What is Poverty Trap

Definition: Poverty trap is a spiraling mechanism which forces people to remain poor. It is so binding in itself that it doesn't allow the poor people to escape it. Poverty trap generally happens in developing and under-developing countries, and is caused by a lack of capital and credit to people.

Description: Poverty trap can be broken by planned investments in the economy and providing people the means to earn and be employed. A series of poverty alleviation programs can be enforced to raise individuals out of poverty by providing monetary aid for a period of time.

But if the plan fails, people will become dependent on such programs forever and may even go deeper down in the poverty spiral. However, poorer countries find this to be difficult, leading to the over-exploitation of natural resources and land.



Check out: Claim Amount Definition, Moral Hazard Definition, Defect Density Definition, Penetration Rate Definition, Net Interest Income Nii Definition, Stock Split Definition, Plan Expenditure Definition, Capitalization Rate Definition, Risk Management Definition, Off Price Retailers Definition