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Formulating Government and Economic Policies To Address Rising Poverty Levels

Poverty is a broad issue that includes social, political, and cultural challenges in addition to economic concerns. Poor sources of financial resources, material deprivation, social alienation, exclusion, and feeling of hopelessness, as well as physical and psychological ill-health, are all characteristics of multidimensional poverty. As a result, eradicating poverty requires a broad set of well-structured policies, not only economic ones (Singh & Chudasama, 2020). But what are the factors considered when formulating the economic policies that are implemented when dealing with poverty? Understanding these factors is the underlying rationale for comprehensive poverty reduction strategies. In particular, this paper will argue that political issues such as political instability, social issues such as low incomes, and cultural issues such as cultural values should govern policymakers in eradicating poverty. My discussion will begin with the multi-dimensional approach of poverty and then progress to economic growth and inequality. But why economic growth? To achieve high and sustainable growth rates, the economy must be stable. Economic growth is the most important factor determining poverty. As a result, any plan to combat poverty should focus on increasing economic growth and ensuring that it remains stable. To achieve high and sustainable growth rates, the economy must be stable. Economic growth is the most important factor determining poverty. As a result, any plan to combat poverty should focus on increasing economic growth and ensuring that it remains stable. The underlying argument is that even Though economic growth is an essential factor affecting poverty, other such as political, social, and cultural issues are also key components in poverty reduction.

Poverty as a Multi-dimensional Problem

Rather than depending solely on income or economic growth to define poverty, some scholars have argued that it is essential to consider various factors. Poor people have a wide range of problems ranging from poor health care and education to a lack of power and living in regions that harm the environment. A multidimensional measure of poverty can integrate several indicators that capture the phenomenon’s complexity to inform national poverty reduction efforts (Singh & Chudasama, 2020). Depending on the country’s setting and the measure’s goal, several indicators can be used to reflect the needs and objectives of the country and its constituent areas.

But why use a multi-dimensional approach? Monetary measures of poverty do not encompass all aspects of poverty. In contrast, economic growth solely does not reduce poverty levels since it is not associated with reducing other deprivations such as child malnutrition (Dhaoui, 2021). People who are poor describe their poverty as multidimensional. Poor people have identified ill-being as ill-health, food, poor hygiene and clean water, social stigma, low education, poor housing conditions, and more in participatory activities. Policymakers will be better able to combat poverty if they have access to more relevant data. For example, a poverty reduction strategy for an area where most people are deprived of schooling is different from a place where most people are impoverished in housing.

The political dimension of Poverty

Poverty has taken on new meaning as time has passed. Poverty has taken on new meanings, and coping mechanisms as our understanding of society’s complexity expands. The idea has evolved from the more basic conceptions of poor health, inadequate education, and lack of income to get to this point (Rupasingha & Goetz, 2007). Being a social and political problem, the topic of poverty has taken center stage in public policy discussions. Poverty has been linked to a range of complex factors, including chronic resource exploitation, discriminatory political treatment, skewed development priorities, inequalities, frequent natural and human-caused disasters, prolonged denial and violation of human rights, and elite-controlled public policy. A new political strategy is needed to deal with multidimensional poverty. Because of this, it cannot be handled by handouts and charity packages claiming to be social security and poverty alleviation. Multidimensional poverty can’t be erased until governments implement robust plans and make long-term investments in essential service delivery, especially in rural regions, through an empowered local government structure.

Uncertainty in economic growth can lead to countries relying on foreign handouts for the rest of their lives. Cultural or ethnic groups are more prone to go to war in countries where they believe that there is a lack of economic and political equality, leading to a vicious cycle that eventually results in poverty (Khan et al., 2022). The impoverished are frequently ostracized, and their cries go unheard. More than any other demographic, the poor rely on essential government services. When poor persons participate in service reforms, these services are more effective for the poor. These services are tough to come by in areas that have recently experienced civil war. Poverty in the world is exacerbated by political instability, poor governance, and corruption. The quality of all public services in the country was lowered due to corruption and misuse of public cash. The police, the court system, and the provision of basic infrastructure are all included in this category of conventional governmental duty. Racism, gender bias, and ethnic prejudice are all intertwined and must be tackled if we are to reduce poverty and inequality around the world successfully. The role of nongovernmental organizations (NGOs) in the fight against global poverty cannot be overstated.

It is critical to promote good governance by forming an institutional system capable of providing the government with more effective and efficient instruments for more successful development plans to meet countries’ economic, social, and environmental needs (Dhaoui, 2021). However, some countries lack proper training and expertise of the technology, as well as access to it and understanding on how to employ it best. Policies on the use of digital technology must be adequately entrenched in public sector transformation to reap the benefits. Countries should foster competitive business environments, improve accountability, and update education and skills development systems (Dhaoui, 2021). The race is between skills and technology, with the winner determining whether ICT dividends are realized, and benefits are equitably distributed

Social Dimension of Poverty

A person is said to be poor if they lack the financial means to provide for themselves and their family. Additionally, there is a lack of access to fundamental amenities like education and a lack of social discrimination and isolation. The impact of poverty falls disproportionately on several different social groupings. All aspects of poverty need to be addressed to have a socially responsible approach to development. Approaches to poverty eradication that are people-centered place emphasis on empowering those who are poor by giving them a right to participate in the development and implementation of policies that directly impact the most marginalized segments of society (Meyer & Wu, 2018). To alleviate poverty, it is necessary to establish policies to distribute wealth and income equality and ensure that everyone has access to social security.

The effectiveness and limitations of present poverty reduction measures should be discussed from a social perspective, which should be included in this discussion. Social poverty analysis looks at how economic and social policies affect the poor and other socially vulnerable populations. Using Poverty and Social Impact Analysis (PSIA), policymakers can examine changes’ economic and social impact on different social and income categories. By promoting national ownership of development initiatives and aiding in the national debate on policy alternatives, PSIA can help operationalize the pledges made in Copenhagen if properly executed.

Cultural Dimension of Poverty

All people are affected by poverty. It has an impact on people of all races, religions, and cultural backgrounds. Despite recent declines in global inequality, many countries still have more advantages over others and, in many situations, are better positioned to assist others less fortunate than themselves. Foreign countries make it tough to ensure success because of their uniqueness. People and governments will act in different ways. Disparities can exist even in how people view poverty in general, and these must be taken into account. Cultural norms influence poverty’s appearance and means of escaping (Small et al., 2010). There are several reasons why single parents are more likely than their married or cohabiting counterparts to live in poverty, but it isn’t easy to pinpoint the exact causes. On a global scale, these cultural disparities persist. As a result, culture directly impacts poverty and has an indirect effect on the conditions that encourage or discourage poverty. Family structure is one of the most important considerations in many cultures.

The necessity to reexamine culture’s role in poverty is becoming more pressing. The purpose of this is to dispel common misconceptions regarding the cultural preferences of the underprivileged. Only by examining experimentally how the poor think and describe their current situations, options, decisions, and what they do to improve their chances for themselves and their children can we fully grasp what causes and perpetuates poverty (Small et al., 2010). A greater understanding of how and why individuals respond to poverty is essential to figuring out ways to get out of it. When we look at poverty from a cultural viewpoint, we can better understand why people in the same high-poverty areas make such disparate choices about parenting, education, community involvement, job hunting, and even criminality. The effectiveness of social policy can be improved by better understanding the role culture plays in poverty. Misguided policies resulting from a lack of cultural awareness might result from failing to recognize the genuine motivations of the impoverished. Scholars believe that we need to comprehend the cultural beliefs that government policy decisions towards the underprivileged.

Economic Growth, Inequalities, and Poverty.

Economic inequality and economic growth play a massive role in poverty alleviation. According to Ncube (2014), income inequality reduces economic growth and raises poverty in most regions. Other than income inequality, other factors that negatively affect economic growth are exchange rates, inflation, government consumption expenditure, previous growth rate, and per capita GDP (Ncube et al., 2014). Poverty-reducing variables include domestic investment, trade openness, education, and income per capita in the MENA region. They recommended specific policy instruments that reduce inequality, thereby reducing poverty levels. The measures are additional cash transfers, greater access to health, labor market training, and increased social investments (Ncube et al., 2014). Since poverty is a multi-dimensional problem, income inequality and economic growth alone cannot wholly eradicate rising levels. Though there are relationships between economic growth and poverty, other political, social, and cultural factors, play a significant role in eradicating poverty.

Economic stability alone does not guarantee strong economic growth rates. Main structural initiatives such as regulatory change, privatization, public service reform, enhanced governance, trade liberalization, and banking sector reform are usually necessary to maintain strong growth rates (Neaime & Gaysset, 2018). Furthermore, reducing poverty cannot be achieved solely through economic growth. Poverty will be reduced more by growth accompanied by changes in distribution than by growth with a static allocation. A country’s plan for combating poverty must include policies that help redistribute wealth among its citizens. These policies include land tenure reform, public spending that benefits the poor, and policies that help the poor access financial markets.

Poverty alleviation cannot be achieved solely by economic growth. The growth that alters the distribution of wealth more gradually has a more significant influence on poverty reduction than growth that does not. To ensure macroeconomic stability, government spending, particularly the country’s poverty-reduction programs, must be financed sustainably and noninflationary way (Singh & Chudasama, 2020). Economic policy formulation and the implementation of programs aimed at combating poverty are cyclical procedures. It is necessary first to explain specific objectives and policies for poverty reduction initiatives, cost them, and fund them within the overall budget in an inflation-resistant manner. Even though a large portion of the funding will be provided at drastically discounted rates, the total amount available is not yet set in stone. If the available resources cannot be used to fund credible solutions for reducing poverty,

Economic growth has been the most crucial factor when it comes to poverty alleviation. Dollar (2015) designed social welfare systems that are responsive to the lower quartiles, and in which wellbeing is correlated positively with income growth and negatively with income inequality. As they examined data from 151 nations, they found that income growth accounts for a majority of differences in welfare among countries. Again, changes in inequality have been relatively moderate and typically uncorrelated with economic development. As a result of these findings, it may be deduced that policies aiming at reducing inequality boost welfare when growth is not negatively affected but may diminish it if growth is adversely affected. Furthermore, according to Jones and Klenow (2016), the connection between GDP per capita and welfare in most nations is 0.98. While income inequality is a problem, researchers found that welfare disparity is considerably more important than income inequality. Accordingly, poverty and inequality are influenced by the distribution of growth between rich and disadvantaged.

Poverty levels in most regions have significantly increased over the last ten years. The SDG Fund and the WORLD Bank report show that poverty levels rose significantly even before the Covid-19 pandemic. There are a lot of inequalities in the region, exposing the vulnerable social, political, and economic systems (Roy et al., 2018). Governments have put in place several strategies in an attempt to reduce poverty. The strategies include good governance, free-market policies to promote economic growth, minimum wages, and inclusivity (Neaime & Gaysset, 2018). Though strategies have been developed, the MENA region still has high poverty levels to address to achieve the SDGs targets.

Reducing inequality is an effective strategy for reducing poverty. Before implementing this strategy, one must understand the effects of changing inequality on economic growth (Roy et al., 2018). Policymakers should also understand the impact of inequality on the mean relative incomes. Growth can be slowed or halted, depending on the policy in place. Inequality reductions can lead to significant reductions in poverty, but policymakers should be aware of the potential for inequality to have other implications on poverty through its effect on growth. There are various opposing hypotheses concerning how inequality affects growth in the theoretical literature; thus, this is a subject of empirical research.


This paper attempts to develop government and economic policies that can be used to reduce rising poverty levels by considering factors that policymakers use to eradicate poverty. The answer lies in the fact that poverty is a multi-dimensional problem. Thus, it should be approached from a political, economic, social, and cultural perspective. To solve this, I have expounded poverty in its dimensional approach and have discussed economic growth and inequality, the most critical factor influencing poverty. Effective job creation, a higher minimum wage, increased investment in places with low incomes, enhanced educational and training opportunities for all citizens are all tasks that policymakers must tackle with new and thoughtful approaches. It is critical that all government entities recognize the influence that poverty has on society and economic growth and development. Policymakers can help decrease poverty in their communities by becoming fully aware of the problem and not ignoring it any longer. Rather of condemning the individual person for his or her misfortune, it’s critical to address the issue and offer assistance and chances to the poor.


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