Poverty and macroeconomic relationships

Poverty

Over the years, the issue of poverty and its lasting consequences has been increasingly brought to the forefront. This is because of the impact that it is having on society and the ability of individuals to live empowering lives. According to statistics compiled by the World Hunger Organization, they found that the total number of people who are dealing with the effects of poverty is 926 million worldwide. The below table is highlighting the different areas that are most susceptible to these issues. ("2012 World Hunger," 2012)

The Total Number of People Living in Poverty by Region

Area

Number of People

Developed Countries

million

Near East / North Africa

million

Latin America / the Caribbean

million

Sub-Saharan Africa

239 million

Asia and the Pacific

578 million

Worldwide

926 million

("2012 World Hunger," 2012)

These figures are showing how poverty is having an adverse impact on a number of regions. To fully understand the overall scope of these challenges requires examining the economic effects of poverty on society and development. Together, these elements will highlight the lasting influences on everyone. ("2012 World Hunger," 2012)

The Effects on Poverty on Society

There are no clear definitions for poverty. Instead, it is a way of life that is embracing a number of characteristics. According to the World Bank, this definition is subject to different variables and interpretations with them saying, "The most commonly used way to measure poverty is based on incomes. A person is considered poor if his or her income level falls below some minimum level necessary to meet basic needs. This minimum level is usually called the 'poverty line'. What is necessary to satisfy basic needs varies across time and societies. Therefore, poverty lines vary in time and place, and each country uses lines which are appropriate to its level of development, societal norms and values." This is highlighting how the standards of poverty will vary from one region to the next. ("Definitions of Poverty," 2012)

However, the World Bank determined that the average rate for the international poverty line is $1.25 per day. This is the amount that someone must make to be able to sustain themselves, their families and provide the most basic necessities. These figures are commonly used by actuaries around the world, to determine the overall depth of poverty that is occurring inside a particular region. (Ravallion, 2009)

Poverty has been shown to have a negative impact on society. This is from the tremendous amounts of stress that someone is under will influence their mental and physical well-being. For example, children who are born into poverty will have to deal with a number of challenges including:

Health issues: This can affect the physical well-being of a child and their ability to cope with a variety of situations. What happens is the lack of resources and stress creates an environment that supports a number of behaviors (i.e. drug / alcohol addiction and physical / mental / sexual abuse). At the same time, these children are usually born at lower birth weights and will often wrestle with lingering health issues (such as: asthma). This is problematic, as these challenges will affect the way that someone sees the world around them and their ability to cope. ("Causes and Effects of Poverty," 2012)

The lack of opportunities: Another impact of poverty is the lack of opportunities. This can take shape with the person having fewer educational resources and support. While at the same time, they are exposed to a host of illegal activities that are committed right in front of them (i.e. The distribution of illegal drugs or the sale of guns). These factors will help the person to think that this is socially acceptable. ("Causes and Effects of Poverty," 2012)

When this happens, they will engage in these actions to address their economic challenges. The problem is that the individual does not see anything wrong with what they are doing. This is from being constantly exposed to these areas through cultural traditions (which are telling them these actions are acceptable). Once they are arrested, is the point that they will claim they are product of their environment (based on the lack of opportunities that were available to them). ("Causes and Effects of Poverty," 2012)

These factors are showing how poverty will have an adverse impact on the physical well-being and mindset of an individual. This will affect society, as these people will engage in actions that are not constructive and help to support a continuation of criminal enterprises. When this happens, poverty and its lasting influences will shape the values that are embraced by everyone. ("Causes and Effects of Poverty," 2012)

The Impact of Poverty on Development

Poverty will have a negative effect on development. This is from the lack of opportunities for advancements in many regions will force an individual to become involved in illegal activities. At the same time, the inability to have access to critical financial resources will mean that they have poor levels of health (which is affecting the standard of living and life expectancy rates). These areas are troubling, as they will lead to a never ending cycle of poverty that is passed from one generation to the next. Over the course of time, this can drain society of its potential and ability to innovate. This is the point that there will be significant declines in economic productivity from impoverished areas. (Viitanen, 2011)