Hello apart from taxes and benefits what other measures can be used to tackle poverty.

1. Minimum wage.

Min wages increase incomes for the low paid. This helps to reduce relative poverty.
Min wages may also increase incentive to get a job.
However, min wages may cause unemployment (in competitive labour markets)
Min wages benefit most second income earners and students. Often the poorest aren't working at all.

Does a minimum wage reduce poverty?

2. Economic Growth.

increasing economic growth increases Real GDP. The "trickledown effect" says that everyone will ultimately benefit from economic growth.
However, there is no guarantee that economic growth will reduce relative poverty. Often those who benefit the most from economic growth are those with high skills and assets. The underclass of low skilled and poor education often do not benefit.

3. Better Education and training.

The cause of much unemployment and low wage jobs is lack of qualifications and training.
However, there is no guarantee spending on education and training will lead to better skills in the workforce, some people may be reluctant to attend training schemes.
Also the benefits are very long term and hard to quantify.


Poverty, income inequality and economic growth

Labels: Poverty

Discuss 3 Factors that can explain the persistence of poverty, despite the efforts of the IMF and the World bank.

The IMF and World Bank are focused on giving loans to countries. Usually with conditions of free market deregulations.

1. These loans are not Targeted to development.

Often they are to meet government deficits and / or lack of foreign exchange. Therefore, may not be used for development. However, the injection of foreign funds can make a difference, through a trickle down effect. Also, some economists argue the conditions that the IMF impose, can help significantly in reducing corruption and economic mismanagement, therefore this is most effective kind of AID, because it makes them reform inefficient economies.

2. Rural Areas need AID most.

AID improved economic development most when it is targeted in certain ways: for example, investment in better technology, education and training for certain workers. AID targetted at rural areas. AID from the world bank is a relatively small % of GDP.

3. Domestic Savings

Harod Domar model considers domestic savings to be the key to economic development. This domestic savings enable higher levels of investment. Higher investment is crucial to economic development (take off period), also domestic investment is usually more beneficial than investment from outside.

However, the importance of domestic savings is less important than some economists believe. Loans from IMF can have the same effect as domestic savings in stimulating investment. The key is how are the loans used.


Other factors worth considering:

• IMF impose economic conditions e.g. privatisation and deregulation. However, it is debatable whether these are actually appropriate for developing countries.

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• Poverty, Income Inequality and Economic Growth
• Does Globalisation Benefit developing countries
  

Labels: Poverty