Economic Growth and Development in the Modern World - Essay Example

?Poverty in Multidimensional Terms Introduction There are numerous challenges facing economic growth and development in the modern world. The major ones include: poverty, insecurity, corruption, mismanagement of resources disease and poor governance. Poverty is noted to be the main cause of the slow pace towards economic development and liberalization globally. It can be noted that most people especially in the developing countries live below the poverty line. This means that they do not have access to basic shelter, education, health care and sanitation. This is an alarming fact and if nothing is done, the number of people living in adverse poverty could rise to nearly three billion by the year 2050 (Deaton, 2005:3). Conversely, there have been cases of poverty reduction is certain developing countries for example, Ghana, Bolivia, Cambodia and Tanzania. This is impressive though, the fight against poverty is real and it will take the collaboration of the people, governments and international organizations to win it. Poverty has been largely understood in terms of income until recently. Being poor meant that an individual could merely provide a proper diet at home. However, poverty is way more than a shortfall of income or food availability. It is more about the denial of choices and opportunities that are necessary for one to lead a decent, health and long life with self- esteem, respect and dignity. People simply live in campsites, slums and in poor living conditions because they have no other choice. Nearly half of the world’s population is faced by problems such as possessing few skills to compete in the market, multiple health problems and little or no income at all. There are many aspects of poverty that are inter- linked resulting to a vicious cycle (Bhalla 2002:79). In other words, poverty is a multi- dimensional concept and some of its facets include: i. Mismanagement of Resources The world is endowed with numerous resources in the form of minerals, oil, and a massive work force among many others (Chen and Ravallion, 2008:56). In most incidences, resources are poorly managed leading to wastages and this contributes to increasing poverty levels. This is common to developing countries such as South Sudan where there are constant fights over resources. It also entails the unequal distribution of resources among different regions that contributes high poverty level. ii. Food Mismanagement and Insecurity Food is a key need for human survival and if not properly managed it could lead to hunger among the population (Ivanic and Martin, 2008). Food security is paramount for the growth and development of an economy since it ensures that there is a constant supply even during dry spells. Food insecurity is common in most developing countries owing to fluctuations in weather patterns and lack of appropriate storage mechanisms. iii. Poor Health Disease and disability may hinder individuals from working thereby limiting their income. If the bread winner is ill, it means that the entire family will be negatively affected. This not only translates to loss of income and an increase in costs due to the need for health care. Other causes of poverty include: war and insecurity, the spread of HIV/AIDS, poor infrastructural and institutional development and corruption (Department for International Development (DfID, 2009). This paper analyses poverty as a multi- faceted concept with regards to mismanagement of food and resources. It further looks at the perspective of poverty by organizations like the UN and World Bank. It also gives an in depth analysis of the progress made by countries towards the achievement of the MDGs. Finally, the paper examines some of the indicators of poverty levels including different countries’ GDP and the human development index (HDI) Poverty from Mismanagement of Food and Security Thousands of people die every day of hunger- related causes according to recent reports. Regrettably, it is children who die most frequently yet there is an abundant supply of food for the world’s population. The main reason contributing to the situation is that the hungry live in areas characterized by extreme poverty (Ivanic and Martin, 2008). They have no access to food and lack money to buy food. They grow weaker and hungrier and this downward spiral continues until their demise. This is widespread in most African countries that rely on food aid from corporations such as the UN to feed the hungry population (Pinkovskiy and Sala-i-Martin, 2010). This is a shame since these countries experience heavy rains and this water should be collected and used for irrigation during drought. Surprisingly, the food aid comes from nations with minimal resources but make optimum use of the resources. Mismanagement of food occurs when there is poor storage and under- utilization of the available resource including land. In some instances, the food prices escalate due to lack of government intervention to set ceiling and floor prices (Ivanic and Martin, 2008). By failing to do so, the people suffer as they pay more for a limited amount of food leaving the traders to maximize their profits. Often, there is overproduction a given type of food during the rainy season. Over and over again, this food goes to waste due to lack of proper storage facilities. It can be observed that several months later, a famine occurs and this could have been avoided through the proper storage of the excess supply. The inconsistent climatic conditions have led to increased food insecurity as predictions cannot be made on when it will rain and resulting to prolonged drought periods leading to increase hunger and poverty. Governments in different countries should set aside funds that should be channelled towards the establishment of proper storage facilities to enhance food security. Food security is attained when a country is able to feed its population constantly throughout the year (Ivanic and Martin, 2008). When a country can proficiently supply food to its people without any aid from external sources it is food secure. Food security guarantees that the population is healthy and can contribute fully in towards economic growth. Governments should strive to maintain food security by making sure that they have a sufficient amount of food in store for the tough times. When all the people can access food, they are able to work well the result of this is increased income and a reduction in poverty. Poverty from Mismanagement of Resources There is a close link between resource management and poverty levels (Haughton and Khandker 2009:27). The world’s resource wealth if properly harnessed can lead to poverty reduction in different ways. However, this is not the case as the problem of resource mismanagement has proven to be a real challenge. Over the years, it has been observed that countries with high levels of resource mismanagement have trailed the rest of the world in minimizing poverty (Haughton and Khandker 2009:27). Mismanagement of resources may be through corruption, poor policy formulation and inequality in distribution of resources. This has led to resource wars in some of the volatile regions such as the Middle East and North Africa where there are constant wrangles over oil. In conclusion, advancements are being made as nations have learnt from the consequences of mismanagement of resources. Measures have been undertaken to ensure efficient management of resources towards the overall course of poverty reduction. With the decline in natural resources, people need to dedicate their time and energy towards obtaining alternative resources for their subsistence. Poverty and Government Policy The fight against poverty and inequality calls for the active participation of government. The widening gap between the rich and the poor requires the set up of sound policies to eradicate the two issues. Government policy intervention is mainly done through the review of the tax and benefits framework, minimum wage and management of the available resources (Haughton and Khandker 2009:25). Government policies have a considerable impact on poverty reduction hence the leadership should take an active role in the economic and social development process. Inequality in Sharing food, wealth and resources Inequality varies from poverty since it gives the actual situation of how resources are distributed in a given economy (Ravallion, 2003:645). On the contrary, poverty concentrates on the situation of the poorest in society. Inequality paints a clear picture of how countries generate and distribute their income and shows the disparity or the gap between the poor and the rich. In general, countries with high incidences of inequality experience high levels of poverty. This goes ahead to prove that poverty deeply connected to the how resources, wealth and food are distributed in a country. Inequality in food sharing is common in developing countries. This is whereby food is distributed unfairly leaving the poorest in society hungrier. Inequality in resource distribution is deep rooted in many countries and this has led to high incidences of poverty as discussed earlier in the paper. International bodies including the European Union and World Bank view inequality from the perspective of income distribution. However, this is only a tip of the iceberg since another main aspect of inequality is wealth. The main concerns with distribution of wealth are: how society distributes it, who owns it and where it originates from (Bussolo et al., 2008:55). Conclusively, inequality arises from improper wealth distribution thereby leading to poverty. Governments should review the process of wealth distribution across regions and among different classes of people so as to minimize levels of poverty. The Human Development Index The HDI is one of the modern methods of measuring development by taking into account factors such as life expectancy, income and education level. HDI acts as one statistic that can be viewed from social and economic development perspectives (Sumner, 2010). It is expressed as a value between 0 (minimum) and 1 (maximum). Basically, it sets a minimum and a maximum for the three facets of HDI which are health, education and living standards. There are four indicators that are used in the statistic which include: gross income per capita, expected years of schooling mean years of schooling and life expectancy at birth. HDI is an appropriate measure of development as it compares experience between different countries and offers an alternative to measures such as the GNP and GNI that are affected by the characteristics of wealth as a human development estimate. Different Countries GDPs GDP reflects the value of goods and services (at their prevailing prices) that are produced in a country yearly. The table below shows the most recent figures of the GDPs in some specific countries and their rank in the global scene. Rank Country GDP 1 United States $ 15,660,000,000,000 3 China $ 12,380,000,000,000 5 Japan $ 4,525,000,000,000 27 Egypt $ 537,800,000,000 84 Kenya $ 76,070,000,000 120 Mozambique $ 26,220,000,000 153 South Sudan $ 9,664,000,000 (Central Intelligence Agency, 2012) Millennium Development Goals The MDG framework was established in 2000 and its main objective was to limit the number of people living in abject poverty. It was formulated through the collaboration of leaders from over 150 countries and the international community (World Bank, 2010b). The goals were approved by religious bodies and development institutions that have shown their unwavering support since their inception. All the goals are connected since their general objective is to lessen global poverty, fight against disease and improve the general living standards of people. There are eight MDGs varying from halving poverty, provision of global primary education and controlling the spread of HIV/AIDS (Deaton, 2003:367). The goals were formulated as an effort to ensure that the world’s poorest meets their needs. The focus of this paper is mainly on the first MDG, which is: To eliminate extreme poverty and hunger. There are two major setbacks experienced towards the achievement of this goal. Firstly, there are millions of people that are said to be chronically hungry and the death rate of children due to hunger- related problems is alarming. Secondly, approximately a billion people live below the poverty line that is one US dollar a day. The MDGs aim to lower this by halving the number of hungry individuals and the number of those living below the poverty line (World Bank, 2010c). The road towards accomplishment of this goal has been successful as the target to halve poverty was met in long ago. The rate of universal poverty has notably reduced over the years. Nevertheless, projections show that approximately a billion people will be living below the poverty. The MDGs have played an important role in poverty reduction and improved the accessibility of basic needs to the poorest in society. Perspective of Co-operations: UN and World Bank International corporations have been on the forefront in the course of poverty eradication (Potter et al. 2012:25). The UN acknowledges poverty eradication to be an ethical, social, economic and political and economic concern and encourages governments to nip poverty at the bud. They have continuously come up with policies including the MDGs in a bid to reduce poverty global poverty levels (World Bank, 2010d). The organizations are of the common belief that the governments and the people themselves are partly to blame for the poverty experienced in different nations. They are of the view that poverty can be eradication through effective management of resources and the equal distribution of wealth and resources. Their activities have helped reduce the poverty levels significantly over the years. However, critics claim that they are biased in their efforts and tend to favour the Western world. Limitations of Dealing with Poverty Dealing with poverty has become a hindrance to governments all over the world in their mission to maintain sustainable economic growth and development (Kenny, 2011:13). Poverty greatly affects economic growth since funds are invested to alleviate it and they could have otherwise been directed to nation building. The poorest in society are argued to be poor simply because they are comfortable. This means that they may not be willing to participate in meaningful economic activity and wait upon the government to solve their economic and social problems. The battle against poverty calls for cohesion among the governments, international organizations and the individuals themselves. Gains Associated with Poverty Eradication Poverty eradication is associated with various gains that have a ripple effect on various sectors of the economy including health, security, education and employment. Generally, it improves people’s living standards by improving their rights to use to basic needs and better services such as improved health care, quality education. As earlier discussed, poverty involves with improving self- esteem, respect and opportunities to the population. Thus by mitigating poverty, people have access to better jobs and therefore can actively participate in the process of economic growth and development. Conclusion In summary, poverty rates have reduced over the years and this can be attributed to the MDG framework and active participation of the international organizations. The discussion clearly shows that poverty is a multidimensional concept and its aspects must be understood and this helps governments to deal with it accordingly. In the present day, poverty can be attributed to poor governance and the unequal distribution of wealth and resources. The best measure of development to date is the since it takes health, education and living standards into consideration. These are the major factors affecting global economic growth and development. The war against poverty is merely over. International organizations and governments should always be on their toes in their efforts to eradicate poverty and boost equality in resource distribution. References Bhalla, S. (2002) Imagine there’s no country: Poverty, inequality, and growth in the era of globalization, Washington, DC, Peterson Institute Press, pp. 76- 80. Bussolo, M., De Hoyos, R. & Medvedev, D. (2008) Economic growth and income distribution: linking macroeconomic models with household survey data at the global, pp. 40-70. Central Intelligence Agency, 2012 ‘GDP (General Purchasing Power)’, viewed 20 Apr 2013 . Chen, S. & Ravallion, M. (2008) ‘The developing world is poorer than we thought but no less successful in the fight against poverty’, World Bank Policy Research Working Paper #4703. Deaton, A. (2003) ‘How to Monitor Poverty for the Millennium Development Goals’ Journal of Human Development, vol. 4, no. 3, pp. 353-378. Deaton, A. (2005) ‘Measuring poverty in a growing world (or measuring growth in a poor world’, Review of Economics and Statistics, vol. 87, no. 1, pp. 1-19. Department for International Development (DfID), United Kingdom. (2009) ‘Eliminating world poverty: building our common future’. Haughton, J. & Khandker, S. (2009) Handbook on poverty and inequality, Washington, DC: World Bank, pp. 23-37. Ivanic, M. & Martin, W. (2008) ‘Implications of Higher Global Food Prices for Poverty in Low-Income Countries’, World Bank Policy Research Working Paper 4594. Kenny, C. (2011) Getting better: why global development is succeeding--and how we can improve the world even more, New York, Basic Books, pp. 3- 15. 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