theme 4 : absolute poverty

absolute poverty definition

• the absence of one or more factors enabling individuals and families to assume basic responsibilities and to enjoy fundamental rights

• varies in definition but less than $1-2 per day

official or common understanding of the poverty line

is significantly higher in developed countries than in developing countries

UN definition of absolute poverty

a condition characterised by severe deprivation of basic human needs

8 conditions of absolute poverty according to the UN

• food : BMI below 16

• safe drinking water : water solely from rivers / ponds or unavailable less than a 15 minute walk away

• sanitation facilities : no accessible toilets

• health treatment unavailable for serious illnesses / pregnancy

• shelter : more than 4 people living in each room

• education : lack of schools

• information : lack of access to newspapers, radio, TV, computers or phones

• access to services : e.g. education, health, legal, social and financial (credit) services

what is a LEDC

• less economically developed countries

• country which according to the UN exhibit the lowest indicators of socioeconomic development

9 causes of absolute poverty

• primary product dependency

• natural climate

• debt

• natural disasters

• poor policy / inept gov

• low FDI

• civil wars / wars with neighbouring countries

• population growing faster than GDP

• corruption

primary product dependency explanation

• some countries main export is of low value e.g. Ivory Coast and cocoa

• these do not generate much valuable output

natural climate explanation

• geographical terrain and climate change

• some parts of the world are too hot (Sahara) to grow anything / live / operate

• others are too mountainous (Afghanistan)

debt explanation

• borrowings / interest need to be repaid

• LEDC is tied in and has little to invest in their own economy

natural disasters explanation

• tsunamis, earthquakes, floods

• damage infrastructure, end lives, deter FDI

• famines

poor policy explanation

• bad decision making by govs

• misallocation of resources

low FDI explanation

• companies exist to make a profit ie they want rich customers

• LEDC’s generally are not the best place to invest

wars explanation

• destruction of buildings, homes, infrastructure, deaths, mass exodus

• little point / ability to reinvest

faster growing population explanation

• country finds it difficult to cope with increased requirement for schools, healthcare

corruption explanation

• gov is self interested rather than concerned about GDP

• uneducated population suits their aims

argentina reasons for poverty

• economic instability - repeated cycles of inflation, debt crises, currency devaluation

• high inflation - chronic inflation reduces spending power

• unemployment and informality - large informal economy and high unemployment rates limit stable job opportunities

• inequality - systematic inequality in access to education, healthcare

• ineffective policies and unsustainable subsides - in the 2000’s heavy subsides contributed to a fiscal deficit, attempts to lower subsidies I 2015-2019 led to price hikes

• over reliance on short term solutions