Poverty & Economics
Would handouts help?
To help people living on $2 a day, governments could give free healthcare and education, for example, which may help raise their citizens' standards of living. But governments in the developing world rarely have the money to spend on universal healthcare and education, and this important gesture does not go far enough. To make a real difference in the lives of the poorest people in the world they need to earn more than $2 a day – they need to be able to stop living in absolute poverty. And for that to happen there needs to be economic development.
What you need to know about economic development.
There is no one path out of poverty – it is different for every individual and every country.
Political stability is important – few businesses will start up and few banks will invest in a country that is not stable or that is in conflict. This does not mean that it has to be a democracy, some of the highest growth rates are from non-democratic countries.
The respect of property rights and contract enforcement is essential so businesses are not afraid that the government or someone else will take their money and goods.
It is possible for a country's economy to grow and for the poorest segment of society to get poorer – economic development does not have to be equal.
Governance and the quality of political, economic and social institutions dictate how much economic development helps the poor.
There are many factors that hinder economic development, including climate change, international trade laws, corruption, lack of education, poor healthcare, market failures, debt...
Economic development is not everything – freedom and quality of life matter too – and these are more likely to be supported in a democracy.
