Poverty

Poverty describes the condition of being unable to meet the basic needs of life due to inadequate income or material goods. Read the overview below to gain an understanding of the complexities of poverty and explore the previews of additional articles on this global issue.

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The Economic and Human Dimensions of Poverty

"The Economic and Human Dimensions of Poverty." Gale Essential Overviews: Scholarly, Gale, 2016.

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There are a number of overlapping forms of human deprivation that cannot be neatly classified as either causes or effects of poverty. For example, chronic hunger and malnutrition are results of poverty, but they also weaken immune systems, undermine maternal health, encourage an unsustainable approach to resource extraction, and reduce school attendance and the ability of students to learn. Saddled with a constellation of problems such as this, an individual or community faces an extremely arduous climb out of poverty. Although national economic development is rightly the focus of many antipoverty programs, these other overlapping forms of deprivation do not necessarily disappear with economic gains at the national level, as measured by growth in gross domestic product (the total market value of final goods and services that are produced within an economy in a given year).

Moreover, addressing the multiple overlapping components of poverty can bring gains in national economic development beyond those achieved through a strict focus on finance and economics. For example, the gender inequities that characterize many developing societies are frequently an affront to the consensus international view of universal human rights, but they also limit economic development by suppressing the productive potential of women. Finally, economic development programs imposed by outside groups, along with economic policies in the developed world, are themselves sometimes blamed for worsening rather than alleviating poverty in developing countries.

The nature of human and economic development challenges varies from region to region. The countries that have seen the biggest gains in human and economic development since the 1980s, such as China, India, and Brazil, have followed diverse paths rooted in their own unique challenges and institutions, rather than enacting a single authorized set of development strategies such as those commonly recommended by the international community after World War II (1939–1945). Increasingly, international leaders recognize the need for pragmatism, flexibility, and knowledge of a particular country's or region's challenges.

Antipoverty efforts in the countries of sub-Saharan Africa, where extremely low average incomes are the norm, must necessarily take different forms from antipoverty efforts in the countries of Latin America and the Caribbean, which have higher average incomes but greater inequality. Indeed, in spite of the fact that Latin American and Caribbean countries are generally more developed and economically dynamic than sub-Saharan African countries, the poorest people in Latin America and the Caribbean are on average poorer than their counterparts in sub-Saharan Africa. In 2014 the average daily income of people living on less than $1.25 per day was just $0.60 in Latin America and the Caribbean, compared with $0.71 for the same category of people in sub-Saharan Africa (“Trends in Poverty Indicators by Region, 1990–2015,” in World Development Indicators 2014, World Bank, Washington, D.C., 2014.

Thus, as the economies of the developing world continue to grow at rates that outpace those in the developed world, the need to understand the complex dynamics of poverty is becoming ever more apparent. This discussion will survey of some of the key overlapping dimensions of poverty across the world, paying particular attention to variations in the challenges faced by different global regions.

Economic Growth and Employment

Economic growth at the national and regional levels has a strong direct correlation with decreasing poverty levels, although it does not solve all the problems associated with poverty. For example, China's extraordinarily robust economic development since the 1980s accounts for much of the decrease in poverty worldwide since that time.

One of the central facts pertaining to economic growth in the contemporary world is the increasing interconnectedness of national economies. Globalization, as this interconnectedness is generally called, has opened up new markets for products, increased companies' ability to obtain financing and affordable labor, and allowed many companies and national economies to operate more efficiently than in the past. With this interconnectedness, however, also comes shared risk.

The effects of the global economic crisis that began with losses in the U.S. housing and financial markets in late 2007 had a profound impact worldwide for many years thereafter because all of the world's major economies are linked in innumerable ways. Increased unemployment rates and decreased rates of economic growth were widespread in the years that followed, even in many regions of the world that did not experience the underlying economic problems that triggered the crisis. Although wealthier countries such as the United States suffer significantly from such economic downturns, the effects of a faltering worldwide economy can be even more catastrophic in regions whose citizens are already extremely vulnerable to poverty and its many related deprivations.

National Economies

The most rapidly expanding economies in the developing world were growing faster than the economies of the developed world prior to the years of the global financial crisis, and five years after the crisis began, the developing world continued to outperform the developed world in terms of growth percentages. According to the International Labour Organization (ILO), in Global Employment Trends 2014: Risk of a Jobless Recovery? (2014), all regions of the developing world saw their economies grow faster than the economies of the developed world between 2011 and 2013, and this trend was expected to continue through 2015.

Even so, both the developed and developing worlds experienced economic slowdowns during this period, in that the global economic growth rate dipped to 2.9% in 2013, its lowest level since 2009, according to the ILO. At a regional level, the economy of the European Union went stagnant, with a growth rate close to zero, while the economies of central and southeastern Europe and the Commonwealth of Independent States (a group of nine former Soviet states), East Asia, Southeast Asia, and Latin America and the Caribbean also lost momentum. Indeed, between 2012 and 2013 the only regions in which economic growth accelerated were South Asia and East Asia, with a percentage point increase of 0.3 and 0.1, respectively.

Employment and Poverty

Economic growth lifts people out of poverty primarily through better-paying job and business opportunities and through higher overall rates of employment. The progress that had been made in combating global poverty prior to 2008 thus slowed during the crisis years, and unemployment climbed above pre-crisis norms. Globally, 201.8 million people were unemployed in 2013, according to the ILO in Global Employment Trends 2014, 31.8 million more than were unemployed in 2007, prior to the crisis. The global unemployment rate was 6% in 2013, and although the ILO expects this rate to continue to hover around 6% through 2018, it nonetheless projects actual unemployment numbers to continue rising during these years, as the global workforce grows faster than the rate of job creation.

These figures translated into a global employment-to-population ratio (EPR; the percentage of the total working-age population that is employed) of 59.6% in 2013, which was 1.1 percentage point less than in 2007 (“Table A5. Employment-to-Population Ratio, World and Regions (Per Cent),” in Global Employment Trends 2014: Risk of a Jobless Recovery? International Labour Organization, 2014). EPR values varied significantly by global region. The ILO reveals that between 2008 and 2013 developed economies saw EPR drop from 57% to 54.8%, a decline that was matched by South Asia (the region economically dominated by India), where EPR fell from 56.1% to 53.9%. East Asia (the region economically dominated by China) saw its EPR fall from 68% to 67.5%. Other developing regions saw their EPR values remain constant or rise slightly, with the largest increases in Southeast Asia (from 66.6% to 67.4%) and in Latin America and the Caribbean (from 61.4% to 61.9%).

In all regions of the world, men had substantially higher EPRs than women (International Labour Organization, 2014). The largest gender disparities in employment were in the Middle East and North Africa, in which fewer than 20% of women were employed in 2013, compared with nearly 70% of men; and in South Asia, where roughly 30% of women were employed, compared with nearly 80% of men. The highest levels of female employment were in sub-Saharan Africa and East Asia, in which approximately 60% of women were employed. By comparison, the EPR for women in the developed world was more than 13 percentage points lower than for men.

In many parts of the world, employment does not necessarily provide a path out of poverty. Indeed, sub-Saharan Africa had one of the highest rates of employment in the world in 2013, and yet it was the world's poorest region (International Labour Organization, 2014). According to a 2014 analysis by the ILO, 11.9% of the world's employed people made less than $1.25 per day in 2013 (“Table A14a. Working Poor Indicators, World and Regions (US$1.25 a Day),” in Global Employment Trends 2014: Risk of a Jobless Recovery?). Also in 2013 in Southeast Asia and the Pacific 11.2% of employed people made less than $1.25 per day, and in South Asia 24.6% of employed people made less than $1.25 per day. The proportion of sub-Saharan Africa's employed population that made less than $1.25 per day in 2013 was 39.2%.

When a poverty threshold of $2 per day is used, these percentages climb dramatically. Indeed, in South Asia and sub-Saharan Africa, employment and poverty routinely go together, as nearly two-thirds of employed people in both regions made less than $2 per day in 2013. The number of extremely poor and the poor as a share of total employed people had been declining since 2000 in all regions of the developing world, and the ILO projects the declines to continue. Nevertheless, these statistics underscore the falseness of one of the most persistent stereotypes about the poor: the notion that poverty is the product of an aversion to work (Global Employment Trends 2014: Risk of a Jobless Recovery?).

The employed are more likely to escape extreme poverty in the developed world than in much of the developing world, but even in the United States, the country with more high-paying jobs, on average, than any other in the world, 7% of the labor force (the total number of people who had either been working or looking for work for at least 27 weeks) lived below the official poverty line in 2013 (“Table A. Poverty Status of Persons and Primary Families in the Labor Force for 27 Weeks or More, 2007–2013,” in tistics underscore the falseness of one of the most persistent stereotypes about the poor: the notion that poverty is the product of an aversion to work (A Profile of the Working Poor, 2013, U.S. Department of Labor, Bureau of Labor Statistics, July 2015). This working-poor rate of 7% marked a significant increase since the start of the global economic crisis in 2007, when 5.1% of those in the U.S. labor force for 27 weeks or more lived in poverty. The working-poor rate in the United States was much higher for young people, African Americans and Hispanics, and women. Nearly a quarter (23%) of all African American women aged 20 to 24 years who had been in the labor force for 27 weeks lived below the poverty line in 2013, as did a comparable proportion (23.6%) of African American men in the same age group (“Tab. People in the Labor Force for 27 Weeks or More: Poverty Status by Age, Gender, Race, and Hispanic or Latino Ethnicity, 2013,” in A Profile of the Working Poor, 2013, U.S. Department of Labor, Bureau of Labor Statistics, July 2015).

The Informal Economy

The term informal economy refers to the exchange of goods and services outside of national and international regulatory guidelines. The informal economy includes all unincorporated nonagricultural businesses that produce marketable goods and services, but it does not include informal work that goes toward producing goods for one's own household.

The ILO notes in “Informal Economy” (2016) that in most countries of the developing world between half and three-quarters of all nonagricultural jobs are informal rather than official and that conditions in such jobs tend to be less than ideal. The ILO states, “Although it is hard to generalize concerning the quality of informal employment, it most often means poor employment conditions and is associated with increasing poverty. Some of the characteristic features of informal employment are lack of protection in the event of non-payment of wages, compulsory overtime or extra shifts, lay-offs without notice or compensation, unsafe working conditions and the absence of social benefits such as pensions, sick pay and health insurance. Women, migrants and other vulnerable groups of workers who are excluded from other opportunities have little choice but to take informal low-quality jobs.”

The informal economy occupies a larger share of all economic activity in developing countries than in developed countries, but informal labor does exist in wealthier countries as well, mostly in the form of self-employment and part-time and temporary work (the latter two are known as nonstandard wage employment). In the United States informal workers include casual laborers, as well as some employees with nonstandard pay arrangements, including those who work “under the table” (they are paid in cash and are not reported as official employees).

Although the informal economy resists objective measurement because of its secretive nature, the ILO has since 2003 worked to implement data gathering and reporting efforts aimed at increasing understanding of the informal economy in the developing world, and it has begun issuing reports based on its findings. In Measuring Informality: A Statistical Manual on the Informal Sector and Informal Employment (2013), the ILO distinguishes between “informal employment,” which includes jobs with unregistered employers as well as unregistered or under-the-table jobs in the formal sector; and “employment in the informal sector,” which includes only those jobs undertaken on behalf of unincorporated businesses. Informal work constitutes more than half of all nonagricultural work in much of the developing world, with the informal sector generally accounting for most informal work. In Brazil, for example, 51.1% of all nonagricultural work was informal, 37.4% on behalf of unincorporated businesses and 17.1% on behalf of formal employers or otherwise outside of the informal sector. In six of the 12 countries for which the ILO presents data, informal work constituted more than two-thirds of all employment, and the figure was over 80% in Mali and India (“Table 2.6. Informal Employment, Employment in the Informal Sector and Informal Employment Outside the Informal Sector, as a Percentage of Total Non-Agricultural Employment in Selected Countries by Sex,”).

Although the informal economy acts as a resource for those left out of the formal economy and is in most cases preferable to unemployment, international organizations generally seek to help developing countries transition away from the informal economy. Besides the risks that workers in the informal economy face, informal economic activity imposes costs at the national level, as the World Bank notes in “Workers in the Informal Economy” (2016). Informal work amounts to a loss in tax revenues that countries might have been able to use to improve infrastructure and social services, and it places an extra tax burden on those who are formally employed. In both human rights and development terms, then, formal employment is preferable to informal employment.

Poverty, Education, and Literacy

Lack of education is one of the strongest indicators of the likelihood that an individual or household will live in poverty. People who are illiterate or have low levels of education are more likely to be unemployed than their better-educated counterparts, and among employed people, less education corresponds with a greater likelihood of remaining in poverty even while working. Additionally, countries with high levels of illiteracy often have correspondingly underdeveloped economies. According to the United Nations Educational, Scientific, and Cultural Organization (UNESCO), in Education for All 2000–2015: Achievements and Challenges (2015), although access to quality education has been greatly expanded in recent decades, much work remains to be done to ensure that all people receive the education they need to find decent work, earn a living, contribute to their community and society, and fulfill their potential. UNESCO explains that “there is simply no more powerful or longer-lasting investment in human rights and dignity, in social inclusion and sustainable development.”

In recent decades, the international community has observed some progress in reducing illiteracy worldwide, with the global rate of illiteracy falling from 24% in 1990 to an estimated 14% in 2015. Still, the overall number of illiterate adults remained stubbornly high, at nearly 780.7 million, as of 2015 (“Tab. Key Indicators for Goal 4,” in Education for All 2000–2015: Achievements and Challenges, United Nations Educational, Scientific and Cultural Organization, 2015). Illiteracy is a problem that is overwhelmingly relegated to the developing world, with 99% of the world's illiterate population living outside of North America and western Europe, and more than half of this population living in South and West Asia. Indeed, between 2005 and 2012 the adult literacy rate in South and West Asia stood at just 63%, the lowest in the world, with the exception of sub-Saharan Africa, where the adult literacy rate was only 59% during the same period. Conversely, the regions with the highest adult literacy rates were Central Asia (100%) and East Asia and the Pacific (95%).

Across the developing world, illiteracy disproportionately affects women. Between 1995 and 2004 women accounted for more than 60% of the adult illiterate population in every region of the developing world except for Latin America and the Caribbean, and regional illiteracy remained fairly constant between 2005 and 2012 (“Tab. Key Indicators for Goal 4,” in Education for All 2000–2015: Achievements and Challenges, United Nations Educational, Scientific and Cultural Organization, 2015). Even so, UNESCO reports that all countries where fewer than 90 women per 100 men were literate in 2000 had made progress toward gender parity. For example, Timor-Leste (or East Timor) moved from only 66 literate women per 100 literate men in 2000 to a projected rate of 89 literate women per 100 literate men in 2015 (“Figure 4.2. Many Countries Are Projected to Make Substantial Gains towards Gender Parity in Adult Literacy by 2015,” in Education for All 2000–2015: Achievements and Challenges, United Nations Educational, Scientific and Cultural Organization, 2015). Chad, Yemen, Bangladesh, and Burundi had also made significant strides toward increasing women's literacy since 2000, although none was projected to achieve gender parity by 2015.

Hunger and Health

Undernourishment and Malnutrition

Undernourishment, or the inability to satisfy dietary requirements either because of an insufficient quantity of food or because of problems with food quality and nutritional value, is largely a problem confined to the developing world. Undernourishment in childhood, and especially the first two years of life, is particularly devastating, causing developmental damage that cannot be undone. Hunger's relation to poverty is reciprocal: poverty usually results in hunger, but hunger is a factor that keeps people in poverty. Deficiencies in nutrients such as iodine, vitamin A, iron, and zinc contribute to weakened immune systems, anemia, learning disabilities, complications in pregnancy and childbirth, and many childhood diseases. These conditions result in poverty-causing problems such as absenteeism and poor performance at school and work, unemployment, illiteracy, and the continuing cycle of poverty.

According to the Food and Agriculture Organization (FAO) of the United Nations (UN), in The State of Food Insecurity in the World 2015—Meeting the 2015 International Hunger Targets: Taking Stock of Uneven Progress (2015), 794.6 million people worldwide were chronically undernourished in 2014–16. This was 216 million fewer undernourished people in the world than in 1990–92, a 21% reduction, even while the world population increased by 1.9 billion during the same period.

Of the world's total of chronically hungry people, 779.9 million lived in developing countries, a figure equal to 12.9% of the developing world's total population (“Table 1. Undernourishment around the World, 1990–92 to 2014–16,” in The State of Food Insecurity in the World 2015. Meeting the 2015 International Hunger Targets: Taking Stock of Uneven Progress, Food and Agriculture Organization of the United Nations, 2015, http://www.fao.org/3/a-i4646e.pdf). However, this also represented significant progress in reducing undernourishment since 1990–92, when the prevalence of undernourishment (PoU) in the developing world stood at 23.3%. Even so, the 2014–16 rate of 12.9% fell short of the Millennium Development Goal (MDG) to halve the PoU between 1990 and 2015, as meeting the goal would have meant arriving at a target of 11.6% of the developing world's population.

As with other development and poverty indicators, progress toward eliminating chronic undernourishment varied widely from region to region and country to country in the developing world. Among all regions of the developing world for which the FAO presented data in its 2015 report, only two saw their PoU increase between 1990–92 and 2014–16: in Middle Africa it rose from 33.5% to 41.3%; and in Western Asia it rose from 6.4% in 1990–92 to 8.4% in 2014–16 (The State of Food Insecurity in the World 2015. Meeting the 2015 International Hunger Targets: Taking Stock of Uneven Progress, Food and Agriculture Organization of the United Nations, 2015). As a whole, sub-Saharan Africa accomplished a significant reduction in hunger levels over the course of those two decades: the percentage of people in the region who were undernourished fell from 33.2% in 1990–92 to 23.2% in 2014–16. Nonetheless, the 2014–16 percentage remained unacceptably high, resembling or exceeding the 1990–92 hunger levels of most other regions in the developing world.

Most of the total progress at combating hunger in this two-decade period came in the high-population regions of Eastern Asia and Southeastern Asia. Eastern Asia, led by declines in China, saw its hunger levels fall by more than 150 million people during the period, from 23.2% to 9.6% of the region's population (The State of Food Insecurity in the World 2015. Meeting the 2015 International Hunger Targets: Taking Stock of Uneven Progress, Food and Agriculture Organization of the United Nations, 2015). Southeastern Asia, led by declines in the populous countries of Indonesia, Thailand, and Vietnam, saw a slightly smaller decline in terms of raw numbers, as the chronically hungry population fell from 137.5 million to 60.5 million. However, Southeastern Asia's progress was larger than Eastern Asia's in percentage terms, as the proportion of the hungry in the region fell from 30.6% to 9.6%. Both of these regions exceeded the MDG, reducing PoU by more than half. Latin America and the Caribbean made more modest progress, reducing the number of the hungry from 66.1 million to 34.3 million and the percentage of the hungry fell from 14.7% to 5.5%. Thus, although Latin America and the Caribbean did not quite cut its total population of hungry people in half, it still exceeded the MDG by cutting its rate of hunger by significantly more than half.

Malnutrition refers both to the effects of chronic undernourishment and to obesity. Because maternal undernourishment and/or undernourishment in early childhood can have irreversible cognitive and physical effects, much of the international community's attention to malnutrition focuses on children. The personal and societal burdens created by these forms of malnutrition are at present more significant than those created by obesity, although the rapid growth in obesity rates even in the developing world is cause for great concern among public health officials and experts, particularly because of the correlation between obesity and noncommunicable diseases, such as type 2 diabetes and coronary heart disease.

Besides PoU, another critical indicator for monitoring world hunger is the prevalence of underweight children under the age of five years (CU5). The FAO reports that the developing regions as a whole saw CU5 decline from 27.4% in 1991 to 16.6% in 2013, a 39.4% reduction (“Tab. Prevalence of Undernourishment and Prevalence of Underweight in Children under Five Years of Age: Progress during the MDG Monitoring Period,” in TheThe State of Food Insecurity in the World 2015. Meeting the 2015 International Hunger Targets: Taking Stock of Uneven Progress, Food and Agriculture Organization of the United Nations, 2015). Progress in the reduction of CU5 was uneven from one region to the next. Southern Asia, which has the highest prevalence of underweight children in the world, achieved dramatic progress, reducing CU5 from 49.2% in 1991 to 30% in 2013. Southeastern Asia also made considerable strides, cutting CU5 almost in half (from 30.4% to 16.6%) during the same period. By contrast, sub-Saharan Africa made much more modest gains, reducing the prevalence of CU5 from 28.5% in 1991 to 21.1% in 2013.

The consequences of malnutrition are sometimes quantified in terms of “disability-adjusted life years” (DALYs). One DALY is equivalent to the loss of one year of healthy life, so the number of DALYs and the DALY rate in a country or region provide a picture of the gap between current health conditions and optimal conditions in which people enjoy maximum life expectancy and a disease-free old age. According to the World Health Organization's (WHO) Global Health Observatory data (2016), all regions of the world saw reductions in DALYs between 2000 and 2012. Although the largest decline (32%) was seen in the WHO Africa region, this region still experienced the highest DALYs in the world in 2012, with 740 DALYs per 1,000 population, compared with 273 per 1,000 population in the WHO Western Pacific region, where DALYs were lowest. The WHO also notes a significant global reduction—from 40% in 2000 to 30% in 2012—in the proportion of total DALYs borne by children under the age of 15 years, an indication of the substantial improvements in child mortality rates during the same period.

Child Mortality and Life Expectancy

Poverty is directly correlated with increased mortality and shorter life spans. Diseases that are preventable or treatable in the developed world remain life threatening to many in the developing world because of the lack of affordable health care, sanitation, clean water sources, and other necessities. Although such necessities are widely available to ordinary citizens in the developed world, they are frequently obtainable by only the privileged in the developing world. Additionally, chronic hunger claims the lives of many in the developing world either directly, because of starvation, or indirectly, by weakening the body's resistance to disease.

The UN's Inter-Agency Group for Child Mortality Estimation finds in Levels & Trends in Child Mortality: Report 2015 (2015) that the global child mortality rate fell 53% between 1990 and 2015, from 91 deaths per 1,000 live births to 43. Furthermore, of the 195 countries with available data, 62 (including 24 low- and lower-middle income countries) met the MDG target for Goal 4 to reduce the under-five mortality rate by two-thirds between 1990 and 2015. However, in spite of such remarkable progress the global MDG for child mortality was not met, due in large part to persistently high rates in Southern Asia, sub-Saharan Africa, Oceania, and the Caucasus and Central Asia regions. There were an estimated 5.9 million deaths of children under the age of five years in 2015, most of which were from preventable causes or treatable diseases, and 98.7% of which were in the developing world.

More than 80% of global under-the-age-of-five child mortality occurred in sub-Saharan Africa (49.6%) and Southern Asia (31.8%) in 2015 (Levels & Trends in Child Mortality: Report 2015, United Nations, Inter-Agency Group for Child Mortality Estimation, 2015). All regions of the developing world saw declines of more than 50% in their child mortality rates between 1990 and 2015, with the exception of sub-Saharan Africa, which achieved only a 24% decline in the under-five death rate, and Oceania, which saw only a 6% decline. In Eastern Asia, led by China, child mortality declined by 88% during this period, well above the MDG. The only other region of the developing world that met or exceeded the MDG was Latin America and the Caribbean, which saw child mortality fall by 69%.

Another indicator that demonstrates the severity of the health gap between the developed and the developing world is life expectancy. As research published by the World Bank in 2015 shows, people in developed countries can generally expect to live substantially longer than those in developing countries (“Life Expectancy at Birth, Total (Years),” in World DataBank: World Development Indicators,). Between 1990 and 2013 the developed region consisting of European Union countries saw life expectancy rise from 74.9 to 80.4, and North American life expectancy rose from 75.4 to 79.1. The developing regions of East Asia and the Pacific (with a 2013 life expectancy of 74), Europe and Central Asia (72.4), and Latin America and the Caribbean (74.6) each made gains comparable to those in the developed world over the same period, but the 2013 life expectancies in these countries remained comparable or below 1990 life expectancies in the developed world. Life expectancies in the Middle East and North Africa, South Asia, and sub-Saharan Africa had likewise increased by substantial amounts between 1990 and 2013, but the 2013 levels in these countries lagged dramatically behind those in the developed world. South Asia's 2013 life expectancy of 66.9 and sub-Saharan Africa's life expectancy of 56.8 were particularly stark reminders of the destructive effects of poverty on health.

Poverty, Governments, and Globalization

The growing economic interdependence of nations has been one of the most consequential developments in the post–World War II world. Proponents of globalization maintain that opening markets across national borders provides opportunities for both large and small economies. They suggest that freer exchange of money and technology can help develop the world's smaller and poorer economies and therefore help alleviate poverty in developing regions while increasing the wealth of developed ones.

Opponents of globalization argue that the system resulting from this interdependence favors those who are already most advantaged and puts the welfare of multinational corporations above the welfare of poor and indigenous people. Multinational corporations that move into developing countries are often seen to be exploiting the populace in the name of providing opportunities for them. Critics suggest that people in traditional cultures are often denied the ability to sustain themselves by growing their own food, making their own clothing, and maintaining economic autonomy. Also, many claim that with globalization has come an increase in unjust labor practices that take advantage of the poor, such as sweatshops and the use of child labor.

A major facet of globalization is the forging of free trade agreements (FTAs), which are arrangements between countries that allow the exchange of goods and labor across borders without governmental tariffs (taxes on imported goods) or other trade barriers. Two of the best-known FTAs are the North American Free Trade Agreement (among Canada, Mexico, and the United States) and the Central American Free Trade Agreement (among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States). Despite the increasing number of FTAs, poor countries are often subject to higher import tariffs and other unfavorable circumstances when they export goods to developed countries. Also, when these FTAs are signed outside of the auspices of the World Trade Organization, they do not always provide poor countries the opportunity to band together to create more favorable rules for themselves. As a result, the rules that favor rich countries often prevail.

Food Aid and Agricultural Subsidies

Administered by the UN's World Food Programme, the U.S. Agency for International Development (USAID), the European Commission's Humanitarian Aid and Civil Protection department, and other agencies, humanitarian food aid plays an important role in the effort to address global hunger and improve food security. Food aid is provided in response to natural disasters and political crises, when people's regular access to food is threatened. In developing countries food aid may also be administered in nonemergency situations, such as in the form of school lunches intended to boost educational outcomes and thereby contribute to a country's long-term economic development.

In U.S. International Food Assistance Report, Fiscal Year 2013 (September 24, 2014), the most recent year for which data were available, USAID reports that in fiscal year 2013 the U.S. government provided $1.7 billion of food assistance (amounting to 1.5 million tons [1.4 million t] of food) to 46.2 million people in 56 countries. The overwhelming majority (78.9%) of U.S. food aid is directed to Africa, in keeping with the disproportionate prevalence of food insecurity in that region.

Although international food aid programs are genuinely intended to alleviate the immediate suffering and long-term detriments caused by hunger, critics nonetheless charge that the United States and other wealthy countries simultaneously use these programs to gain advantages in food export markets and otherwise bolster their own agricultural industries in ways that undermine local agriculture and economic development in the developing countries that receive the aid. Specifically, the governments of wealthy countries routinely pay farmers—mostly the owners of large farms—and agribusinesses billions of dollars each year to produce too much or not enough of certain crops to control the prices of crops for export or import. In Europe, Japan, and the United States, these farm subsidies are designed to work in conjunction with trade barriers such as quotas (limitations of imports) and tariffs. When farmers in developed countries are paid to overproduce certain foods (e.g., rice and corn), those countries export the surplus to poor countries for extremely low prices or sometimes without charge as aid (this is sometimes called food dumping). Meanwhile, trade barriers prevent poor countries from exporting crops and other goods to wealthy countries (this is sometimes called protectionism).

In some emergencies, such as disasters or wars that disrupt supply chains and destroy crops, the importation of food from the United States and Europe represents the most sensible food-aid option. However, in other cases, even in emergency situations, food is available in the country or region affected, and humanitarian funds could be more effectively spent on these locally or regionally sourced foods, with the added benefit of bolstering the earnings of those farmers.

Additionally, supplying foreign-grown crops beyond the early stages of an emergency may hurt local economies by driving prices down to levels that small local farmers cannot match. Once local farmers are prevented from competing in this way, a country can become perennially dependent on food aid, and farmers instead use their land to produce crops such as cut flowers or livestock feed for export to developed countries. These countries thus become more vulnerable to international economic trends ranging from rising prices in world commodity markets (which can make food aid less available), to falling prices for the commodities they produce for export, and to financial meltdowns such as those that touched off the global economic crisis in 2007. A country that is capable of meeting its own food needs without significant amounts of imported food is, by contrast, better positioned to reduce poverty and increase its levels of human development.

International Debt

Lending and debt relief to underdeveloped and developing nations is another controversial issue. Many low-income countries became heavily indebted to wealthy nations during the 1970s, when banks around the world began lending money to developing countries that were rich in resources such as oil. The money, however, was often mismanaged—particularly in the countries of sub-Saharan Africa—and spent on projects to expand the wealth of the upper classes, rather than used to build the infrastructure and make the social investments necessary for economic development. When interest rates on the loans rose and the prices of oil and other resources fell during the 1980s, the indebted countries were unable to repay the loans. Many of these nations turned to the World Bank or the International Monetary Fund (IMF) for help. These organizations underwrote more loans, but required that the poor countries agree to undergo structural adjustment programs (SAPs).

In essence, the World Bank and the IMF demanded that the poor countries restructure their economies by cutting spending and revaluing their currency so that they could begin to repay their loans and emerge from debt. Most low-income countries met the restructuring criteria by limiting their social spending (e.g., on education, health care, and social services), lowering wages, cutting jobs, and taking land from subsistence farmers to grow crops for export. This focus on increasing trade has generated the most severe criticism from opponents of SAPs, who argue that wealthy countries encourage such measures to improve their own trading opportunities, which destroys the ability of poor countries to support themselves by encouraging dependence on imports of food and other basic necessities. However, supporters of SAPs point out that this economic system allows poor countries to participate more fully in the global market and that the benefits of restructuring will eventually “trickle down” to the poor.

In 1996 the World Bank and the IMF created the Heavily Indebted Poor Countries (HIPC) Initiative. The initiative was intended to reduce the debt of the most heavily indebted poor countries to manageable levels. In 2005 the HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI) to help countries make progress toward the UN MDGs.

The MDRI cancels the debt of countries that meet the HIPC Initiative criteria, which include implementing agreed-on reforms and developing a Poverty Reduction Strategy Paper (PRSP; the paper describes the policies and programs that a country will pursue over several years to encourage economic growth and reduce poverty). As a country makes progress toward these goals, a decision point is reached, whereby the International Development Association of the World Bank and the IMF determine whether the country should receive debt relief. If the country is granted debt relief, it may begin receiving interim debt relief at the decision point. Once the PRSP has been adopted and implemented for at least one year, and when other criteria have been met, the country is said to have reached its completion point, and full debt relief is given.

Other Factors Associated with Hunger and Poverty

A number of other factors cause or contribute to poverty and the many forms of deprivation with which it is associated. One of the most common contributing factors for poverty and hunger is a country's system of governance. The World Bank, through its ongoing Worldwide Governance Indicators research project, has compiled several hundred variables and developed indicators that measure six dimensions of a country's governance. Four governance indicators in particular—political stability and absence of violence, government effectiveness, rule of law, and control of corruption—are necessary to achieve hunger reduction in a country. Hunger worsens and per capita food production drops, for example, in countries that are experiencing violent conflict and/or political instability.

Natural disasters, such as droughts, excess rainfall, extreme temperatures, and earthquakes, also cause food crises by slowing food production or halting it altogether. These occurrences have far more serious consequences in poor countries, where food production is already low. Displacement is another consequence of natural disasters that increases the incidence of hunger in poor countries. When people are forced to flee after major disasters such as earthquakes or to migrate because of severe weather conditions, pressure to produce enough food to support them is placed on the areas in which they settle.

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