Understanding the Causes and Consequences of Poverty in the Developing Countries

Understanding the Causes and Consequences of Poverty in the Developing Countries

In order to understand the causes and consequences of poverty, we need to explain the notion of poverty first. Poverty is termed as the state of a person who does not have enough income to meet his basic needs of life. In order to determine this, various indicators are there. Political, economic, and social factors are there which have a strong influence on the individual’s social status. On the basis of these factors, it becomes very clear to identify the type of poverty. 

The Causes and Consequences of Poverty

There are certain causes of poverty and its consequences in any society. But it varies from the social settings of the society. So, here we will explain the core factors contributing to this problem.  

Let us have a look at some of the causes and consequences of Poverty:-

1. Lack of Knowledge about the benefits of Economy

Everybody expects us to work hard and get good grades in our studies. Then what next? What should be our life goal? When we get out of our homes, there should be a road map that gives us an idea about where to go, how to reach there, and what to do when we reach there. Also, if we work hard to reach the goal of higher studies.  Then what happens to the rest of our life, what should we expect when we reach the level of higher studies? When I was growing up, the most important thing in my life was going to a library to find books to learn new things. When I was learning a new topic, we would sit around the table and discuss it for hours.

Understanding the Root Cause of Poverty

So, we can divide the causes and consequences of poverty into three groups based on the same basic cause of poverty i.e. lack of income. Poverty in a developing country would not be identified by the cause unless there is a relation of poverty with another factor, such as social status, environmental degradation, and other more complex factors. The poverty cycle as an evolving syndrome is worrisome and challenging for all countries.

Some social and demographic Statistics can better indicate the causes and consequences.

  • Age distribution
  • Life expectancy
  • Health status
  • Housing conditions
  • Environments
  • Political structure

The main sources of income of a person are related to two aspects of life in developing countries. These two aspects are Life Expectancy and Social Status.

Poverty in the Developing Countries

A lot of studies have been done to understand the causes and consequences of poverty in developing countries. The World Bank has declared that poverty is widespread and the causes and consequences are most complex. Government can help to reduce poverty and promote development through two policy areas – direct public investment and debt management.

‘Understanding the causes and consequences of poverty in the Developing Countries’ is the title of a new paper by Dr. Lamin K Dormaa, Senior Research Fellow at the Centre for Development and Enterprise (CDE) and Lecturer of Development Economics and Policy in the Department of Economics, UCT. The paper looks at the ‘Two Pillar Strategy of Action and investment’ and its ‘Key Fundamentals’.

How does it affect Society?

Even though Poverty not only affects the individual family but also the social structure of any society. It affects the family and its structure by changing and corrupting the family structure. It makes people face lots of obstacles and hurdles in society. The nature of poverty affects human life from physical, mental, and social aspects.

Characteristics of poverty in different parts of the world:

-In Africa we can say poverty starts from brain drain: The people who have skills are not in a position to utilize them.

-From an economic point of view: People who are in rich countries and with a higher level of education have better opportunities to earn money, they can easily travel and move out of the country with just a word. They have better prospects to make a decent life for themselves, but people in poor countries do not have this opportunity.

What is the Economic impact of Poverty?

Let us get back to the topic at hand and understand what is the impact of poverty on the economy of any nation. In this article, poverty impact is illustrated and its results on GDP and growth are also explained. The economic impact of poverty is very crucial. All economic activity is ultimately determined by the level of productivity of the production process. All these economic activities which are followed by economic growth, market growth, and investment growth, are ultimately governed by the level of productivity of the production process.

The economic and social policies initiated by the Governments to fight poverty are surely very crucial. Many countries have started their internal programs to eliminate poverty. They allocate huge funds to start new projects and development programs. This is an ideal way to identify and curb poverty. In this way, we can make the creation of New job opportunities possible for skilled workers. International organizations also try to facilitate the governments. They organize workshops and arrange skill development training for the workers.   


Certain countries in Asia and big parts of Africa have long been considered as the poorest nations. The economic crisis that took place in these countries in recent years caused the number of poor people to increase. In general, it is assumed that the causes of poverty are the following: poor legislation, weak institutions, bad organization, and inadequate social services. But the worst factors among those are the bad financial and economic decisions of rulers, a distorted market, and low state revenue. On the other hand, the causes of poverty are the following: low population growth rate, young people working for low wages, dependence on agriculture, and the lack of a developed industrial base.

 All we need to root out poverty is, sincere and urgent efforts are to focus upon. Decent public policy has a healthy impact to eliminate the root causes of poverty. North and western Europe, North America, and certain countries in Asia have successfully rooted out poverty. Proper management and equal distribution of resources are among those factors which can guarantee the success of any public policy. 

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