The Poverty Trap Example Paper

The Poverty Trap Example Paper

Topic: Getting households from the poverty trap takes a greater focus on the “demand” aspect as opposed to the “supply” area.


Despite the considerable amount of research undertaken to review the economic progress and development and analyse how it facilitates the poverty lowering, there has not been still one remedy discovered to make poor countries rich. Poverty continues to be the reason for suffering of thousands of people around the world, who are caught in a poverty trap.The Poverty Trap Example Paper Azariadis and John Stachurski (2005) establish the poverty trap as “any self-reinforcing device which causespoverty to persist”. Those mechanisms triggering poverty to persist range from, for example, limited usage of education, inadequate nourishment, lack of public health care, limited usage of credit and capital markets, inefficient governance, sociable instability and poor infrastructure. We can use one of the listed mechanisms to demonstrate the introduction of the poverty snare. Limited usage of education brings about an increased degree of illiteracy among the indegent, which further can determine the niche the poor may take in the labour market. Being uneducated, the poor is restricted to perform unskilled labour, which will not pay high income and brings the poor’s income level down. Income deprivation eventually leads to insufficient nutrition, limited access to education, etc. This is the trajectory poor homes follow towards dropping in to the poverty snare.

What are the methods for getting households out of the poverty trap? A couple of two types of procedures, “supply” and “demand” area policy interventions, that happen to be put on break the poverty capture. “Supply” side policies aim to immediately provide services to the indegent that may concentrate among other spheres of matter on education, health, or infrastructure, whereas the “demand” part policy proponents claim that first poor should demand these services, normally they are going to be ineffective. The author of this essay shares the last mentioned point of view as well.


Evidence shows that enabling the indegent to participate in determining services they need, their quality and number is crucial in ensuring coverage intervention’s success. To ensure sustainability of the results there must be social accountability set up, which allows the indegent to hold the government accountable for the decisions and options it makes for the indegent. We also build our argument predicated on a country example from Bangladesh, in which a “demand” side funding involvement has outperformed a “supply” aspect financing intervention in the health care sector. Hence, this article aims to claim that getting homes from the poverty trap requires a greater give attention to the “demand” area rather than the “supply” aspect.The Poverty Trap Example Paper

Voices of the Poor

Mani et al (2013) argue that being preoccupied with pressing financial concerns the indegent have fewer cognitive resources to guide their choice and action; therefore, they cannot take prepared decisions because of their poor mental features. Thus, taking this simple fact under consideration “supply” side procedures are made to help the indegent to escape poverty without reading their voices. It is believed that the government can decide better what’s had a need to get the poor out of the poverty snare on poor people’s behalf. However, based on the World Development Statement (2004), “public services often are unsuccessful people – in access, variety, and quality”. The statement emphasizes that the primary reason of the failed work of the growing countries to make services be employed by the poor is the degree to which the indegent themselves are employed in determining the quality and the quantity of the services that they are entitled to. Services can work better if “the indegent are placed at the centre of service provision by allowing them to keep an eye on and discipline services providers by strengthening their tone in policymaking and by reinforcing the incentives for providers to provide the poor” (World Development Report, 2004).The Poverty Trap Example Paper

However, the “supply” part proponents will claim a well-targeted strategy of the “supply” area performance incentives could alone be enough to achieve the desired outcomes, for instance, attracting upon an example from Nicaragua where a conditional cash transfer program exhibited “significant improvements in immunizations, growth monitoring, and reductions in stunting” (Regala, F. and Castro, L. , 2009). Upon conclusion of this program an analysis was conducted to recognize the impact the blended “supply” and “demand” side intervention experienced. The evaluation exhibited that incorporating “supply” and “demand” aspect plans can significantly improve the use of health services among poor homes and improve health outcomes. Furthermore, the analysis aimed to assess the impact “demand” area incentives alone played in this involvement. For this function, an evaluation about ten months after “demand” side incentives had been stopped using areas was conducted, and it unveiled that take-up rates for precautionary healthcare services still remained high. The analysis explained this effect by the probability that the program strategy dramatically advanced professional outreach activities during the initial level of implementation and thus the access of poor households to health services, minimizing the costs of energy and happen to be reach professional medical service delivery tips was also increased. It’s possible, therefore, a well-targeted strategy of “supply” side performance incentives could, alone, be enough to accomplish and maintain high levels of health care service use among poor rural populations in Nicaragua (Regala, F. and Castro, L. , 2009).

Although this example shows that “supply” side procedures on their own can be successful in helping the poor to get better access to healthcare services, we have to be aware that this is merely one example and, therefore, it can’t be representative of all “supply” side policy interventions. Additionally it is pressured by the analysis that the success of this program might be because supplier outreach activities were improved; thus, we question here which should “demand” side bonuses, such as incentives for health providers to build up efficient plans to expand coverage speedily in underserved areas, weren’t there right from the start of the program the results of the program could have been less successful.

Sustainability and Sociable Accountability

Designing policy interventions based entirely on the “supply” side approach ensures less sustainability. When the poor are not experienced enough about the plan treatment and, therefore, less worried about keeping the results of the policy once it is completed, the intervention will have a short-term impact. The Poverty Trap Example Paper This is one of the concerns often lifted by aid firms (International Labour Firm, 2001). An insurance plan intervention is undoubtedly sustainable in case it keeps on indeterminately with no further donor involvement or support, whether financial or otherwise. With a greater give attention to the “demand” side, this matter is more likely to be dealt with. In particularly, focusing plans on capacity building of the indegent in terms of educating them about their rights, open public services they are entitled to acquire, the role they can play in bettering their livelihood, providing more info about the stakeholders involved in insurance policy design and execution, etc. , can be conducive to poverty reduction and, hence, to lasting development. For instance, Economic Development Institute (1996) shows that non-governmental organizations can assist the poor to recognize their needs and identify their priorities. These methods will build poor people’s capacity to demand services they want and hold policymakers accountable for their actions and policy options. Quite simply, this will improve communal accountability that depends on civil engagement, i. e. where “the indegent can participate directly or indirectly in exacting accountability” (World Bank or investment company, 2004). This device can function only through the demand part methodology as it manages from the bottom-up (World Bank, 2004).

It can be though argued that poor people caught in the poverty snare will be less concerned about social accountability when, for example, they lack basic usage of diet and clean water in the first place. Therefore, it is inefficient to consider developing soft skills of the indegent until they have basic infrastructure, which would allow them to support their living and only then they can take a next thing to bettering their capacity and profiting from social accountability. Poor people need immediate help today. Building capacity of the poor will need longer time showing its results. Also, the “supply” aspect of governance already uses certain actions such as checks and amounts, administrative rules and types of procedures, auditing requirements, and formal police mechanisms to handle the task of accountability.

Indeed, “source” side regulations aim to dwelling address immediate needs of the poor. However, the intervention can be viewed as successful if it is sustainable. Relying on the present-bias, i. e. immediate provision of services “today” somewhat than investment in growing capacity of the indegent for better results in the longer term, does not assure sustainability over time.The Poverty Trap Example Paper Because of this, the poor can only just temporary escape the poverty trap and then again be captured into poverty once the treatment is completed. Empowering the indegent through interpersonal accountability enables lasting development. As the supply based procedure is an involvement that is bound to provision of services only and does not spread much beyond to improvement in governance, communal accountability functions a multiple purpose and, therefore, has a long-lasting impact. As such, sociable accountability facilitates improvement in governance, ensures development effectiveness through the more-pro-poor insurance policy design and, finally, empowers poor people to demand goods and services they want most. Regarding the accountability measures utilized by the “supply” part of governance, evidences suggests that “these “top-down” accountability promoting mechanisms have found with only limited success in many countries, both developed and growing” (World Lender, 2004). As a result, social accountability measures defined above are preferred.


“Demand” Side Financing

Furthermore, having analyzed lots of “supply” side interventions and behaviours of the poor we can restate that it is crucial to target more on the “demand” aspect interventions. Among the main areas included in the “supply” aspect polices is a medical care sector. Studies also show that despite appreciable subsidies allocated towards supply area the access to the health care systems among the poor remains low. To handle this disadvantage new “demand” side financing mechanisms are created (Schmidt, J. , Ensor, T. , Hossain, A. and Khan, S. , 2010). These mechanisms copy purchasing capacity to the targeted organizations for defined health care goods and services. This strategy is directed to increase poor homes’ usage of given goods and services. In particularly, such device was applied in Bangladesh, in which a maternal voucher plan was implemented. The program provided vouchers to poor women that entitled them to receive skilled care at home or a center and also provided repayments for transport and food (Schmidt, J. , Ensor, T. , Hossain, A. and Khan, S. , 2010).The Poverty Trap Example Paper The analysis of this program shows that the take-up of vouchers was faster when the program was integrated through the “demand” side financing than recently through the “supply” established financing. Authors of the report describe the earlier implemented structure through the “resource” side funding as an “apparent inability”, when all resources were assigned to the supply area and it was assumed that those with need will be able to access services.

While “supply” area financing schemes can enhance their outreach to the poor by constructing private hospitals in the distant rural areas or providing money for carry or move itself to attain hospitals in towns, and enhancing service quality, so that individuals can have easier usage of public health care services. However, as practice shows that is quite challenging. Gupta, I. , Joe, W. and Rudra, S. (2010)state that policymakers in growing countries have come to understand that open public health services havent been obtaining desired outcomes scheduled to “a significant lack of efficiency, fairness in service provision and its own quality”.

Although, the “demand” part funding can be questioned with regards to the quality of healthcare services kept to the providers’ discretion, the “demand” part interventions are executed with an assumption that service providers are in charge of the service quality confidence, and if involvement beneficiaries are kept to choose from a couple of service providers, it is assumed that there is a considerable number of providers to choose from. However, coming back back again to the example from Bangladesh we conclude that demand-side funding schemes are more effective predicated on the available data, which implies that the go up in the voucher take-up appeared to be more rapid through the “demand” side financing design than through other non-demand part financing (“supply” side financing) areas.The Poverty Trap Example Paper


In the course of this article we directed to highlight that getting poor homes out of the poverty trap requires a greater concentrate on the “demand” area interventions rather than the “supply” side interventions. In particularly, we highlighted the data proving this debate through examples of the assumed cognitive poverty of the indegent, where practitioners on the other hand bring research that those interventions that require the indegent in determining the number and quality of services they need prove to be more efficient. We also brought up the thought of interpersonal accountability that is crucial not only in guaranteeing effectiveness and efficiency of the poverty alleviation programs, but also in enhancing governance and keeping sustainability of the plan outcomes. Finally, we dwelled into a specific example of a policy involvement from Bangladesh, which aimed to provide vouchers to poor women that entitled them to get skilled good care at home or a service and also provided payments for move and food. The analysis of this intervention helped us to investigate the results of both “demand” area funding and “supply” side funding. We reconfirmed that research from Bangladesh also demonstrates that “demand” part policies are far better in reaching the poor and dealing with their needs.The Poverty Trap Example Paper