7.3 Global poverty and its causes

Poverty: Definition and Dimensions

Global poverty affects billions of people, limiting their access to food, shelter, healthcare, and education. Understanding poverty means looking beyond just income. It involves historical exploitation, political failures, economic structures, and social exclusion that all reinforce each other.

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Multidimensional Nature of Poverty

Poverty isn't just about money. It encompasses a lack of economic resources, social exclusion, and limited access to basic necessities like clean water, healthcare, and education.

There are two main ways to frame poverty:

• Absolute poverty means lacking the minimum resources needed for physical survival: not enough food, no safe drinking water, no adequate shelter. The World Bank sets an international absolute poverty line at $\$2.15$ per day (adjusted in 2022).
• Relative poverty is measured against the average standard of living in a specific society. Someone in relative poverty in Norway might have more resources than someone above the poverty line in a lower-income country. This concept highlights economic inequality within societies.

The poverty line is the monetary threshold used to determine who counts as poor. It varies between countries and is often adjusted for purchasing power parity (PPP), which accounts for differences in the cost of goods across countries.

Because income alone doesn't capture the full picture, researchers developed multidimensional poverty indices (like the MPI used by the UN). These consider non-monetary factors such as health, education, and living standards. For example, a family might earn above the poverty line but still lack access to clean water or electricity. The MPI captures that kind of deprivation.

Gender and Geographic Aspects of Poverty

Poverty doesn't affect everyone equally. Where you live and your gender play a major role.

• The feminization of poverty describes how women are disproportionately represented among the world's poor. This results from systemic gender inequalities: women often earn less, own less property, and have fewer legal protections. Globally, women are estimated to be 10% more likely than men to live in extreme poverty.
• Urban poverty looks different from rural poverty. In cities, poverty often means overcrowding in slums with poor sanitation and limited services. In rural areas, it tends to involve geographic isolation, limited infrastructure, and dependence on subsistence farming.
• Geographic disparities are stark. Sub-Saharan Africa and South Asia have the highest concentrations of extreme poverty. About 60% of the world's extreme poor live in Sub-Saharan Africa alone.
• Slums and informal settlements are a visible face of urban poverty. Brazil's favelas, South Africa's townships, and India's urban slums house millions of people with little access to formal services or legal land rights.

Causes of Global Poverty

Historical and Political Factors

Poverty today can't be understood without looking at history. Many of the world's poorest regions were shaped by centuries of exploitation.

• Colonialism and imperialism created deeply uneven distributions of resources. European colonial powers extracted wealth from African, Asian, and Latin American colonies while building economic systems that served the colonizers. For example, the Belgian Congo was stripped of rubber and minerals while its population was subjected to forced labor. These patterns left lasting economic damage.
• Political instability disrupts economies and drives people deeper into poverty. Civil wars destroy infrastructure, displace populations, and halt investment. The Syrian conflict, for instance, pushed over 80% of the population below the poverty line by 2020.
• Corruption diverts resources away from public services. When government officials embezzle foreign aid funds or skim from public budgets, money meant for schools, hospitals, and roads never reaches the people who need it.
• Weak governance structures perpetuate poverty cycles. Ineffective tax collection, lack of rule of law, and poor public administration mean governments can't fund the services that help people escape poverty.

Economic and Social Factors

Structural features of the global economy also keep countries poor.

• Unequal trade relationships disadvantage developing nations. Wealthy countries often subsidize their own agricultural sectors (the EU and US spend billions annually on farm subsidies), making it nearly impossible for farmers in developing countries to compete on the global market.
• Debt burdens limit what governments can invest in their own people. Many developing countries took on heavy loans in the 1970s and 1980s. International financial institutions like the IMF then imposed structural adjustment policies that required cuts to social spending as a condition for further lending, often worsening poverty in the short term.
• Lack of access to education limits economic opportunities. In many rural areas of developing countries, illiteracy rates remain high, trapping communities in low-productivity work with little chance of advancement.
• Discrimination excludes entire groups from economic participation. Racial segregation, caste systems, and ethnic marginalization all restrict access to housing, employment, and education for specific populations.
• Globalization creates mixed effects. It has created millions of manufacturing jobs in countries like Bangladesh and Vietnam, lifting some out of poverty. But it has also enabled exploitation of workers in sweatshops with low wages and dangerous conditions, and it can undermine local industries that can't compete with multinational corporations.

Poverty and Global Issues

Health and Education

Poverty and poor health reinforce each other in a vicious cycle.

• Limited access to healthcare leads to higher rates of disease and death among the poor. Infant mortality rates in low-income countries are dramatically higher: about 10 times the rate in high-income countries.
• Malnutrition impacts both physical and cognitive development. Chronic malnutrition causes stunting in children under five, affecting roughly 149 million children worldwide. Stunted children often struggle in school and earn less as adults.
• Poverty limits access to quality education, and lower school enrollment rates in impoverished areas mean fewer people gain the skills needed for better-paying work. Individuals without secondary education earn significantly less over their lifetimes, which perpetuates poverty into the next generation.

Conflict and Environment

• Poverty increases the risk of civil unrest. High youth unemployment is a particularly strong factor in political instability, as large numbers of young people without economic prospects become vulnerable to recruitment by armed groups.
• Conflict, in turn, destroys the infrastructure and agricultural land that communities depend on, creating a feedback loop between violence and poverty.
• Environmental degradation disproportionately affects the poor, who often depend directly on natural resources for their livelihoods. Deforestation leads to soil erosion and reduced crop yields, pushing subsistence farmers further into poverty.
• Climate change amplifies these vulnerabilities. More frequent and severe natural disasters (hurricanes in the Caribbean, flooding in South Asia, droughts in East Africa) hit poor communities hardest because they have the fewest resources to prepare, respond, and rebuild.

Technology and Gender

• The digital divide widens the gap between the poor and the rest of society. Limited internet access in rural and low-income areas means people miss out on educational resources, job opportunities, and financial services that are increasingly online.
• Gender inequality intersects with poverty in powerful ways. Women farmers, for example, produce a significant share of food in developing countries but have much lower rates of land ownership, limiting their ability to access credit or invest in their farms.
• Women's limited access to education affects entire communities. There's a strong correlation between maternal education and child health outcomes: children of educated mothers are more likely to be vaccinated, better nourished, and more likely to attend school themselves.

Strategies for Reducing Poverty

Financial and Social Protection Measures

No single approach can solve global poverty. Effective strategies combine financial tools, social safety nets, and institutional reform.

• Microfinance provides small loans to people who can't access traditional banking, helping them start or expand small businesses. The Grameen Bank in Bangladesh, founded by Muhammad Yunus, pioneered this model and has served millions of borrowers, most of them women.
• Conditional cash transfer programs give money to poor families on the condition that they keep their children in school and attend health checkups. Brazil's Bolsa Família program reached over 13 million families and contributed to significant reductions in poverty and child malnutrition.
• Social protection systems provide safety nets like unemployment benefits and pension schemes for the elderly, preventing people from falling into extreme poverty during economic shocks or old age.
• Foreign aid supports poverty reduction efforts, but its effectiveness is debated. Critics argue that long-term aid can create dependency and that corruption can divert funds. Supporters point to measurable gains in health and education when aid is well-targeted.

Education and Sustainable Development

• Education and skills development build human capital, giving people the tools to earn higher incomes. Vocational training programs in countries like India help young people gain practical skills for growing industries.
• Fair trade initiatives aim to ensure equitable compensation for producers in developing countries. Fair trade coffee cooperatives in Latin America, for example, guarantee farmers a minimum price and invest in community development.
• The Sustainable Development Goals (SDGs), adopted by the UN in 2015, provide the most comprehensive global framework for tackling poverty:
  • Goal 1: No Poverty targets ending extreme poverty everywhere by 2030
  • Goal 2: Zero Hunger focuses on food security and improved nutrition
• The SDGs emphasize that social, economic, and environmental challenges are interconnected. You can't effectively reduce poverty without also addressing climate change, inequality, and access to education. This integrated approach is what makes the framework distinctive compared to earlier efforts.