Pakistan is a developing country and faces many problems like poverty, famine and corruption. But the most common of these problems faced by Pakistan is poverty. According to the Asian Development Bank (ADB), 38% of Pakistanis live below the poverty line. Poverty in Pakistan affects all sections of population such as peasants, workers, traders and industrialists etc. However its effect on peasants is more than others as they are badly affected by rise in prices of agricultural products due to increased demand and unavailability of resources at cheaper rates.
About 85% of Pakistani population belongs to rural areas which means that most people depend on agriculture for their livelihoods. Since the total amount of land available with individuals or groups is very little so they cannot produce enough food for their families. So they have to purchase it but due to poverty they cannot afford the high prices of the agricultural products so instead of spending on other necessities, people spend more on food. Moreover, due to continuous increase in prices of fertilizer and other expensive inputs, there has been decrease in production of food grains which further increases the prices. This vicious cycle continues.
On one hand, peasants are affected by increased cost of production while on the other hand, government is taking various steps for initiation of big projects like construction dams which requires huge capital expenditure that poor farmers do not possess. This all provides a perfect ground for exploitation by middlemen who buy produced materials at very low price from peasants and sell them at higher price in urban areas making tremendous profit. In this way, middlemen exploit peasants and make them even poorer. So in a nutshell, poverty is the root cause behind all problems faced by Pakistan.
Generally speaking, income distribution refers to the way in which the population is divided into a hierarchy of groups according to their income. Inequality in income distribution can be measured by using Lorenz curves and Gini coefficients. The Gini coefficient, a statistical method for measuring income inequality, the higher the number the more unequal the society is. There are certain types of income inequality, such as gender inequality, wealth inequality, age discrimination and disability have been included into other kinds of social inequality, while others have been considered in another classification.
Can the poor rise out of poverty? The answer is yes, despite all odds. Pakistan was ranked at number 70 in the Human Development Report, which is a measure of quality of life.
There are thousands upon thousands of microfinance institutions who offer small loans with tiny interest rates so business owners can start up their own businesses and work towards prosperity, but 60% percent never receive these loans because they do not have collateral or cannot supply information on the location of their business.
There are also charities that give rice or food to the poor, but these charities cannot make a large enough impact for this to be sustainable. Instead of wasting energy trying to find solutions that will not work, they can help implement systems that can actually help people move out of poverty. The following are 3 effective ways the government and charities can help poor people in Pakistan become prosperous.
1) Free education is one of the most efficient investments governments can make in their economy. A World Bank report stated that the correlation between GDP per capita and literacy rate is 0.65, which means that if Pakistan’s literacy rate were to increase by 10%, its GDP per capita would rise by 6.5%. Moreover, it stated that for each additional year of schooling in a poor country, economic growth rates are raised by 1-2 percent or more.
2) Free public healthcare would reduce the financial strain that prevents poor people from seeking medical attention when they need it.
3) The number of jobs available is insufficient to accommodate population growth. Unemployment has been cited as one of the main reasons why some young adults turn towards terrorism and other illegal activities. In order to produce more jobs, economic growth must occur. Economic development can be initiated by the manufacturing sector which has a high multiplier effect throughout the economy because most of what it contributes is spent rather than saved.
In conclusion, it can be seen from above that poverty is not inevitable due to natural causes but is rather a result of socio-economic factors, such as unemployment and illiteracy. In order for poverty rates to decline worldwide, social institutions must ensure universal access to healthcare and education while labor markets should create sufficient number of jobs by investing in manufacturing sectors. This would promote economic growth which would lead to greater employment opportunities and increase tax revenues.
