Vicious Circle of Poverty

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Vicious circle of poverty

 The principle of the vicious circle of savings income in the level of UDCs' and remains low, which leads to lower levels of investment.
Low investment leads to low productivity and income leads.
According to Professor Nurkse. "It will work, and poverty implies care circular constellation of forces to react to each other in such a way as to keep a poor country. He is an example of a poor man said cited.
A poor man who does not get enough food makes it vulnerable. His performance as a result of the weakness of the lower income as reduced as a result and the poor. "

The vicious circle of poverty solution:

Broadly, these two methods to solve the vicious circle of poverty.

Our detail in the description of these two aspects.

Side solution for delivering vicious circle:

Increase in Saving

In these countries, the vicious circle ;: attempts to get rid of supply should be made in order to increase the efficiency can be encouraged to invest in productive channels. To increase savings, spending on weddings, social events, etc. should be minimized. In UDCs, voluntary savings possibilities are very low.
  Thus, in this regard, the Government. Intervention is necessary. Govt. This can increase the efficiency of monetary policy by the changes. Govt. May impose heavy taxes on luxury goods. In addition, it can enhance the role of indirect taxes. Thus, Govt. The tax system can reduce consumption by modifying.

Increased investment

There is not much advantage to break the vicious cycle of poverty by increasing productivity, saving cost-saving programs. Short-term and long-term investment policies should be coordinated. Through short-term investment, people can get the necessary equipment to fair prices, which will have a favorable effect on their skills.
 In addition, short-term investments, multipurpose projects, chemical fertilizers, as well as investment in the creation of iron should be promoted properly. In UDCs, can provide appropriate monetary and banking policies to encourage facilitation and encouragement of small savings which should be adopted.

Vicious circle of demand side solutions

 UDCs to address the demand side of the vicious circle, people can get to the market limit investment incentives should be expanded so. In this regard, law professor Nurkse balanced development of doctrine. According to the principle of balanced development, investment and demand can be met by the Department of the sector should be done in every sector of the economy. Thus, the larger the increase in demand and market incentives would lead to such investment.
On the other hand, Hirschman, Singer, like Fleming, experts do not consider fair policy virtually balanced economic growth. According to him, would be more useful unbalanced development policy. In UDCs, is likely to increase the demand and the need to increase financial revenue. The plan is adopted UDCs rate development policy.
Accordingly, further investment in the public sector, due to increasing the supply of money. Monitory due to the increase in revenue, expanding the market size. By increasing these exports tried to expand the market size.

Other Solution to vicious Circle of Poverty

The main obstacle to economic growth in underdeveloped countries underdevelopment of human power. Several proposals can be made to increase the manpower skills. For example, in these countries, education, technical knowledge and management training should be extended. These countries can enhance the performance of health care workers should be increased to. The transport and communications should be developed.

Criticism
 As an obstacle to economic growth many economists do not consider the vicious cycle of poverty. According to Professor Hirschaman lack the ability to decide the core issue of economic development in these countries. The real problem is the lack of capital.
 According to Professor Lewis "lack of capital to these countries is not realized during the period, ten percent of the national income can be easily stored for economic development." Therefore, experts are weighted in those countries during the vicious circle of poverty, according to economists. In addition, Professor Bailer, is also critical of the vicious cycle of poverty on such grounds.