“Everybody wins” – The poverty cycle

(Extract from the book “Everybody wins”, by Bart Cools and Bruno Rouffaer)

Living in extreme poverty means not being able to afford a doctor or medical treatment. It means no electricity, limited shelter, and often little to no food on the table. For young children, inadequate nutrition leads to growth retardation with lasting effects on their development. In regions where many people lack access to clean water and sanitation, extreme poverty means the spread of disease and unnecessary child mortality.

Children living in poverty rarely have access to quality education. Sometimes this is because there are not enough quality schools, because their parents cannot afford the cost, or because impoverished families need their children to work. Without a quality education, children grow up unable to cater to their own children – thus, poverty is passed from generation to generation. The situation is usually compounded by a lack of self-confidence, a sense of inferiority, and sometimes even the belief that living in such conditions is their fate, about which they cannot do anything.

Economists use the term “poverty trap” to describe a situation in which people are stuck in deprivation for long periods, often several generations, and they can do nothing to escape this situation. The idea is simple: poverty today causes poverty in the future, so children born into poverty remain poor. For a person to get out of poverty, they need opportunities such as education, clean water, financial resources, and accessible medical facilities. Without these basic elements, poverty becomes a cycle from one generation to the next, in a perpetual motion.

If families are too poor to send their children to school, their children will have a hard time earning an adequate income later. If a community has no clean water, women will spend much of their day fetching water rather than earning an income. If medical facilities are far away, a parent will lose income every time he takes a sick child to the doctor.

Natural disasters and conflict make it even harder to break this vicious cycle and often plunge additional people into the poverty trap. Families in a community without well-functioning public institutions usually have few reserves, so when such catastrophes occur, they become further entrenched in poverty or fall into a precarious situation quickly.

Malnutrition is one of the typical causes that can drive people into a poverty trap. When our bodies use the calories we consume to survive rather than to provide the necessary strength to work, a perverse equilibrium is created characterized by low income and poor nutrition. Inadequate nutrition then becomes both the cause and the consequence of low income.

Such vicious circles also occur at a macro level. For example, low-income countries often lack basic conditions for growth (such as technology, education, and infrastructure). These are much needed to achieve productivity improvements that lead to rising national incomes, which would eventually allow the population to escape the most extreme forms of poverty.

To make the right decisions to “break the cycle”, it is important to understand the poverty trap in which an individual, a family, or a community finds itself. Onetime efforts, if well-chosen, can have lasting positive effects. This is the reasoning used, for example, to advocate to expand the microfinance system in low-income countries. Often, someone simply lacks a push to start a virtuous cycle of increased investment, economic growth, and income.

One specific trigger, such as malnutrition or disease, rarely causes a poverty trap. It is usually a complex situation with multiple causes that will require a multidimensional approach. This does not always have to be done at a regional or national level. Sometimes the chances of success are just as high or even higher, with measures aimed at addressing bottlenecks at a local or even family level.


More information on the book “Everybody wins”: www.everybody-wins.eu

“Everybody wins” – The poverty cycle
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