Poverty reduction

Poverty reduction is a set of actions that aim to help people escape from poverty forever. These actions can be economic or humanitarian, like giving support to those in need. One way to reduce poverty is by helping people create their own wealth, as suggested by Henry George in his book Progress and Poverty. Today, some economists support ideas like the land value tax to make natural resources accessible to everyone.

Poverty exists in both developing and developed countries, though it is more common in developing nations. In the past, poverty was often seen as unavoidable because many places had limited resources while populations grew quickly. However, with advances in technology and the Industrial Revolution, many wealthy nations saw a big drop in poverty. Over the past century, the world's average wealth grew five times. In 1820, most of the world lived on less than a dollar a day, but by 2001, this had dropped to about 20%.

Today, reducing poverty is challenged by things like lack of economic freedoms and poor governance. Helping people gain property rights, especially to land, and giving them access to financial services through tools like mobile banking can make a big difference. Support in areas like health, education, and building infrastructure also helps. Efforts like the Green Revolution and fighting diseases have improved lives for many. However, some aid comes with rules that may not always help the poorest the most. Some believe that small changes in how wealthy people live could make a big impact in ending world poverty.

Economic liberalization

People who support economic liberalization believe it can help reduce poverty. They think that giving poor people the right to own land and other property is very important. When people have secure rights to their land, it can greatly increase their wealth. For example, in China and India, reducing government control and allowing people to own land helped lower poverty levels.

However, there are also challenges. Some rules and corruption can make it hard for small businesses to grow. For example, opening a business in Canada is much easier than in Bolivia. While free markets can help, they can also cause problems, like making it harder for poor farmers to afford things they need. Also, trade rules sometimes favor richer countries, making it difficult for poorer countries to sell their products fairly.

Capital, infrastructure and technology

Long-term economic growth happens when people and tools become better at making things. Health and education are very important for this growth. Even countries without lots of money can improve health by learning what works, like teaching people to wash their hands, which can greatly reduce sickness in children.

Education is key to economic growth, helping people earn more money. Simple actions, like treating children for parasites, cost very little but can help kids stay in school. Good roads and communication networks also help people trade and grow their economies. New technologies, like mobile phones, let people in poor areas connect to markets and manage their money safely, though they work best when combined with other improvements.

Employment and productivity

Economic growth can help reduce poverty by creating more jobs and improving how well people work. Studies show that in many countries, when the economy grows, poverty often goes down. But having a job doesn’t always mean a person can escape poverty. Many workers still earn too little to support their families.

During the COVID-19 pandemic, many people lost their jobs, which made poverty worse. Some workers, especially those with fewer skills, were affected the most. Helping farmers is also important because many poor people work in agriculture. Improving farming methods and water management can help farmers grow more food and earn more money. This can lift many people out of poverty and give them better opportunities.

History of Anti-Poverty Sentiments

Poverty reduction has always been an important goal for many countries. In Europe, strong feelings against poverty began in 1957 with the Treaty of Rome. Later, in 2000, the European Union started focusing on both economic growth and helping people stay together as a community.

In the United States, early ideas about poverty often punished poor people to push them to find work. Later, President Lyndon B. Johnson started a big effort called the "War on Poverty" in 1964. He wanted to not just help people in poverty, but to stop it from happening at all. He created programs like Medicare and Medicaid to help older people and families, plus programs for housing, food, and jobs. One key law he helped pass was the Economic Opportunity Act of 1964, which created new ways to help people find jobs, start small businesses, and get education. This made fighting poverty a national goal instead of just something each person had to solve alone.

Aid

Main article: Aid

Welfare

Main article: Welfare's effect on poverty

Aid can help people by giving them money regularly, like a basic income grant or social security. In tests in Namibia, giving people just $13 a month helped children go to school, reduced sickness, and boosted work. Another way is unconditional cash transfer, where families get money if they do things like sending kids to school or getting vaccinations. In Mexico, this cut school dropouts and helped children grow taller. Welfare programs in rich countries have also shown they can lower poverty by giving people support and chances to succeed.

Development aid

See also: Development aid and Tied aid

Some aid comes with rules, like making countries buy things only from the country giving the aid. This can cost more and isn’t always the best help. For example, Eritrea had to spend aid money on expensive foreign goods instead of local options. Some believe aid should focus more on teaching people and improving health systems instead of just fixing problems temporarily. Supporters say aid can save lives, like vaccines for polio, diphtheria, and measles.

Debt relief

See also: Debt relief

Helping countries pay off their debts can free up money for important things like health and schools. In the 1980s, ideas like debt relief started, and many countries offered to cancel some debts. This let poor nations use money for things that help people instead of paying interest. Programs like the Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative aimed to support these efforts. Even so, some say more needs to be done to help countries manage their debts and focus on growth.

Microloans

One way to help people escape poverty is through small loans, known as microloans. These became well-known in 1976 thanks to the Grameen Bank in Bangladesh. The idea is simple: give very small amounts of money to farmers or villages so they can buy things that will help them earn more. For example, a pump costing just $50 can make a huge difference in a village that doesn’t have a way to water its crops, thanks to irrigation.

Governments and groups also offer microloans. In Thailand, the People’s Bank gives loans from $100 to $300 to help farmers buy tools or seeds, or to help sellers get items to sell, and others to start small shops. The The International Fund for Agricultural Development (IFAD) Vietnam has helped form many saving and credit groups in poor areas, giving people access to microcredit for small farming projects.

Empowering women

The empowerment of women has become an important topic in discussions about development and economics. Because women and men experience poverty differently, they have different priorities for reducing poverty and are affected differently by strategies to reduce poverty. Policies aimed at reducing poverty have started to focus on poor women separately from poor men. Research from the World Bank shows that promoting gender equality by empowering women can lead to greater poverty reduction and economic growth.

Studies show that helping women in the food system, such as through training and income-generating activities, can improve food security and make communities stronger over time. This highlights the need for policies that address social norms and ensure fair access to resources.

Good institutions

Good and fair institutions help countries grow and stay safe. When governments follow the rules and don’t take money for themselves, they can make laws that help everyone, not just a few rich people. Strong governments can create policies that help all citizens, like making sure workers are paid fairly and that companies pay taxes to help the country develop.

Countries like Thailand, Taiwan, Malaysia, South Korea, and Vietnam have shown that strong leadership can lead to better lives for everyone. These countries have governments that can make and keep policies that help all people, not just the wealthy. Researchers have found that good governance—like being responsible, effective, and fair—helps countries grow richer and reduce poverty.

Other approaches

Another approach for helping people out of poverty is Fair Trade. This supports paying better prices and following social and environmental rules when making products. However, how well this helps reduce poverty is debated.

The Toronto Dollar is a special money used only in Toronto. It helps raise funds for local charities, especially those helping people in need. It also rewards people on welfare who volunteer their time.

Some believe big changes to the economic system are needed. Ideas include socialism, communism, anarchism, libertarianism, binary economics, and participatory economics. These ideas come from different political views and aim to reduce or end poverty completely.

Reducing inequality can be done through progressive tax.

In law, there is a movement to make living without poverty a human right.

The IMF and countries have made Poverty Reduction Strategy papers.

Economist Jeffrey Sachs wrote a book called The End of Poverty, planning to end global poverty by 2025. Groups like the Global Solidarity Network follow his ideas, helping with housing, food, education, health, and more.

The Poor People's Economic Human Rights Campaign in the United States organizes poor people to fight for their rights to live without poverty. They believe that everyone deserves respect and dignity.

Some development experts think that letting people move freely between countries could greatly help reduce poverty.

Climate change adaptation

Main article: Climate change and poverty

Extreme weather from climate change can make poverty worse. Poor people are most affected by these disasters. By 2030, over 325 million very poor people might live in countries that face many hazards. Most live in South Asia and Sub-Saharan Africa.

Experts say we need to connect efforts to reduce poverty with plans to adapt to climate change. Right now, these are often treated separately, which isn’t helpful.

Bicycles

Main article: Bicycle poverty reduction

Tests in Africa and Sri Lanka show that bicycles can help poor families earn up to 35% more. Bikes make transport easier and cheaper, which helps people living in rural areas.

Millennium Development Goals

Ending extreme poverty and hunger by 2015 was one of the Millennium Development Goals. Experts suggested several helpful actions, like giving children medicine for diseases, ending school fees, and providing clean water and electricity.

Sustainable Development Goals

The first Sustainable Development Goal aims to end poverty by 2030. It also wants to protect poor people from climate disasters. From 2002 to 2022, the number of people living in poverty dropped from 26% to 13%. If this trend continued, poverty could fall to 4% by 2030. But if growth is slower, it might only drop to 6%.

Poverty targeting

Governments need to find and help the poorest people. One common way is “means testing,” where families prove they are poor enough to get help.

Global initiatives to end hunger and undernutrition

Fighting poverty includes ending hunger. In 2012, a global agreement called the Food Assistance Convention was signed. The Sustainable Development Goals include a goal to end hunger. Groups like Caritas International and Compact2025 work to end hunger by 2025.

Poverty reduction in China

See also: Targeted Poverty Alleviation

China’s growth helped lift more than one billion people out of poverty. Most of the world’s poverty reduction from 1981 to 2008 happened in China.

Poverty reduction in Taiwan

Even with efforts, some countries still struggle with poverty. In Taiwan, wages for poor families have gone up, but not enough. The government helps with health care, payments to older people, and many support programs. Still, rising costs make it hard for poor families to afford things like education.

Business solutions to poverty

See also: Bottom of the pyramid

Some businesses try to help poor people by creating products they can afford. Ideas like this started with a book called Fortune at the Bottom of the Pyramid. But it’s hard to make money while also helping poor customers. Some businesses work directly with poor communities, helping them start small farms or businesses. However, there are challenges, like making sure these businesses stay honest and helpful.