Causes of Poverty in Costa Rica
Costa Rica is known for its sunny seaside beaches and tourist attractions. It is arguably the most stable and most prosperous country out of all its Latin American neighbors. A large part of this is due to government spending. Nearly 20 percent of Costa Rica’s GDP goes toward social spending. Because of this, the Costa Rican economy has boomed. The infant mortality rate has decreased, while healthcare and sanitation have improved. But in recent years, Costa Rica’s poverty rate has stagnated at roughly 20 percent. This begs the question: what are the causes of poverty in Costa Rica? Why, despite all the government’s spending, does it still persist?

A large part of the answer is income inequality. There is extensive research showing that income inequality is correlated with higher levels of poverty. And without a doubt, income inequality is one of the main causes of poverty in Costa Rica.

Urban Costa Ricans are largely outpacing rural Costa Ricans when it comes to income. The top 20 percent of earners make an average of $4,650 per month, while the bottom twenty percent make only $360. In other words, wealthy Costa Ricans are making nearly 13 times as much money as poor Costa Ricans.

This can have dire consequences. The Organization for Economic Cooperation and Development (OECD) has found that income inequality can cause the economy to slow down. In addition, it prevents poorer people from finding high-paying jobs.

However, Costa Rica is not doomed to an eternity of inequality. The OECD shows that inequality can be reduced simply by encouraging women to join the workforce and providing better access to higher-quality jobs. Costa Rica’s government is already working hard to eradicate poverty, and the future looks bright. Income inequality may be one of the main causes of poverty in Costa Rica, but it does not have to stay that way.

Adesuwa Agbonile

Photo: Flickr

The Millennium Compacts for Regional Economic Integration Act (M-CORE Act), introduced by Rep. Karen Bass in May 2015, would allow the Millennium Challenge Corporation (MCC) to engage in multiple projects in an eligible country at any given time.

The MCC was established in January 2004 thanks to bipartisan efforts in passing the 2003 Millennium Challenge Act.

However, the law currently prohibits the MCC from entering into more than one concurrent assistance agreement – or compact – in any country at any given time.

  1. The M-CORE Act will allow the MCC to develop multiple compacts with a country at any given time.
  2. Multiple compacts in a country, particularly in Africa, will promote regional economic integration and cross-border collaborations.
  3. An eligible country that already has a Millennium Challenge Compact in effect can enter into another compact if one or both compacts are or will be for regional economic integration, increased regional trade or cross-border collaborations.
  4. This act establishes new assistance criteria for a low-income or a lower middle-income candidate country to enter into a Millennium Challenge Compact with the U.S.
  5. Candidate countries must meet the International Bank for Reconstruction and Development’s (IBRD) threshold.
  6. If the per capita income of a low-income candidate country changes during the fiscal year to that of a lower middle-income country, then the country will need to meet the per capita income requirement for that fiscal year and the two subsequent fiscal years.
  7. Eligible countries that already have a Millennium Challenge Compact in effect can enter into another compact if the country is making considerable and demonstrable progress in implementing the terms of the existing compact.
  8. The MCC’s board must notify Congress 15 days prior to providing assistance to an eligible country, commencing negotiations with an eligible country, signing a compact and terminating a compact or agreement.
  9. In addition to the notification requirement, the MCC is required to provide detailed information on economic rates of return.
  10. The MCC’s board is required to disclose information on their website and provide notice of the information’s availability in the Federal Register.

The Millennium Challenge Corporation has signed 29 compacts with 25 different countries since its inception — and the M-CORE Act has the potential to increase their impact.

According to a March 2015 Congressional Research Service (CRS) report, concurrent regional compacts could provide higher rates of return on investments, benefiting from economies of scale and supporting trade between nations.

Summer Jackson

Sources: The United States House of Representatives, Congress, FAS
Photo: Google Images

Bolivia is the poorest country in South America. It possesses the largest ratio of indigenous people, who make up 62 percent of the population. Most of these indigenous groups suffer from poverty—over 74 percent are poor. The indigenous groups also make up most of the rural areas, where the greatest amount of poverty in the region is found. The unemployment rate remains high, with 8 percent of the population without jobs, increasing poverty in rural areas.

Bolivia’s income distribution is one of the most uneven in the world, ranking second in unequal income distribution. The land is rich in minerals and resources, but the elite Spanish ancestry dominates the economic system. Most Bolivians are low income farmers and traders. There has been long running tension over the rich natural gas resources by exploitation and export, which continues to strengthen the Bolivian income gap.

Social unrest in Bolivia is growing with the tax reform. The inflation rate is controlled by the tax reform and causes more tension within Bolivia’s economy. These issues in the economic system are creating poverty that affects groups like the indigenous people. Poverty can lead to inequality, which limits human rights and mobility through different strata of class, causing a separation of income.

Throughout history, indigenous people have been the poorest and most excluded from social economic growth. Access to basic health care and necessities is limited due to isolation. The high fertility rate among the indigenous people of Bolivia has increased their population to over 5 million people. The increase is so drastic because of the lack of access to education and health care needs.

Bolivia sees the highest rate of child malnutrition, particularly among indigenous cultures. World Vision estimates that over a quarter of the children under the age of five are malnourished and do not have access to proper health care.

Recent organizations, like World Vision, have formed local centers in Bolivia to help monitor the well-being of these children. This includes the implementation of training for local health care workers to bring awareness to kids to stay safe from different forms of child maltreatment.


Causes of poverty.


Most of the women living in rural areas have limited education or training for employment. There is also a lack of health services and education in the health sector for women. This restricts the growth of the economy by preventing these women from bettering their futures and the economy.

The rural areas continue to suffer from poverty. With the deficiency of natural resource management and limited approach to technology in rural areas, infrastructures such as roads will be neglected. Without the proper road system, isolation of indigenous groups will increase, causing lack of job opportunities and access to education.

These regions of Bolivia are facing obstacles in the economic development in many of the indigenous groups. The advancement of these obstacles relies on policies to protect the economic growth in the rural regions, where indigenous groups reside, and to help increase labor productivity.

— Rachel Cannon

Sources: BBC, UNICEFGeorgetown University, World Vision
Photo: Next Starfish

While Mexico’s national rate of poverty dropped between 2010 and 2012, as reported by Reuters, the country’s real numbers of poor people increased. A large portion of this increase came in the capital district where the amount of people living in extreme poverty rose by nearly 27,000. The world’s largest slum, Neza-Chalco-Itza, has nearly four million people and is adjacent to the national capital.

Traveling outside of the central zones of Mexico’s capital, one will encounter many signs of a growing city, as well as the poverty incumbent in burgeoning urban areas. From 2010 to 2012, the percent of people facing conditions of poverty in the city increased from 28.5% to 28.9%, according to a report from the government agency CONEVAL (Consejo Nacional de Evaluacion de la Politica de Desarrollo Social). Nearly all of that increase consisted of more people entering extreme poverty, many in slum areas.

When looking at government reporting, it is important to consider what the report actually measures. CONEVAL takes a multidimensional approach to measuring poverty, accounting for lack of access to one of six “social rights”: education, health services, social security, adequate and quality housing, basic utilities, and adequate food.

Under this schematic, lack of access to one of the social rights places that person (and all family members) under the category of “vulnerable.” What this tag means is that this particular family has increased their likelihood of entering a state of poverty, depending on the size of their family’s income. Correspondingly, lacking more of the social rights requires a larger income.

With this measurement of poverty, more people can accurately be included under the label “poor.” As opposed to labeling only those that have a low income as poor, taking the listed rights as factors in poverty allows government assistance programs to cover more people.

Unfortunately, for Mexico, it also means that a large portion of the population faces the vulnerability of entering poverty. Due to widespread lack of housing and quality health services, many Mexicans are at risk of losing the small footholds they currently have.

Returning to the numbers for the capital district in Mexico, while 28.9% of people were in poverty, nearly 40% were labeled “vulnerable” by the CONEVAL report. Interestingly, the percentage of people in Mexico City who were vulnerable because of a lack of social rights decreased, while the percentage of those that were vulnerable because of a lack of income increased.

In actual numbers of people, this data as a whole becomes more real. In one of the world’s most populous and apparently affluent cities, literally millions of people live in poverty or are at risk of entering a state of poverty. According to the report, nearly 5.5 million people are either poor or vulnerable in this city alone.

That number accounts for 10% of the country’s poor. For this number to lessen, it will be necessary to partner with the Mexican government in its poverty alleviation programs.

– Jacob Huju

Sources: CONEVAL, Reuters, International Business Times, Wilson Center
Photo: El Futuro Llego Hace Rato

s The Human Development Index (HDI) is a composite measure of health, education, and income which was introduced by the United Nations Development Programme in 1990 as an alternative to purely economic assessments of national progress, such as Gross Domestic Product growth. In the field of international development, the HDI soon became the most widely accepted and cited measure of its kind.

Many developing countries in the 1980s faced strict structural adjustment conditions imposed by financial institutions like the World Bank and the International Monetary Fund.  To avoid a financial crisis and get the loans they needed, these countries had to undergo massive economic restructuring that involved currency devaluation, government spending cuts, business deregulation, and reducing taxes for the wealthy. Not surprisingly, the social impact was harsh for the average citizen and the human condition worsened. Do you remember the images of people burning money to keep warm? It was in light of this situation that the United Nations advocated for a human development approach, as opposed to a business development approach.

1990 was the beginning of a campaign by the UNDP for a people-focused strategy towards development, and hence the birth of the Human Development Index. The HDI emphasized that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone. The HDI was designed to reflect average achievements in three basic aspects of human development – leading a long and healthy life, being knowledgeable and enjoying a decent standard of living.

The main components used to calculate a country’s HDI are Life Expectancy at Birth, Gross National Income per Capita, Mean Years of Schooling and Expected Years of Schooling. From these, a number between 0 and 1 is produced – with 1 being the best possible HDI and 0 being the worst possible HDI. As of 2012, Norway ranked number 1 out of 187 countries with an HDI of 0.955.  Niger and the Democratic Republic of the Congo tied for last place with an HDI of 0.304.

The HDI can be revealing in other ways as well. For example, how is it that two countries with the same level of GNI per capita can end up with such different human development outcomes? The Bahamas’ GNI per capita is higher than New Zealand’s (by 17%) but because life expectancy at birth is about 5 years shorter, mean years of schooling is 4 years shorter and expected years of schooling differ greatly between the two countries; New Zealand has a much higher HDI value than the Bahamas.

Although the Human Development Index is a more holistic measure of human development in a country when compared to GDP per capita, the HDI is still not all-inclusive. The HDI, for example, does not reflect political participation or gender inequalities. The Inequality-adjusted HDI, Gender Inequality Index and Multidimensional Poverty Index offer other insights into a country’s development status.

According to the 2012 HDI, the top ten countries with the best human development are:

1.    Norway

2.    Australia

3.    USA

4.    Netherlands

5.    Germany

6.    New Zealand

7.    Ireland (tied for 7/8 spot)

8.    Sweden (tied for 7/8 spot)

9.    Switzerland

10.   Japan

Out of the 187 countries counted in the 2012 HDI, the bottom ten countries with the least human development are:

177.  Sierra Leone

178.  Burundi

179.  Guinea

180.  Central African Republic

181.  Eritrea

182.  Mali

183.  Burkina Faso

184.  Chad

185.  Mozambique

186.  Democratic Republic of the Congo (tied for last place)

186.  Niger (tied for last place)

– Maria Caluag

Source: UNDP
Photo: Guardian


Oxford University’s poverty and human development initiative published a world poverty report.  As world poverty declines, the report notes that “never in history have the living conditions and prospects of so many people changed so dramatically and so fast.”  In fact, if some countries continue to improve at current rates, it is possible to eradicate acute poverty within 20 years.

The academic study measured new deprivations, such as nutrition, education, and health. By examining more than income deprivation, the study is able to convey the bigger picture.  The new methodology is entitled the Multidimensional Poverty Index (MPI).  Past studies identify income as the only indicator of poverty.  This is a misrepresentation because multiple aspects constitute poverty.

The MPI measures poor health, lack of education, inadequate living standards, lack of income, disempowerment, poor quality of work, and threats from violence.  These factors provide a holistic look as world poverty declines.

Dr. Sabina Alkire and Dr. Maria Emma Santos developed the new system.   They named the system “multidimensional” because it is what people facing poverty describe.  “As poor people worldwide have said, poverty is more than money,” Alkire said.

This increased information and understanding better informs international donors and governments.  “Maybe we have been overlooking the power of the people themselves, women who are empowering each other, civil society pulling itself up,” Alkire said.  The new data could incentivize donors to provide assistance.  International and national aid contribute to the declining rates.  Improvements to infrastructure, education, and healthcare help decrease poverty rates.  Trade has improved the economies of Ethiopia, Rwanda, and Sierra Leone.

Rwanda, Nepal, and Bangladesh experienced the greatest decrease in poverty rates.  It is possible that “deprivation could disappear within the lifetime of present generations.”  Close behind in the ranks of poverty reduction were Ghana, Tanzania, Cambodia, and Bolivia.

The study is supported by the United Nations’ recent development report.  The UN report stated that poverty reduction was “exceeding all expectations.”

Check out the MPI interactive world map for more details.

– Whitney M. Wyszynski

Source: The Guardian

Amidst the joy over the DOW reaching an all-time high, as well as the numerous other positive signals that the American economy is in recovery mode, it can be easy to miss the nuanceshidden in the statistics. While Americans on the whole are getting rich again, these gains are not being seen by everyone. When the data is parsed carefully, it is evident that the poorest in our society have failed to see many benefits from the so-called economic recovery. As a result, the wealth gap in the United States continues to grow.

Impoverished people rarely, if ever, have any forms of investment. So when huge gains are seen in financial markets, these benefits do not actually bring any kind of respite from the day-to-day hardships of poverty. The recent gains in American wealth have been largely concentrated among the richest members of society, raising “the bar for success while leaving fewer haves and more have-nots.”

The economy as a whole has managed to get back to its pre-recession figures without bringing back the same levels of employment, home ownership, home value, or income inequality. Companies have been unwilling to hire for a variety of reasons, not the least of which is uncertainty about which way Washington’s budget struggles will play out. Without knowing what tax rates will be, it can be hard for a business to make any kind of large expenditure determinations. At a time when calls have been renewed to raise the minimum wage to be in line with inflation, these new figures from the Federal Reserve should work to galvanize support for policies which work to reduce poverty using the powerful engine of capitalism—an approach which is as American as baseball and apple pie.

–  Jake Simon

Source: US News

According to Oxfam, an international NGO committed to fighting poverty, the money made by the world’s top 100 billionaires in the last year alone could end global poverty four times over.

Oxfam asserts that the wealth amassed by the world’s richest is encouraging inequality and deepening a divide between those in abject poverty and the rest of the world – making it even more difficult to end poverty once and for all. They assert that the world’s rich are getting richer at the expense of those in extreme poverty, and that the $240 billion that was collected in 2012 by the wealthiest 100 billionaires could end global poverty four times over.

Although a few American billionaires have already pledged to donate much of their wealth back into the public sphere, including Bill Gates and Warren Buffet, the exact figure has not been disclosed, and foreign billionaires have not made any such pledge to match those given by Gates and Buffet.

The Chief Executive for Oxfam GB Barbara Stocking cites a report that will be unveiled at the upcoming World Economic Forum. The report, titled “The Cost of Inequality: How Wealth and Income Extremes Hurt Us All”, found that within the last 20 years, the wealthiest 1% have increased their wealth by 60%. Stocking points out that this trend has led to extreme poverty as low-income earners have taken home an even smaller share of the total income as the rich get richer, which has also stifled growth and investment.

The report states that this trend has affected even Westernized countries, citing levels of high income inequality in the UK and South Africa. The report points out that top earners in China own over 60% of the overall income, similar to the situation in South Africa, where income inequality has risen even past levels seen at the end of apartheid.

Income inequality also persists across the United States, where the portion of total national income going to the top 1% has doubled within the last 30 years – the top 1% now take home 20% of the national income.

Oxfam is urging global leaders to committ to lowering income inequality levels to those seen in the 1990s, and Stocking asserts that doing away with tax havens, which reportedly would create $189 billion in additional tax revenues, would help alleviate the problem.

The World Bank and International Monetary Fund have taken a similar stance, saying that income inequality hinders development and growth, and say that they aim to fund projects that limit the perpetual cycle of inequality.

Christina Mattos Kindlon

Source: The Guardian