The Causes of Global Poverty

It is an undisputed fact that the majority of the world’s population live in conditions of poverty and that the majority of countries in the world would also be classed as impoverished. Despite decades of attention, the problem seems to be getting worse rather than better and every attempt to make the world a more equal place seems to end in abject failure. Why is this? Is this a natural state of affairs, the result of personal choice or a direct result of globalization? If we now live in a global village, then a great many of our neighbours are having a very bad time at the moment and those of us in the more advanced economies seem to show little concern for them.

The causes of the current inequalities in the world (20% of the world’s population account for 75% of global income) are complex and disputed but some key underlying reasons would be:

  • Globalization: the world is interconnected as never before and the prosperity of all nations is dependent on the relative prosperity of their neighbours and trading partners. Most decisions affecting the global economy are made by rich, powerful countries who are mainly concerned with the health of their own domestic economies. Governments in poorer countries are often powerless to influence policy making and unable to fend of any negative impacts of decisions made elsewhere – even when a number of poorer countries band together.
  • Lack of empowerment: Just as the governments of poorer countries lack a voice at the world table, the citizens of poor countries often lack a political voice in their own countries. The poorest tend to become increasingly marginalised and need to focus more on day to day survival than political debate. It is also argued that this lack of political power results in many of the world’s poorest people becoming the victims of self-serving dictators who siphon off much needed income for their personal use, leaving the poor to become ever poorer. This can become a seemingly never-ending cycle of impoverishment.
  • The impact if debt repayments: Many of the world’s poorest countries struggle under the burden of large levels of debt – almost inevitably. Part of the enforced conditions of debt relief imposed by the International Monetary Fund and World Bank are the imposition of structural reforms which often result in cuts in such areas as education, health and infrastructure development. Countries are also often forced to open their markets resulting in rich countries and multi-nationals becoming increasingly active within those countries – and this process can lead to a spiral of lower standards, reduced wages, cheaper resources etc. This process is perhaps an inevitability of globalization but it has seemed to make poor countries poorer.
  • Lack of drinking water, disease etc: Huge numbers of people lack immediate access to drinking water which results in millions of man-hours being used simply walking to fetch and carry water – time which could otherwise be spent on much more productive activity. Diseases such as HIV not only decimate populations but take people away from productive activity – both the infected and the carers. How can people earn money if much of their time is spent on essential but non-economically productive activities?
  • Corruption:  Many of the poorest countries in the world rank very high on the Corruption Index which is produced every year by Transparency International.  Corrupt activities undermine attempts to alleviate poverty as money is often diverted away from such activities as education, health provision, infrastructure development and sanitation projects.  The reduction in levels of corruption is an urgent task for many developing countries but is a problem which seems difficult to tackle.
  • Tax avoidance:  This is an issue in both developing and developed countries.  Tax collection levels across the board in many developing counties are very low which means that governments lack the income necessary to tackle many of the root causes of poverty.  Many western companies are also accused of using elaborate, legal tax avoidance instruments to avoid paying the taxes which are due in-country.

There are lots of other causes of corruption which could be cited but the causes seem much easier to enumerate that the solutions.  Poverty is something that affects large swathes of the world and which needs urgent attention as the problem seems to be growing at an increasing pace.


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