Economics HL
Economics HL
4
Chapters
117
Notes
Unit 1 - Intro To Econ & Core Concepts
Unit 1 - Intro To Econ & Core Concepts
Unit 2 - Microeconomics
Unit 2 - Microeconomics
Unit 3 - Macroeconomics
Unit 3 - Macroeconomics
Unit 4 - The Global Economy
Unit 4 - The Global Economy
IB Resources
Unit 4 - The Global Economy
Economics HL
Economics HL

Unit 4 - The Global Economy

Understanding The Vicious Cycle Of Poverty: Key Barriers To Development

Word Count Emoji
496 words
Reading Time Emoji
3 mins read
Updated at Emoji
Last edited onΒ 5th Nov 2024

Table of content

The dreadful poverty cycle

  • What is it

    • Imagine being stuck in a merry-go-round, where you can't get off. That’s the poverty cycle.
    • Gunnar Myrdal, a Nobel Prize winner, described it as "circular and cumulative causation."
  • The Vicious Loop

    • People are poor → earn low income.
    • Spend all on essentials, so no savings.
    • No savings = less investment in things like machines or education.
    • With low investment, productivity (how much you can produce efficiently) stays low.
    • Low productivity → low income.
    • And back to the merry-go-round we go...
  • Real-World Impact

    • This trap doesn't just affect the current generation; kids get stuck too!
    • For instance, if parents can't afford schooling for their children, those kids grow up with fewer opportunities and may remain in poverty.
    • A country’s growth gets stifled! 😟

Economic barriers - the invisible walls

  • Inequality – The Big Monster

    E.g., Imagine having a pizza and only getting a tiny crumb while someone else gets most of it. Not fair, right?

    • Globally, 20% of people earn only 1.5% of the income! 😲
    • Some areas have shocking disparity, like parts of Latin America, Africa, and Middle East.
    • Impact of High Inequality
      • Fewer chances to study or get healthcare.
      • Hard for poor to borrow money.
      • Overall savings decrease.
      • Corruption: Investors and businesses fear hidden costs and dishonesty.
      • Possible social unrest: People get fed up, leading to instability and reduced investments.
  • Infrastructure and Tech Woes

    • Infrastructure = essential physical stuff: roads, electricity, water, etc.
    • E.g., Think of it like the foundation of a house. If it's weak, the house might crumble!
    • In many developing areas, there's either very poor or no infrastructure.
    • Appropriate Technology = tools best suited for a place’s needs.
      • Developing countries might need tech that uses more labor since they often have more workers and fewer machines. But they often lack such tech.
      • This leads to unemployment, poverty, and less growth.
  • Human Capital Hurdles

    Remember: Good health and learning are not just goals but the foundation for a country's development!

    • Human capital is our health, skills, and knowledge. But many developing areas lag in these.
    • Without healthcare and education:
      • Less productivity.
      • Fewer job opportunities.
      • Diseases might spread more.
      • Fewer new tech and ideas.
  • Primary Sector Dependence – The Risky Business

    E.g., Imagine depending solely on lemonade stands and suddenly, there’s a lemon shortage! πŸ‹

    • Many regions like Africa and Latin America heavily depend on exporting raw materials or primary goods (like coffee, sugar, or even uranium).
    • Issues
      • Demand doesn't always grow with rising incomes.
      • Prices are unpredictable. A bad season can cause a big loss!

πŸ’‘ Key Takeaways

  • Breaking the poverty cycle is crucial for progress.
  • Addressing economic barriers can pave the way for sustainable growth.
  • Investments in education, health, and infrastructure can boost a country's development prospects.

Now, young economist, go conquer that exam and make the world a better place! πŸŒπŸŒŸπŸ“š

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IB Resources
Unit 4 - The Global Economy
Economics HL
Economics HL

Unit 4 - The Global Economy

Understanding The Vicious Cycle Of Poverty: Key Barriers To Development

Word Count Emoji
496 words
Reading Time Emoji
3 mins read
Updated at Emoji
Last edited onΒ 5th Nov 2024

Table of content

The dreadful poverty cycle

  • What is it

    • Imagine being stuck in a merry-go-round, where you can't get off. That’s the poverty cycle.
    • Gunnar Myrdal, a Nobel Prize winner, described it as "circular and cumulative causation."
  • The Vicious Loop

    • People are poor → earn low income.
    • Spend all on essentials, so no savings.
    • No savings = less investment in things like machines or education.
    • With low investment, productivity (how much you can produce efficiently) stays low.
    • Low productivity → low income.
    • And back to the merry-go-round we go...
  • Real-World Impact

    • This trap doesn't just affect the current generation; kids get stuck too!
    • For instance, if parents can't afford schooling for their children, those kids grow up with fewer opportunities and may remain in poverty.
    • A country’s growth gets stifled! 😟

Economic barriers - the invisible walls

  • Inequality – The Big Monster

    E.g., Imagine having a pizza and only getting a tiny crumb while someone else gets most of it. Not fair, right?

    • Globally, 20% of people earn only 1.5% of the income! 😲
    • Some areas have shocking disparity, like parts of Latin America, Africa, and Middle East.
    • Impact of High Inequality
      • Fewer chances to study or get healthcare.
      • Hard for poor to borrow money.
      • Overall savings decrease.
      • Corruption: Investors and businesses fear hidden costs and dishonesty.
      • Possible social unrest: People get fed up, leading to instability and reduced investments.
  • Infrastructure and Tech Woes

    • Infrastructure = essential physical stuff: roads, electricity, water, etc.
    • E.g., Think of it like the foundation of a house. If it's weak, the house might crumble!
    • In many developing areas, there's either very poor or no infrastructure.
    • Appropriate Technology = tools best suited for a place’s needs.
      • Developing countries might need tech that uses more labor since they often have more workers and fewer machines. But they often lack such tech.
      • This leads to unemployment, poverty, and less growth.
  • Human Capital Hurdles

    Remember: Good health and learning are not just goals but the foundation for a country's development!

    • Human capital is our health, skills, and knowledge. But many developing areas lag in these.
    • Without healthcare and education:
      • Less productivity.
      • Fewer job opportunities.
      • Diseases might spread more.
      • Fewer new tech and ideas.
  • Primary Sector Dependence – The Risky Business

    E.g., Imagine depending solely on lemonade stands and suddenly, there’s a lemon shortage! πŸ‹

    • Many regions like Africa and Latin America heavily depend on exporting raw materials or primary goods (like coffee, sugar, or even uranium).
    • Issues
      • Demand doesn't always grow with rising incomes.
      • Prices are unpredictable. A bad season can cause a big loss!

πŸ’‘ Key Takeaways

  • Breaking the poverty cycle is crucial for progress.
  • Addressing economic barriers can pave the way for sustainable growth.
  • Investments in education, health, and infrastructure can boost a country's development prospects.

Now, young economist, go conquer that exam and make the world a better place! πŸŒπŸŒŸπŸ“š

Unlock the Full Content! File Is Locked Emoji

Dive deeper and gain exclusive access to premium files of Economics HL. Subscribe now and get closer to that 45 🌟

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