Dozens of countries of the modern world suffer from this phenomenon. What is the vicious cycle of poverty? And can it be torn?
What is the vicious cycle of poverty?
Poverty refers to a person’s inability to satisfy his basic necessities of life. This is a state of constant need, lack of material and monetary resources. Hundreds of millions of people on Earth live below the so-called poverty line. In other words, they cannot even provide themselves with normal and nutritious nutrition. What is the vicious cycle of poverty? What is the essence of this popular economic concept today?
This problem is inherent in almost all developing states of the planet. Low incomes of people in developing countries do not contribute to the accumulation of monetary savings. This, in turn, does not allow investment in national production. As a result, the state simply does not have a foundation for increasing the welfare of its citizens. The answer to the question of what is the vicious cycle of poverty can be done in simpler words. The essence of this economic phenomenon can be explained in one short phrase: “Poor countries are poor because they are poor.”
The Vicious Circle of Poverty: Examples and Ways to Combat
The population of most developing countries simply does not have the means to buy various goods, products and services. Accordingly, there are no prerequisites for the growth of their national production, which means for the creation of new jobs. And this whole situation "walks in circles", repeating from year to year.
Perhaps the most striking example of the vicious cycle of poverty is the Roma people, which are scattered throughout the cities and territories of the Balkan Peninsula and Eastern Europe. Gypsies live in very difficult conditions, often without access to clean drinking water, sewage, electricity and good nutrition. All this significantly undermines the health and vitality of Roma, pushing people to the sidelines of civilization.
All post-Soviet countries found themselves in a similar situation in the early 1990s. The collapse of the powerful economy of the USSR led to the closure of many enterprises where thousands of people worked. Products previously produced in huge quantities were suddenly not at all in demand in new markets. Some countries of the former USSR (such as Latvia or Estonia) were able to get out of the "vicious cycle of poverty", while others were deeply stuck in economic and political crises.
How to break the cycle of poverty? This serious problem can be solved with the help of large-scale financial injections from outside, investments in the economy from internal reserves, tight control of population growth and increasing tax revenues in order to redirect the accumulated funds to the implementation of important state projects.