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Numerous economists do not consider vicious circle of poverty as an obstacle in the path of economic development. According to Prof. Hirschaman, the basic problem of economic development in these countries is the lack of decision making ability. The real problem is the lack of capital.
Vicious circle of poverty implies that poverty is the cause of poverty. A poor person, in order to repay his existing debt, will borrow some more, thereby adding to his debt. Further, he will also incur interest payment obligations.
The vicious circle of poverty is a result of the various vicious circles which were on the sides of supply of and demand for capital. As a result capital formation remains low productivity and low real incomes.
Jun 19, 2023 · The cycle of poverty refers to a self-perpetuating pattern in which individuals or families experience poverty and find it difficult to escape from it. It involves a combination of economic, social, and psychological factors that create barriers and keep people trapped in poverty across generations.
Sep 12, 2022 · The vicious circle of poverty introduced by R. Nurkse attempts to explain the reasons and factors why underdeveloped or poor economies tend to stay poor.
In economics, a cycle of poverty or poverty trap is when poverty seems to be inherited causing subsequent generations to not be able to escape it. It is caused by self-reinforcing mechanisms that cause poverty, once it exists, to persist unless there is outside intervention. [2]
A vicious circle (or cycle) is a complex chain of events that reinforces itself through a feedback loop, with detrimental results. It is a system with no tendency toward equilibrium ( social , economic , ecological , etc.), at least in the short run.
