Investing in Education Is the Most Effective Way to Reduce Poverty

Topics: Poverty, Millennium Development Goals, Poverty reduction Pages: 6 (2266 words) Published: March 5, 2013
“Investing in education is the most effective way to reduce poverty” In many ways this is a difficult statement to assess. There is no doubt that education is a key initiative in the reduction of poverty. Whether it is the most effective is harder to say for sure. We can easily confirm correlation in the relationship between reduced poverty and increases in factors such as education and health. However it is no simple task to measure and compare the level of impact a component such as education has on poverty. There are many factors and variables that influence the poverty of a country and many of these factors influence one another, strengthening or weakening their individual effects and implications. However after researching the topic I feel I agree with the statement. Before I continue to argue my stance on the title statement I will discuss the basic problem of poverty and the accepted policies and solutions. Poverty is arguably the greatest obstacle facing developing countries in the world today. Poverty can be defined in two ways; absolute poverty and relative poverty. The absolute poverty of a country relates to the number of people who have a standard of living below a certain level. In essence it is a person’s inability to command sufficient resources to satisfy basic human needs. This quantity of resources is called the poverty line. Relative poverty on the other hand refers to the income share of the poorest section of society (Tara Mitchell, 2012). Absolute poverty can be abolished by directly raising the living standards of everyone in a country above the established level – poverty line. Relative poverty however can only be combatted by reducing the gap between the rich and the poor so that the poorest section of a society receives an acceptable percentage of the total income. In other words inequality is the obstacle to overcome. Growth is the key initiative in ending absolute poverty in developing countries. Aid can be supplied to help boost living standards temporarily but growth and development allow countries to support themselves. Growth has a positive correlation with reduction of absolute poverty. Investment in areas such as education, health and gender equality induce growth within early stage developing countries (World Health Organisation, 2008). It is not as clear with relative poverty as it is a share of total income received by the poorest section of society. It can only be reduced not eradicated, by lowering inequality. However many experts differ in opinion on whether reducing inequality has a positive effect on growth. There are two main types of inequality. The first, structural, which relates to historical factors of social divide and infrastructure is definitely bad for growth, as it confines people to predetermined sectors with no drive to innovate. The other type, Market inequality has a much more ambiguous relationship with growth. Some argue that inequality is necessary for growth as there are incentivises people to achieve more. In terms of the most extreme poverty and basic growth, the reduction of inequality seems to be a positive approach (M. Ravallion, 2005) Health and education are important objectives and components of growth and development. For developing countries these two objectives are pivotal in the early eradication of poverty. There is a positive correlation between the number of years of schooling and both income and growth (Cohen & Soto, 2007). In terms of health (which is usually measured in life expectancy at birth or daily per-capita calories) there is also a positive correlation with increases in income (Heston, summers & Aten, 2006). This increased income and/or growth would be seen as direct reduction in poverty. It is difficult to determine whether health or education has a stronger effect on income. This is because they are both heavily intertwined and overlap in many regards. It is found that increased investment in health boosts education and vice...
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