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What is poverty and how does it affect a country's economy?

What is poverty and how does it affect a country's economy?

May 13, 2016
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What comes to your mind when you hear or read the word “Poverty”? Maybe you imagine a small kid in Africa with no clothes on, carrying a bucket to get water from a very dirty pond and with a big stomach because he is suffering hunger. Poverty is not just that, and that is why we want to explain to you what poverty really is and how does it affect the economy of a country.

Poverty is the condition of having very little or no money, it affects individuals and families all around the world including Europe, Africa, Asia and America. According to the United Nations Organization (UN) a poor person is someone that earns 2 dollars a day and when he or she earns 1 dollar or less a day, they live in extreme poverty.

It doesn’t discriminate race, age or gender and it spreads very fast around the world. It includes many factors among political and cultural ones, according to the UN; each factor has its own consequences that affect the economy of a country:


  1. Economic: work rights and adequate incomes
  2. Social: Access to health care and education. 
  3. Political: Freedom of thought, expression and association. 
  4. Cultural: the right to maintain one’s cultural identity and be involved in a community’s cultural life. 

One important fact we must understand is that poor people are not poor because they don’t work or they want to; there are many factors like lack of education, inadequate conditions of health services, hunger and having no opportunities that are actually contributing to their condition of living in poverty.

And when many people live in poverty, a country also becomes poor. What causes this economic and social condition? There are many reasons like wars, corruption from the government, overpopulation and diseases. There is no simple formula to understand what really causes poorness in a country but its effects on that territory can be fatal.

Now that we have given a definition to poorness, we can try to understand how it affects the economy of a country.

All the effects we listed above impact on the economy of a country. How? Well, it impedes progress. This is mainly because people who live in poverty don’t have access to good education or any education at all, not allowing them to have good jobs and if they don’t get good incomes, they are not able to inject their money back in the economic system of a country through taxes and by purchasing products.

And off course if there are no good job opportunities and there are no educated people, investors will not pay attention to a country or pay lower prices than they would pay in a good economic system, if there is no foreign income a country has to almost sustain itself and its economy stops growing.  

What happens after the economic effects? Poverty is a big circle, if a factor like education is failing, well, then everything else falls apart. Some of the long term effects of poverty are death, spread of diseases, pollution and severe hunger, and other factors like bad health, crime and even migration.

Poverty is a severe situation that affects 836 million people around the world, 1 in every 5 persons earns 1.25 dollars a day, 1 of every 7 children who are less than 5 years old suffer from hunger. According to the UN this are the rates and numbers of 2015 and its projection for this year, 2016, is no encouraging, authorities expect that this numbers increase even more as the months and years go by.

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