Causes of Poverty in the Least Developed Countries (LDCs)

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Jan 4
6 min read

Poverty is a major worldwide issue continuously being battled by organizations such as the United Nations. Poverty is described as not having the financial ability to be able to buy basic necessities such as food, shelter, or proper health care facilities. “Nearly half of the world’s population currently lives in poverty, defined as income of less than US $2 per day, including one billion children. Of those living in poverty, over 800 million people live in extreme poverty, surviving on less than US $1.25 a day”. (United Nations, n.d.)

Least Development Countries (LDC) are low-income generating countries, which are usually facing huge economic crises and are very vulnerable to economic disasters.

“There are currently 46 countries on the list of LDCs which is reviewed every three years by the Committee for Development (CDP)”. (United Nations, n.d.)

Poverty in LDCs is common as people have lower income and hence lower purchasing power, prohibiting them from buying necessities for their survival. The causes of poverty in itself are a broad debate while narrowing it down towards LDCs it gets a little less complex. Although there is adversity in the opinions shared by the professionals on the causes of poverty, some state that it is because of the corrupt and authoritarian government as they steal the money that is meant to be spent on the betterment of the economy and spend it for their own private benefits, while others believe that economic hazards, natural hazards and economic policies on poverty, trade, and other problems have a major say in the development of the poor countries. In this essay, we will critically analyze the debate and thoughts of professionals on which reason has a more major role in the destruction of LDCs. Corruption is a major setback in the development of the economy. Corruption refers to the concept where a powerful person or institute such as a prime minister or armed forces steals or hides the money that is meant to be used upon the general public for the economic development and is used illegally for private benefits such as major investments. This forces countries towards the economic disaster, especially of the LDCs as they are already tackling a lot. The sources that are meant to be used on programs such as infrastructure or education improvement are diverted for private use hence countries face themselves in deficit and debt. For example, Sani Abacha, a Nigerian president was levied with corruption charges throughout his reign.

“Sani Abacha was a Nigerian army officer and dictator who served as the president of Nigeria from 1993 until his death in 1998. His five-year rule was shrouded in corruption allegations, though the extent and severity of that corruption was highlighted only after his death when it emerged that he took between US$3 and $5 billion of public money.” (Haldevang, 2019)

Another example is Venezuela, which was considered one of the richest countries in South America but led to an economic disaster due to corruption by the powerful.

“Starting in 2014, members of the country's elite and public officials embezzled more than $1 billion from Venezuela's state-owned oil company. The scheme exploited the country's foreign exchange system.” (Saudelli, 2019)

As seen, poor countries have the most corruption found in them, partially this is because of the disturbed law and order and more power amongst the leaders and authoritarian leaders rather than the general public. The countries in Sub-Saharan Africa are majorly affected by corruption, Democratic Republic Congo (DRC) is considered to be the one the poorest countries and faces poverty day by day due to political instability and corruption.

“Most people in DRC have not benefited from this wealth. A long history of conflict, political upheaval and instability, and authoritarian rule have led to a grave, ongoing humanitarian crisis.”

“DRC is among the five poorest nations in the world. In 2022, nearly 62% of Congolese, around 60 million people, lived on less than $2.15 a day. About one out of six people living in extreme poverty in SSA lives in DRC.” (World Bank, 2023)

An alternative view of some economists and analysts is that global factors such as income inequality, wage discrimination, and policies on free trade, etc highly contribute towards the poverty disaster of LDCs. Income inequality is a major contributor, “The richest 10 percent today snap up 52 percent of all income. The poorest half get just 8.5 percent” (Stanley, 2022)

This forces income to be restricted amongst the richest while investments and economic growth can be considered a monopoly. Furthermore, policies made on international trade can effect a countries economic situation. It is evidently seen that LDCs are majorly dependant on the exports of their primary commodities as many of these countries living around primary sector. Prices of these commodities face fluctuation and cause an instable market, which in return makes the economic situation of LDCs much more complex. In addition to this, international trade liberalism can make an impact , if policies on international trade are much restricted and have limitations such as taxes , quotas and embargoes. This can make a market very unproductive for the LDCs. Moreover, climate change is another important factor. Floods, cyclones and tsunami are some severe examples of climate disasters. These disasters create economic chaos, especially in poor countries, where the rescue, communication or health system is not up to the required level. This ultimately puts a financial pressure on the LDCs and either they are forced to shift their expenditure pattern towards rehabilitation, or they are forced to take a loan, which worsens their economic condition. Lastly, poor level of education and health system is quite common amongst the LDCs , this keeps the literacy rate below the required level hence LDCs find themselves stuck in the poverty cycle as a huge proportion of their young population is left unskilled and unproductive.

Corruption has indeed a significant contribution towards poverty in LDCs , the same is the case for the stated global factors. Corruption prohibits the governments ability to flourish economically and forces it towards consumer exploitation. Corruption is unethical and illegal as it exploits the rights of poor people for the betterment of the rich. Similarly, global factors such as unequal distribution of wealth, international trade agreements also limit the capabilities of LDCs. In most cases LDCs are facing both of these issues simultaneously hence they find themselves stuck in the poverty cycle with no way out. It is this reason that ending poverty in LDCs is quite complex as the government find themselves tackling with the corrupt leaders as well as the global factors. There is no doubt in concluding that corruption as well as global factors both have a severe impact on the poor economic condition of LDCs. For a country to prosper economically, there must be steps made which not only prevent corruption but also have a positive solution towards the global factors that are presented. Global factors can be faced by making policies on international trade regulations such as promoting free trade or having better relations with neighboring countries. Taxation policies can be implemented on the rich to make the wealth distribution much equal. Infrastructure programs can be launched which create immense job opportunities. Moreover, promoting industrialization with subsidies and financial help to industrialists can help boost economic conditions. Similarly, maintaining law and order and implementing strict actions against corrupt people can help reduce corruption. While it seems quite difficult to end corruption in LDCs as the powerful are indeed corrupt themselves and have a major say in the implementation of the law, it is as important to lower the corruption level for LDCs to prosper economically.