Unit 4.9·Global Economics

Poverty Traps and Cycles

Barriers to Economic Growth and/or Economic Development

AO2·AO4·Diagram required

Syllabus requirement

Self-reinforcing mechanisms that prevent individuals or countries from escaping poverty, often involving multiple linked factors like low income, poor health, and limited education.

Assessment objectives

AO2 Application and AnalysisAO4 Use of Appropriate Skills

Required diagram: A poverty cycle diagram showing linked factors such as low income, poor education, low productivity, and poor health that perpetuate poverty.

Summary

This section explains how poverty traps (poverty cycles) keep individuals, households, and countries in persistent poverty through linked factors like low income, low savings, low investment, low productivity, poor health, and limited education. It shows why private markets may not break the cycle (e.g., lack of credit) and outlines the role of government intervention and foreign aid. The text introduces Jeffrey Sachs’ six types of capital needed for development and connects barriers such as poor infrastructure and limited technology to lower productive capacity. It also links rising inequality, weak tax systems, and inadequate access to healthcare and education to stalled human development.