Poverty: what are the causes, the effects and the consequences

What is the definition of poverty?

Poverty often refers to the state where a person does not possess enough money or resources to satisfy their basic needs. Poverty exists all around the world. It often has negative impacts on a person's wellbeing, health, education and social status. It is closely related to living standards, which means the level of resources, means and comforts that make somebody have a good quality of life. Living standards and poverty look different in different contexts. For example, pastoral communities might measure their wealth in livestock, whereas money, shares or investments might be indicators of wealth in industrial societies.

Poverty can be passed down between generations. This is called the cycle of poverty. Growing up in poverty often results in lower chances to get a good education, less social capital and less connections, resulting in fewer employment options. People who grew up in poverty are more likely to do underpaid and dangerous labor. Escaping the cycle of poverty is usually very hard, because poor families don't have the resources to escape poverty. Escaping the poverty cycle often requires outside intervention, for example in the form of education or social housing.

While there are many ways to define poverty, and many different ideas about how to solve it, most economists agree that global poverty requires solutions that address the root causes of poverty, rather than the symptoms. Poverty is not a result of being lazy or dumb, rather it can be caused by a wide range of factors which require a complex approach to solve.

How many people live in extreme poverty?

Globally, 8.5% of the world population, almost 700 million people, live in what can be called extreme poverty. This means they have less than $2.15 per day to spend, which is called the extreme poverty line. To compare, in 1990, 2 billion people lived below the extreme poverty line. Poverty has been reduced significantly yet remains a big challenge. Sub-Saharan Africa is the world's poorest region. Almost three-quarters of people living in extreme poverty live here. People living in conflict areas or war zones are also more likely to live in extreme poverty. Other continents where income inequality is high are Latin America and Asia, although both continents have experienced rapid economic development in the last 30 years, which caused millions of people to be lifted out of poverty.

Why is it important to solve global poverty?

As humans, we all live together in the same world. Large issues such as poverty and inequality affect everyone and require collective action to solve them. Growing poverty does not only prevent economic growth, it also can drive social and political unrest, and even conflict and war.

Every person in the world has the right to live a safe life free from poverty, discrimination and violence. But a lot of people do not currently have access to those rights. Together we can change this, by taking collaborative action to solve problems such as poverty, inequality and climate change. For example, through supporting international development cooperation. But it is also important to fight corruption and consume products that are produced under safe circumstances for which workers are paid a fair wage.

What are the root causes of poverty?

There are many different causes of poverty. The first cause is economic disparity, which means the unequal distribution of wealth and resources. This results in the inability to provide yourself and others with your basic needs, such as food, water and housing. We often talk about ‘living below the poverty line’ when we talk about people who do not have enough money or resources to afford their basic needs.

But also, a lack to basic services like healthcare and education can result in people living in poverty. People with access to healthcare and education often have higher chances to get paid work. Lastly, discrimination and social inequalities can make it difficult to break free from cycles of poverty once a person is experiencing poverty. This happens when people get discriminated against based on their social status and therefore do not get access to basic services. For example, Sukumbasi in Nepal, landless migrants who face discrimination by both the government and society. Social inequalities, such as the position of women in patriarchal societies can also be a cause for poverty.

How does poverty disproportionately affect women and girls?

Women and girls are disproportionally affected by poverty. 56% of the world's poor are women, and this number is expected to increase drastically at the current rate. Gender inequality is both a cause and a result of poverty. Women and girls are more likely to experience poverty due to systemic barriers, including unequal access to education and unpaid care work. For instance, in many low-income regions, women and girls spend hours fetching water, limiting their ability to pursue education or paid work. Furthermore, cultural norms, poor infrastructure and violence prevent girls from going to school. Girls who live below the poverty threshold are the group that is the least likely to complete secondary education. Women are also more likely to be discriminated against on the work floor, and the gender-wage gap in most countries is far from closed. For example, in the Netherlands, the gender pay gap is 13.7%, meaning that women on average must work 47 days a year more to earn the same yearly income as their male colleagues.

How can gender equality contribute to poverty reduction?

Just as gender inequality is one of the largest drivers of poverty, gender equality is a powerful driver of poverty reduction. Closing gender gaps in education and employment could not only significantly raise global GDP, but it would also improve the opportunities for millions of women and girls to pursue a livelihood free of poverty. Educated women are more likely to access employment and improve their families' well-being. It has been proven many times that empowering women strengthens communities as their wellbeing trickles down and enhances social and economic stability. However, the developments around gender equality have been slowing down. At the current rate of change, the global gender gap will not close for another 100 years.

What is the connection between poverty and water?

Water is essential for survival, health, and economic development, yet over a third of the world’s population lack access to safe drinking water close to home. The scarcity of clean water impacts poverty in multiple ways. Contaminated water leads to diseases such as cholera and diarrhea, which can have severe impact on health and wellbeing, and affect people socially and economically. Furthermore, the time spent collecting water reduces opportunities for education and work, especially for women and children, thus preventing them from breaking the cycle of poverty through education and labor. Water is also closely linked to food security. Agriculture, the main source of livelihood for many people in low-income countries, is highly dependent on water availability. It is crucial to invest in water infrastructure and management to break the cycle of poverty and enhance the resilience of low-income communities.

What is the link between poverty and climate change?

Climate change can increase poverty because it disproportionately affects vulnerable communities. Rising temperatures, extreme weather, and climate disasters affect those who are more dependent on natural resources or who live in poorly safeguarded areas more. It can cause food and water insecurity. Changing weather patterns can cause droughts and affect crops. Furthermore, people living in areas where there is no budget for climate adaptation are more likely to become displaced because of climate change, for example when a big disaster such as flooding or forest fires destroy lands and villages. Therefore, tackling global poverty requires integrating climate resilience into development strategies.

Why is international development cooperation important to combat global poverty?

International development cooperation has played a critical role in addressing global poverty. Global poverty has halved since the 1990’s. Fewer people than ever are severely malnourished, more children follow an education and the mortality rates of many diseases, including malaria and tuberculosis, have dropped significantly. International development cooperation is responsible for a large portion of these incredible developments. Besides financial aid, capacity building and advocacy have strengthened institutions and promoted global agreements, such as the Sustainable Development Goals (SDG’s) to tackle poverty and inequality.

What does Simavi do?

Simavi is a Dutch International Development organisation that exists since 1925. Together with partners in Asia and Africa we work on projects that support local solutions for women and girls so that they have access to water, a toilet and equal treatment. The reason for this is that women and girls worldwide are hit hardest by climate change and the lack of safe drinking water and toilets. Through our programmes, we empower women and girls claim their rights, specifically to water and sanitation and an equal treatment. Our goal is a just and equal world for all.