Poverty Trap

Definition

A poverty trap is a self-reinforcing mechanism that causes poverty to persist. It is a situation where an individual or a community is unable to escape from poverty due to a combination of factors that make it difficult to improve their economic status, leading to a cycle of deprivation that is challenging to break out of.

5 Must Know Facts For Your Next Test

1. Poverty traps can be caused by a combination of factors, including lack of access to education, healthcare, financial services, and infrastructure.
2. Individuals or communities in a poverty trap often face challenges in accumulating assets or savings, making it difficult to invest in their own development and break the cycle of poverty.
3. Malnutrition and poor health can contribute to the poverty trap by reducing productivity and limiting opportunities for economic advancement.
4. Limited access to credit and financial services can prevent individuals from accessing the resources needed to start or expand a business, further perpetuating the poverty trap.
5. Geographical isolation and lack of infrastructure, such as transportation and communication networks, can also contribute to the persistence of poverty in certain regions.

Review Questions

• Explain how the lack of access to education can contribute to the poverty trap.
  • The lack of access to education is a key factor in the poverty trap. Without the opportunity to acquire knowledge and skills, individuals are limited in their ability to find well-paying jobs or start successful businesses. This, in turn, perpetuates the cycle of poverty, as they are unable to accumulate the resources needed to invest in their own or their children's education, further entrenching the poverty trap.
• Describe how the capability trap is related to the poverty trap and its impact on economic development.
  • The capability trap is closely linked to the poverty trap, as it refers to the situation where individuals or communities lack the necessary skills, resources, or opportunities to improve their economic and social status. This lack of capabilities, such as access to healthcare, financial services, and infrastructure, makes it challenging for them to break out of the poverty trap and participate in economic development. The capability trap perpetuates the poverty trap by limiting the ability of individuals to acquire the skills and resources needed to achieve economic mobility and prosperity.
• Analyze how the geographical isolation of certain regions can contribute to the persistence of the poverty trap and discuss potential strategies to address this issue.
  • Geographical isolation can be a significant contributor to the poverty trap, as it limits access to markets, resources, and opportunities for economic advancement. Regions that are geographically isolated often lack the necessary infrastructure, such as transportation and communication networks, which makes it difficult for individuals and communities to participate in the broader economy. This, in turn, perpetuates the poverty trap by restricting access to education, healthcare, and other essential services. To address this issue, policymakers and development organizations may need to invest in infrastructure projects, such as building roads, bridges, and communication networks, to connect isolated regions to the broader economy. Additionally, targeted interventions, such as providing access to financial services, education, and healthcare, can help break the cycle of poverty in these regions.

Related terms

Vicious Cycle: A self-perpetuating cycle of events in which one problem leads to another, which in turn exacerbates the original problem, creating a downward spiral that is difficult to escape.

Subsistence Level: The minimum level of income or resources required to maintain a basic standard of living, often associated with the inability to afford more than the essentials for survival.

Capability Trap: A situation where individuals or communities lack the necessary skills, resources, or opportunities to improve their economic and social status, leading to a persistent state of deprivation.