The principle of the vicious circle of savings income in the level of UDCs' and
remains low, which leads to lower levels of investment. Low investment leads to low productivity and income leads. According to Professor Nurkse. "It will work, and poverty implies
care circular constellation of forces to react to each other in such a way as to
keep a poor country. He is an example of a poor man said cited. A poor man who does not get enough food makes it vulnerable. His
performance as a result of the weakness of the lower income as reduced as a
result and the poor. "
The vicious circle of poverty solution:
Broadly, these two methods to solve the vicious circle of poverty.
Our detail in the description of these two aspects.
Side solution for delivering vicious circle:
Increase in Saving
In these countries, the vicious circle ;: attempts to get rid of supply should
be made in order to increase the efficiency can be encouraged to invest in
productive channels. To increase savings, spending on weddings, social events,
etc. should be minimized. In UDCs, voluntary savings possibilities are very low. Thus, in this regard, the Government. Intervention is
necessary. Govt. This can increase the efficiency of monetary policy by the
changes. Govt. May impose heavy taxes on luxury goods. In addition, it can
enhance the role of indirect taxes. Thus, Govt. The tax system can reduce
consumption by modifying.
There is not much advantage to break the vicious cycle of poverty by increasing
productivity, saving cost-saving programs. Short-term and long-term investment
policies should be coordinated. Through short-term investment, people can get
the necessary equipment to fair prices, which will have a favorable effect on
their skills. In addition, short-term investments, multipurpose projects,
chemical fertilizers, as well as investment in the creation of iron should be
promoted properly. In UDCs, can provide appropriate monetary and banking
policies to encourage facilitation and encouragement of small savings which
should be adopted.
Vicious circle of demand side solutions
UDCs to address the demand side of the vicious circle, people can get to the
market limit investment incentives should be expanded so. In this regard, law
professor Nurkse balanced development of doctrine. According to the principle of
balanced development, investment and demand can be met by the Department of the
sector should be done in every sector of the economy. Thus, the larger the
increase in demand and market incentives would lead to such investment. On the other hand, Hirschman, Singer, like Fleming, experts do not
consider fair policy virtually balanced economic growth. According to him, would
be more useful unbalanced development policy. In UDCs, is likely to increase the
demand and the need to increase financial revenue. The plan is adopted UDCs rate
development policy. Accordingly, further investment in the public sector, due to
increasing the supply of money. Monitory due to the increase in revenue,
expanding the market size. By increasing these exports tried to expand the
Other Solution to vicious Circle of Poverty
The main obstacle to economic growth in underdeveloped countries
underdevelopment of human power. Several proposals can be made to increase the
manpower skills. For example, in these countries, education, technical knowledge
and management training should be extended. These countries can enhance the
performance of health care workers should be increased to. The transport and
communications should be developed.
Criticism As an obstacle to economic growth many economists do not
consider the vicious cycle of poverty. According to Professor Hirschaman lack
the ability to decide the core issue of economic development in these countries.
The real problem is the lack of capital. According to Professor Lewis "lack of capital to these
countries is not realized during the period, ten percent of the national income
can be easily stored for economic development." Therefore, experts are weighted
in those countries during the vicious circle of poverty, according to
economists. In addition, Professor Bailer, is also critical of the vicious cycle
of poverty on such grounds.