles and open air burnings causes environmental problems that leads to shortages of food, materials, clear water, for shelter, and other primary resources. This also leads to poverty as proper resources are unavailable. | Economic and Demographic Trends: The economic and demographic trend also plays an important role on poverty in certain nations. It depends on how well is the economy and demography is doing in that country if it’s bad the level of poverty will be high. | |

Stamenkovska, R 2006, Causes of Poverty, viewed 20 July 2012 http://www. fightpoverty. mmbrico. com/poverty/reasons. html Evidence –analysis on countries Poverty in Bangladesh A third world country is an underdeveloped nation that faces problems. For example, many third world countries deal with poverty, a low economy, and high birthrates (Chailand). Bangladesh is considered a thirdworld country; the major crisis Bangladesh endures is poverty. Increasing at a rate of about 2. 06% per year, the current population of Bangladeshis about 138 million. 35. 6% of the population is below the poverty line (Coutsoukis).

Steps are taken to diminish the number of citizens that are below the poverty line. For example, Bangladesh decreased its illiteracy level of females from 73. 5% in 1995 (Data Profile) to 31. 8% in 2003 (Coutsoukis). This means that more and more people are deciding to receive an education. Another step is receiving aid from foreign nations. In the year 2000, $1. 5 billion was acquired from nations helping Bangladesh (Coutsoukis). (http://www. bookrags. com/essay-2004/9/16/82222/8377) Critical analysis on the role of governmental and international organizations to improve the standard of living. Support discussion using statistical evidence and case studies from poor countries and international organizations). The living standards of a country are primarily aligned with the level of wealth or income generated by the nation concerned. There are number if indicators which enable governments and researchers alike to gauge the standard of living of a country and these mainly include income (Gross Domestic Product), life expectancy, poverty rate, and infrastructure and inflation rate. Basically, standard of living refers to quantifiable factors that can be easily measured.

On the other hand, another concept that goes hand-in-hand with living standard is the quality of life. At most times, it is difficult to see both concepts apart as they tend to overlap each other in certain areas. The main indicators among others, for the quality of life are equal rights, freedom from discrimination, right to vote and freedom of religion. The quality of life is deemed to be less tangible and subjective and depends much on perception. Some may argue that given the two, rather distinct concepts, to measure the level of prosperity of a country based just on aspects of living standards, could be restricted and ot accurate. The Investopedia on October 20, 2011 stated that while for the United States would rank highly in most aspects, certain segments such as East St Louis, experience low living standards especially in terms of quality of environment and employment has been quite low. Bottom-line, what this means is that the standard of living should not be confined to tangible aspects such as income and poverty level but encompass other aspects indicated above which would ultimately result in a more objective and precise evaluation. For the purposes of this assignment, we will be focusing more on the living standard indicators.

Now that we have determined that the main indicator for setting the level of living standards of a country is based on its income or poverty level, let us then list down the top ten countries which comprise a high percentage of the world’s total poor population: Ranking| Country| Amount| 1| India| 41. 01% of world’s poor| 2| China | 22. 12 % of world’s poor| 3| Nigeria| 8. 03 % of world’s poor | 4| Pakistan| 3. 86 % of world’s poor | 5| Bangladesh | 3. 49 % of world’s poor | 6| Ethiopia| 1. 82 % of world’s poor | 7| Brazil| 1. 82 % of world’s poor | 8| Indonesia| 1. 9 % of world’s poor| 9| Mexico| 1. 43 % of world’s poor | 10| Russia | 0. 99 % of world’s poor | SOURCE: Country Responsibilities in Achieving the Millennium Development Goals” – Nation Master (As per the source, the definition of poor refers to “living below the global poverty line of US$1 per day”. ) The Mercer quality of living survey in 2011 ranked Vienna as the city with the best living standards in the world. According to this survey, European cities represent dominate more than half of the top 25 spots while cities such as Sudan, Haiti, Iraq and Baghdad rank as the lowest.

The European cities rank higher due to the advancements in infrastructure and social well-being. In the American continent, Canadian cities topped the list while the disparities of living standards between the northern, central and southern American countries are considerably evident. Amoral activities such as drug trafficking, street crime as well as natural disasters mars the southern American region’s quality of life. The 2011 survey also sought to identify cities with the highest ranking in personal safety taking into consideration factors such political stability, international relations, crime levels and law enforcement.

In the Asian-Pacific region, Auckland is the highest-ranking city for quality of living while Singapore ranks the highest in the region for personal safety. Finally, in the Middle Eastern and African regions, Dubai ranks as the highest while Africa has the 18 bottom cities. One international organization which was primarily established to improve the living standards of poor countries through international monetary cooperation is the International Monetary Fund or the IMF.

The IMF was founded together with the World Bank in 1945 and played an important role in several global financial crises. Among the major financial calamities the IMF was involved in comprised of developing countries beginning with the debt crisis that engulfed Africa and Latin America in late 1982. This was followed by the East Asian crisis of 1997 when the currencies of Thailand, Indonesia, Malaysia and South Korea collapsed in the wake of exhausted foreign-exchange reserves.

While all the economies concerned recovered from the crisis, Malaysia’s recovery was much more rapid following the country’s refusal of the IMF funding. While it can be argued that the IMF’s involvement did not result in a total eradication of poverty and the improvement in quality of life in the countries concerned, certain financial structures were put in place for the long-term growth of the population. One of the most renowned international organizations that combats the poverty and promotes higher standards of living through various development programs is the United Nations.

In a summit in September 2000, world leaders converged to establish a set of Millennium development goals which aimed at eradicating poverty and hunger, combat diseases as well as enhance education levels and healthcare by year 2015. The UN also works with specialized agencies to undertake targeted programs to provide practical help and mobilize funds such as the World Bank which provided more than $32. 8 billion in development loan in 2008 to nearly 100 developing countries. By 2009, the

Global Fund to Fight Aids, Tuberculosis and Malaria initiated by UN in 2001 had committed close to $150billiuon in 140 countries to organize interventions against the three diseases. The UN has also established numerous partnerships with governments and non-governmental organizations to promote development in various aspects such as the World Food Program (WFP), the UN Population Fund (UNFPA) and the UN Children’s Fund (UNICEF). In a more recent environmental, initiative the UN under its global environment facility with a $3. 1billion fund works closely with the New Partnership for Africa’s Development (NEPAD).

Governments of numerous countries have continued their strategies to combat poverty and increase living standards, aligning the measures with the UN’s millennium goals. For instance, the South African government undertook a massive anti-poverty strategy targeting the establishments of new economic opportunities, comprehensive healthcare, access to assets, social cohesion and good governance, among others. One of the more notable achievements was the expansion of social grants started since 1994 which saw the distribution of old age pension or disability grant worth R870 a month to 3. million people while 8 million children received a child support grant of R200 a month. In addition to this, R35billion a year has substantially improved conditions in poor households. The Cambodian government came up with first, the Rectangular strategy selected its key elements from the UN Development Goals, the Cambodia Socio-Economic Development Program 2001-2005 (SEDP2), the Cambodia National Poverty Reduction Strategy 2003-2005(NPRS), and the various policies, strategies, plans and other important reform programs, all of which have been formulated through broad consultation with all national and international stakeholders.

In early 2006 the RGC adopted a single National Strategic Development Plan 2006-2010 which lays down how the Rectangular Strategy is to be implemented, and the RGC is committed to doing this through national sector programmes in the form of Sector-Wide Approaches (SWAp), SWiM and Programme-Based Approaches. References 1) 2011 Quality of Living worldwide city rankings, Mercer survey, United Kingdom, London, 29 November 2011. Downloaded: http://www. mercer. com/press-releases/quality-of-living-report-2011 2) Fontinelle, Amy, Standard of Living Vs. Quality of Life. Downloaded: http://www. investopedia. om/articles/financial-theory/08/standard-of-living-quality-of-life. asp#axzz2252VN6fR 3) Poling, Janice, Country Responsibilities in Achieving the Millennium Development Goals”, April 8 2003, NationMaster. Downloaded: http://www. nationmaster. com/red/graph/eco_pov_sha_of_all_poo_peo-poverty-share-all-poor-people;amp;b_printable=1 4) Buckley, Ross P, Improve living standards in poor countries: reform the international monetary fund, Emory International Law Review, Vol 24, US, 2010. 5) Towards an anti-poverty strategy for South Africa: A discussion Document, Oct 2008. Downloaded: http://www. info. gov. za/view/DownloadFileAction? d=92543 6) The UN Brief. Downloaded: www. un. org/en/development/other/overview. shtml 7) Address by Samdech Hun Sen, Prime Minister of the Kingdom of Cambodia, on the “Rectangular Strategy” for Growth, Employment, Equity and Efficiency, First Cabinet Meeting of the Third Legislature of the National Assembly, at the Office of the Council of Ministers, Phnom Penh, 16 July 2004 Downloaded: http://www. embassyofcambodia. org. nz/government. htm 8) http://www. indexmundi. com 9) https://www. cia. gov/library/publications/the-world-factbook/geos/za. html 10) http://www. guinea-mining. com/guinea_economic. htm