what is a poverty trap 
a poverty trap is a mechanism that makes it very difficult for people to escape poverty a poverty trap is created when an economic system requires a significant amount of capital to escape poverty when individuals lack this capital they may also find it difficult to acquire it creating a self reinforcing cycle of poverty understanding poverty trapsmany factors contribute to creating a poverty trap including limited access to credit and capital markets extreme environmental degradation which depletes agricultural production potential corrupt governance capital flight poor education systems disease ecology lack of public healthcare war and poor infrastructure in order to escape the poverty trap it is argued that individuals in poverty must be given sufficient aid so that they can acquire the critical mass of capital necessary to raise themselves out of poverty this theory helps to explain why certain aid programs that do not provide a high enough level of support may be ineffective at raising individuals from poverty if those in poverty do not acquire the critical mass of capital they will simply remain dependent on aid indefinitely and regress if aid is ended 2recent research has increasingly focused on the role of other factors such as healthcare in sustaining the poverty trap for a society researchers at the national bureau of economic research nber found that countries with poorer health conditions tend to be mired in a cycle of poverty as compared to others with similar educational attainments 3researchers at the university of florida in gainesville collected economic and disease data from 83 of the world s least and most developed countries they found that people living in areas with limited human animal and crop disease were able to lift themselves out of the poverty trap as compared to people who lived in areas with rampant disease 4types of poverty trapspoverty traps can vary in their underlying causes and characteristics but they all share the common feature of perpetuating poverty or making it difficult for individuals or communities to escape poverty here is an overview of the various types of poverty traps economic poverty traps are characterized by low income and limited economic opportunities people in these traps may face challenges such as unemployment or underemployment low wages and lack of access to credit or financial services this makes it difficult for them to save invest or escape poverty because they are often living hand to mouth struggling to meet their basic needs geographic poverty traps occur in areas that are geographically isolated or marginalized these regions may lack essential infrastructure like roads electricity and clean water making it hard for residents to access education healthcare and job opportunities limited connectivity to markets and resources can further perpetuate poverty in these areas health related poverty traps are linked to poor health and inadequate healthcare access individuals in these traps often face chronic illnesses lack of preventive care or insufficient treatment options medical expenses can drain their limited resources and ill health can limit their ability to work and earn a stable income educational poverty traps stem from inadequate access to quality education high dropout rates lack of schools and limited educational opportunities hinder individuals ability to acquire skills and knowledge necessary for better employment prospects without education they may remain trapped in low paying low skilled jobs social factors such as discrimination social exclusion or limited social support networks can create social poverty traps these factors may restrict individuals access to resources opportunities and social mobility discrimination based on factors like race gender or ethnicity can perpetuate inequality and poverty and social factors can perpetuate other types of poverty traps listed within this section generational poverty traps occur when poverty is passed down from one generation to the next within families children born into impoverished households may face limited access to quality education healthcare and proper nutrition these individuals may also face barriers or limitations based on debts or financial limitations passed down from generation to generation institutional poverty traps are related to weak governance corruption and ineffective institutions inadequate rule of law lack of property rights protection and rampant corruption can stifle economic growth discourage entrepreneurship and hinder access to essential services like healthcare and education these institutional weaknesses can keep individuals and communities in poverty poverty traps are often the subject of political debate some believe the government has a responsibility to alleviate poverty traps while others believe markets should evolve on their own the public and private role in addressing the poverty trapin his book the end of poverty economic possibilities for our time jeffrey sachs recommends that as a way of combating the poverty trap aid agencies should function as venture capitalists that fund startup companies 1sachs proposes that just like any other startup developing nations should receive the full amount of aid necessary for them to begin to reverse the poverty trap he points out that the extremely poor lack six major kinds of capital human capital business capital infrastructure natural capital public institutional capital and knowledge capital sachs added in his book sachs postulates that the public sector should concentrate its efforts on investing in business capital investments sachs says should be the domain of the private sector which he claims would more efficiently use the funding to develop the profitable enterprises necessary to sustain growth enough to lift an entire population and culture out of poverty 1solutions to overcome poverty trapswith sachs context in mind let s dig deeper into potential solutions that could overtake poverty traps bear in mind that this list is not meant to be exhaustive in addition this list is meant to be a high level overview of potential strategies whose success may ebb and flow over time investing in education is often cited as being crucial for breaking the poverty cycle quality education with well trained teachers updated curriculum and modern facilities ensures that children have the skills and knowledge needed for better job opportunities equitable distribution of educational opportunities particularly for marginalized groups is vital for addressing inequality additionally vocational and technical training programs prepare individuals for skilled employment which can be a pathway out of poverty via better job opportunities access to affordable healthcare services is an essential poverty reduction strategy establishing and maintaining healthcare facilities especially in underserved areas guarantees access to medical services preventive care measures such as immunizations and health education reduce the prevalence of diseases and lower healthcare costs in the long run expanding health insurance coverage is crucial to protect low income individuals and families from the financial burden of healthcare expenses investing in basic infrastructure like roads electricity and water supply improves living conditions and stimulates economic activity this is especially true in remote or marginalized areas that may have a lack of physical accessibility for resources and access this development facilitates growth to markets education healthcare and professional opportunities poverty traps may be alleviated by increasing financing and credit accessibility microfinance institutions can provide small loans to aspiring entrepreneurs and small business owners who lack access to traditional banking services these loans enable individuals to invest in income generating activities and improve their economic prospects in addition expanding access to formal banking services savings accounts and insurance products for marginalized populations promotes financial inclusion promoting gender equality and women s empowerment is not only a human rights issue but also a key driver of poverty reduction when women have equal access to education economic opportunities and leadership roles entire communities can benefit effective anti discrimination laws and policies can also protect the rights of minority groups and promote social inclusion transparent governance the rule of law and accountability are crucial for reducing corruption and ensuring equitable resource allocation independent anti corruption agencies can investigate and prosecute corruption cases discouraging corrupt practices in addition advocacy efforts push for policy changes and reforms at various levels to address the root causes of poverty and promote equity and inclusion according to world bank group the number of individuals in extreme poverty rose to over 700 million people during the pandemic and may be around 685 million at the end of 2022 during the pandemic the global extreme poverty rate reached 9 3 6examples of a poverty trapone of the most important considerations in studying the poverty trap is the amount of government aid necessary to lift a family out of their present conditions consider the case of a family of four made up of parents and two children who are below legal working age the family has an annual income of 24 000 with the parents working in jobs that pay 10 per hour according to the latest federal poverty guidelines a family of four is considered to be poor if its income is less than 30 000 7in a simple case let us assume that the government begins handing out aid amounting to 1 000 per month this raises the family s annual income to 36 000 while it is capped at 1 000 the government aid decreases in proportion to increases in the family s income for example if the family s earnings increase by 500 to 2500 per month government aid reduces by 500 the parents would have to work an extra 50 hours in order to make up for the shortfall the increase in working hours comes at an opportunity and leisure cost to the parents for example they might end up spending less time with their children or may have to hire babysitters for the time that they are out of the home the extra hours also mean that the parents will not have the leisure to upgrade their skill sets for a better paying job the aid amount also does not take into account living conditions for the family because they are poor the family lives in one of the most dangerous neighborhoods in the city and does not have access to proper healthcare facilities in turn crime or susceptibility to disease could drive up their average monthly spending making an increase in the family s income effectively useless in the real world the case of rwanda a country wracked by genocide and civil war until recently is often held up as an example of a nation that tackled the poverty trap by identifying factors beyond income the african country focused on healthcare and insurance to increase the average daily calorie intake 8however certain researchers charge the country s government with reducing the measurement threshold in order to make rwanda rate better on poverty statistics 9