why does poverty exist in south america
One reason why poverty exists in a country like Mexico, which has natural resources and is a fairly rich nation, is a high degree of inequality. When the rich make money, they keep it to themselves, and they do not use it to generate high-paying jobs for low-skilled workers. The so-called "trickle down" theories of economic development that are promulgated by the International Monetary Fund, the World Bank, and other institutions to promote economic growth by creating free markets, do not work, because the new jobs provided do not employ that many people. In addition, these jobs are often for more educated people; the cycle of poverty present in countries in Latin America means that most people do not have access to education, healthcare, and other services they need to be trained for these jobs. PIn addition, people at the top of corporations try to take as much money as possible, leaving very little for low-wage workers. These trends are only intensified in a global market, as entrepreneurs try to find markets in which they can pay their workers as little as possible, and they can invest anywhere in the world.
To break the cycle of poverty in Latin America, local entrepreneurs need capital to start businesses, and they also need technical help to set up these businesses and work around the corrupt and inefficient state system. They also require health care, access to education, and other services to break the cycle of poverty. P
In one sense, it seems obvious that an abundant supply of natural resources and an abundant workforce should boost economic growth. The actual way in which both of these affect a country's economy are somewhat more complex. You might also note that although many people in Latin America may appear poor from the perspective of a middle class North American, in fact, especially when compared to Asia and Africa, Latin America actually has been relatively successful in reducing extreme poverty, with the percentage of people living in extreme poverty dropping by nearly 15 percent over the past few decades, with programs such as the BrazilianPBolsa Famlia being notable successes.
P In terms of workforce, economists talk about a "demographic transition", in which industrializing countries are just in the process of moving from the typically high birthrates of underdeveloped agricultural economies to the lower birthrate typical of developed countries. This is a one off occurrence and can bring a massive "demographic dividend" over a 20-30 year period to the transitioning economy in which there is a large number of working age people compared to a small number of children and elderly outside the workforce. However, for a country to exploit a demographic dividend it needs a solid educational system that can train these workers to be productive, a solid infrastructure to support productivity, political stability, and a rule of law.
Gender equality also helps, as in highly unequal societies women have low rates of labor force participation. In much of Latin America, poor infrastructure, weak education systems, and drug cartels can be a drag on development. For natural resources, there is no direct correlation of them to poverty reduction. Although some countries such as Australia and Norway have successfully used natural resources to improve national wealth and infrastructure, the story in many places is more mixed. When the Spaniards looted, pillaged, and exploited Latin America's natural resources, this caused rather than alleviated poverty in the native populations. Even after independence, for many countries, natural resources only benefit a wealthy elite and encourage rent-seeking behavior. Income inequality remains high, meaning that the wealth derived from natural resources benefits only a limited number of wealthy people rather than lifting all people out of poverty. P
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