The persistent problem of poverty in the developing world has put a question mark on the relation between economic growth and poverty. Some individuals are of the opinion that when economy develops, poverty comes down. Others believe that economic growth leads to poverty. I agree with the former view. A number of arguments surround my opinion.
To begin with, economic growth benefits nearly all citizens of a country, even if not equally, and therefore reduces poverty. For example, in rural areas, most of the poor are engaged in agriculture. When such a country grows through agricultural exports, it benefits both poor farmers and the even poorer labourers they employ. Similarly, rapid growth in manufacturing sector because of increase in demand creates a lot of new jobs, and eventually causes a rise in wages that further reduces poverty.
My second argument comes from historical records. Western countries began discovering the positive relation between economic growth and poverty reduction around 1820 and as a result the living standards in Europe and the United States improved many fold in the next years. Economic growth thus eliminated mass poverty in what is today considered the developed world. Even a short-term view confirms that the recent acceleration of growth in many developing countries has reduced poverty, measured the same way.
The opponents of this view claim that economic progress leads to inequality between the rich and the poor. They opine that a handful of rich are getting richer while the poor are being driven to the wall. However, results have proved that such inequality is only short lived and everyone has benefited in the long run. It is because of the high initial inequality that it appears as if economic growth is leading to poverty.
To put it in a nutshell, I pen down saying that, economic progress definitely reduces poverty. Sometimes, there is unequal distribution of wealth in the initial stages of economic development. Nonetheless, everyone benefits eventually.
Here is my answer (major source is original answer): Vishal
ReplyDeleteThere is a widely held view given current circumstances throughout world that economic progress is the answer to address poverty. There is a counter argument which contends that economic upward movement is behind the poverty. From my perspective, I’m incline towards the former view and I agree wholeheartedly that this is the case.
To begin with, it is immediately apparent that economic growth benefits almost all citizens of country, even if not equally and therefore reduces poverty. For example, in rural areas where most of the poor are engaged in agriculture, when such a area or country grows through agriculture products export, it creates significant jobs and places for work for. This is largely due to industries start looking for more workers to meet demand. This eventually causes a rise in wages that further reduces poverty.
At the other end of spectrum, economic progress leads inequality between the rich and the poor. However, results have proved that such imbalance is short lived and everyone has benefited over long run. It is because of the high initial inequality that it appears as if economic growth is leading to poverty.
In my own experience, I have seen considerable reduction in poverty in countries like india and china. Because of large scale economic uplift in information technology and other industries, within short time span, millions of poor people are now living quality life. They have ample job opportunities and increased purchasing power.
The state of affairs relating to this matter in my country, Australia, is quite typical at the way things are elsewhere in world.
To put it in a nutshell, I pen down saying that economic development definitely reduces poverty. If there is no development in country’s economic conditions then there will huge increase in number of poor people and there will be no solution to solve persistent problem of poverty.
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