Introduction The topics regarding the areas of economics is often controversial and disputed. Particularly, the topic of poverty and the potential causes of it are frequently argued. An example of this is the debate regarding the existence of poverty traps. With that in mind, this paper focuses on the article written by Aart Kraay and David McKenzie, “Do Poverty Traps Exist” (2014). A concise summary of the main topic and its arguments is included for analysis. Subsequently, a critical review of the arguments is given using my opinion and other scholarly references. The purpose of this paper is to demonstrate knowledge and understanding of the course concepts involving poverty traps.
Summary Firstly, Kraay and McKenzie (2014), explains …show more content…
Intuitively, this is correct because poor individuals cannot afford the necessary food intake to escape malnourishment. Subsequently, the individuals will not have the physical capabilities to produce enough food. However, it is described how past studies show that this scenario is extremely unlikely. The S-shaped pattern trend of poverty traps is not present. Based on the lecture discussions of nutrition, I agree with this argument. Unfortunately, some malnourished individuals behave as if they weren’t. This is because individuals have different preferences on the amount of income that should be allotted to nutrition. The research of Edward B. Barbier (2010), shows the complex range of trade-offs and choices of the poor. Evidently, the choices that the poor make are just as …show more content…
The study suggests that geographic constraints are the most consistent evidence regarding poverty traps. Intuitively, this is correct because a region’s infrastructure, policies, practices, etc., can have a large effect on income. There is also the issue of the cost to relocate to an area with higher income potential. Moreover, the study by Bloom, Canning, and Sevilla (2003), found an interesting correlation between geography and poverty traps. To summarize, differences in income levels and the intrinsic geography of each country was tested. A poverty trap model using high and low equilibria was used. Results show that the high-level equilibrium state is the same for all countries and the physical aspects include are greater in cool, coastal countries with high, year-round,
Summary Firstly, Kraay and McKenzie (2014), explains …show more content…
Intuitively, this is correct because poor individuals cannot afford the necessary food intake to escape malnourishment. Subsequently, the individuals will not have the physical capabilities to produce enough food. However, it is described how past studies show that this scenario is extremely unlikely. The S-shaped pattern trend of poverty traps is not present. Based on the lecture discussions of nutrition, I agree with this argument. Unfortunately, some malnourished individuals behave as if they weren’t. This is because individuals have different preferences on the amount of income that should be allotted to nutrition. The research of Edward B. Barbier (2010), shows the complex range of trade-offs and choices of the poor. Evidently, the choices that the poor make are just as …show more content…
The study suggests that geographic constraints are the most consistent evidence regarding poverty traps. Intuitively, this is correct because a region’s infrastructure, policies, practices, etc., can have a large effect on income. There is also the issue of the cost to relocate to an area with higher income potential. Moreover, the study by Bloom, Canning, and Sevilla (2003), found an interesting correlation between geography and poverty traps. To summarize, differences in income levels and the intrinsic geography of each country was tested. A poverty trap model using high and low equilibria was used. Results show that the high-level equilibrium state is the same for all countries and the physical aspects include are greater in cool, coastal countries with high, year-round,