Why are Some Countries Poor? Poverty, Macroeconomic Policy and Poverty Reduction

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Poverty is the state of having little or no money and few or no material possessions. The World Bank defines poverty as the inability of people to attain a minimum standard of living, encompassing low income, deprivation of basic needs, low levels of health and education, poor access to clean water and sanitation, insufficient physical security and lack of voice. According to the United Nations, poverty is “the inability of getting choices and opportunities, a violation of human dignity”.

Concern about poverty has a long tradition, and many economists fixed their studies on poverty and development. Why are some countries poor and other rich? This question has stumped many experts for centuries, trying to develop and construct theories to answer this debate, trying to find a solution. Is there one answer and one universal solution, or each theory and result depends on the country?

As we know, a crucial issue in macroeconomics is government intervention: can the markets, left alone, reach long-run equilibrium, or does the government need to intervene? The reality is that all governments nowadays intervene through their macroeconomic policies to achieve certain objectives and improve the overall performance of the economy.

Throughout this paper, we will encounter different theories and points of view which attempt to explain poverty and to identify the link between poverty, poverty reduction and macroeconomic policy.

Why are some countries rich and others poor? This question has stirred speculation among many scientists who have resorted to multi-disciplinary approaches in accordance with explanatory theories. The reasons why the world has split into socio-economic levels with further divisions within the society itself are ...

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... favorable and that a blanket fits all approach might not yield the best results for the country under study.


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