To what extent is reducing the number of people living in absolute poverty sufficient to achieve economic growth and development?
To what extent is reducing the number of people living in absolute poverty sufficient to achieve economic growth and development?
Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services. Much of the poverty in developing countries, such as South Africa, tends to be absolute poverty. Economic growth can be defined as steady growth in the productive capacity of the economy. Short term growth is measured by the annual percentage change in real national output, which is affected by shifts in short run aggregate supply curve (SRAS), whilst long term growth is shown by the increased in potential growth can is illustrated by an outward shift in a country's long run aggregate supply curve (LRAS). Whilst a rise in real GDP can lift millions of people out of absolute poverty, a reduction in the number of people living in absolute poverty can help to achieve economic development.
In order to reduce the number of people living in absolute poverty, they would have to get jobs in order to gain a living. This means that people would have more disposable income, thus increasing consumption which is a factor of aggregate demand and would therefore shift the aggregate demand curve to the right, causing economic development. This would also mean that the government would also have more money which can be used to invest in education and training or other forms of spending. A lack of education and training is what keeps people in absolute poverty as it prevents them from getting jobs and moving up, however, if education and training were to increase, more people would be getting jobs, thus increasing real GDP whilst resulting in economic growth.
Furthermore, government spending is also a component of the aggregate demand formula and therefore an increase in that would result in an increase in aggregate demand, thus causing an outward shift in the SRAS whig would
Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services. Much of the poverty in developing countries, such as South Africa, tends to be absolute poverty. Economic growth can be defined as steady growth in the productive capacity of the economy. Short term growth is measured by the annual percentage change in real national output, which is affected by shifts in short run aggregate supply curve (SRAS), whilst long term growth is shown by the increased in potential growth can is illustrated by an outward shift in a country's long run aggregate supply curve (LRAS). Whilst a rise in real GDP can lift millions of people out of absolute poverty, a reduction in the number of people living in absolute poverty can help to achieve economic development.
In order to reduce the number of people living in absolute poverty, they would have to get jobs in order to gain a living. This means that people would have more disposable income, thus increasing consumption which is a factor of aggregate demand and would therefore shift the aggregate demand curve to the right, causing economic development. This would also mean that the government would also have more money which can be used to invest in education and training or other forms of spending. A lack of education and training is what keeps people in absolute poverty as it prevents them from getting jobs and moving up, however, if education and training were to increase, more people would be getting jobs, thus increasing real GDP whilst resulting in economic growth.
Furthermore, government spending is also a component of the aggregate demand formula and therefore an increase in that would result in an increase in aggregate demand, thus causing an outward shift in the SRAS whig would