Abstract
This chapter on poverty perpetuation focuses on identifying and analyzing the multiple determinants of poverty, the reasons for its perpetuation, and its impact on economic growth. Sir Henry George, a century and a half ago, in his book “Progress and Poverty,” provided an insight into the mechanism of poverty perpetuation. George explained why the progress of modern technology, social services, and education failed to alleviate poverty, and why the growing wealth of industrialized economies tended to stay concentrated in the hands of the few. He believed that poverty originated from the inherent trends of injustice and inequality in any market economy. The problems of poverty amidst plenty, the corrupt relationship between wealth and political power, and the suffocated social order that the world today faces align with the problems George sought to address. Drawing on contemporary economic theories and models, this chapter revitalizes George’s doctrine and addresses determinants of poverty that go beyond the traditional assumption of poverty being driven by overpopulation, lack of investment, and capital accumulation. It is an inquiry into the circular relationship between the causes and consequences of poverty that trigger a trap for sustained economic stagnation and deprivation. Reviewing poverty thresholds and take-offs (Semmler and Ofori 2007), it examines various growth models to understand the steady state of rich and poor economies. The chapter also investigates the correlation between poverty, ecological imbalance, and climate change to highlight the threat of poverty to sustainable development.
Keywords: Poverty Traps, Inequality, Economic Growth, Endogenous Growth, Human Capital, Infrastructure, Poverty Perpetuation, History of Economic Thought, Economic Development
JEL Codes: I32, D63, O40, O41, J24, H54, I30, B14, O10
The full paper includes the growth models, equations and figures discussed above.