In what’s known as a poverty trap, people of developing countries are falling into a pit of poverty and having little-to-no luck climbing out of it. The reason this happens is because, apart from having an income too low to live off of, people living in such poverty cannot afford to pay for basic things that are taken for granted in first world countries, keeping them stuck in a vicious cycle of poverty. In my analysis, I will highlight several examples of why it is hard to escape poverty in developing countries, such as inability to pay for basic health services which results in premature death by easily preventable diseases, lack of funds for education leading to illiteracy, and general malnutrition as a constant detrimental force. I will also explain how a country can escape a poverty trap, and how this would be beneficial in the expansion of the number of Walmart’s global consumers.
Developing countries have difficulty fending off diseases that are otherwise easy to avoid in developed countries. Getting flu shots and childhood vaccines are treatments that, in America, are expected. Doing so prevents the chances of a child contracting the flu and other more serious diseases and viruses, but not everyone can afford these vaccines. Although it is clear that a typical American has enough money to pay for these treatments, or more likely they have a health care plan to cover the costs, that is not the case in developing countries. The poverty that people in developing countries live in prevents them from even the most basic of health precautions. The assumed child vaccinations in America are not financially prioritized in these third world countries, leading to a high infant mortality rate (Rodgers, 2009, p. 5). The spread of diseases is difficult to stop when there is no income to pay for its halt. This issue keeps the country’s population relatively low, preventing growth of industries due to lack of workers. Those that can work are at a higher risk of contracting harmful illnesses because of the poor work conditions that are common in developing countries (Rodgers, 2009, p. 14).
Living in poverty creates a necessity to prioritize what the families spend their little money on. Naturally, the most important thing to buy is food. However, with such little money comes very little food. People living in poverty traps often suffer from malnutrition. Starvation is an issue in many countries, even developing ones, but it is an even greater epidemic in those countries that suffer the inescapable low-income trap. Being undernourished makes the contraction of sickness and disease even more likely because it affects the strength of the immune system. According to Rodgers, malnourished and sick people are less productive, and vulnerable people avoid risk (2009, p. 22). Impoverished people do not have the income to pay for any sort of healthcare, and becoming sick just makes them more incapable to work and make more money.
With the inclusion of this second issue of poverty, starvation, we can see just how the poverty trap works. Not having enough money to consume proper amounts of food leads to a risk of sickness and disease. Sickness and disease require money to get treated, which the impoverished do not have. This is, in itself, just an example of one small cycle within the larger scheme of the poverty trap.
Illiteracy has a huge impact on being stuck in a poverty trap. Not having enough wealth to pay for an education is a concept not completely foreign to Americans, although public education is meant to be available for everyone. In developing countries, education is put on the backburner. The inability to read makes finding new jobs and opportunities nearly impossible for those living in third-world countries. Another problem that comes with a lack of education is child labor. Because children do not go to school, they are put to work at a very young age. This also helps them earn money for their family, but unavoidably places them in high-risk environments. For example, according to Rodgers, brick factories are a major source of deadly fumes and cause chronic respiratory problems in children who work there (2009, p. 14). This harmful environment, again, plays into the concept of lack of healthcare and impoverished people’s inability to help themselves with even the most basic of health issues.
Although these issues seem difficult to solve, there is a way to help. External debt that is uncontrolled and unsustainable is a primary factor in keeping impoverished countries impoverished (International, 2002, p. 207). However, increased aid from wealthier countries can be a key aspect in resolving the poverty trap of underdeveloped ones. If an impoverished nation is given money to help get them on their feet, though, the donating country will expect to be repaid for their loan. According to The Least Developed Countries Report 2002, highly indebted poor countries, as well as creditor countries, can get locked into a repetitive pattern of perpetual economic adjustment to achieve the ever-elusive goal of external viability (International, 2002, p. 211).
The developing country often has a very flawed economic system, and the money ends up being spent in the wrong way. This prevents the impoverished country from actually making money, thus preventing them from paying back the developed nation, thus plunging them right back into a debt that they never truly escaped. To fix the problem, developing countries need to adjust their internal and institutional issues in order to smartly spend the money they’re given.
One way to help the countries in poverty traps is to help them create jobs with healthy, reliable work environments. If the people can accrue more wealth, they’ll spend more, and international trade will, in turn, become a larger necessity to provide for the growing wealth of the country’s economy. This is where Walmart can come into play. According to the Walmart 2012 Global Responsibility Report, Walmart and its associates are committed to operating globally and giving back locally; in 2012, they gave $86.1 million in money and other resources to international organizations and nations in need (2012, p. 14). It is also important to note that they have goals of increasing how much they give, and improving their quality of giving. There are four focus areas: education, workforce development, environmental stability, and health and wellness (Walmart, 2012, p. 15). The success of all four of these pillars are absolutely imperative to a thriving nation. I previously touched upon three of those four pillars when explaining the difficulties of escaping the poverty trap.
With all of that being said, if Walmart were to build stores in third-world nations, they could make some serious economic improvements for the respective economies. Creating stores would create a need for workers. Walmart is known for creating a healthy work environment which many developing nations lack (Walmart, 2012, p. 30). Citizens would earn money, receive health benefits, and be given the opportunity to improve their quality of life. Offering the services of Walmart in developing countries would expand the company’s global outreach, bringing in many new customers. Placing storefronts in those new-to-Walmart nations would also give the company the opportunity to aid the local communities based off of their four pillars of improvement, helping the business reach its global responsibility ambitions and goals.
In summation, although global poverty has decreased over the past years, poverty traps are still a truly detrimental truth for many developing nations. Lack of basic health services, malnutrition, and illiteracy (to name just a few) are large issues that keep impoverished nations at their lowest points. Insufficient income in these nations prevents the citizens from making any improvements on their quality of life, and the economy remains stagnant. The cyclical nature of enhanced debt relief by wealthier nations and the poor nation’s inability to pay back the debt is one that is increasingly difficult to manage. However, there is some optimism to be had. Based off of Walmart’s desire to give back to the global community, building new stores in developing countries would directly impact their stated goals of giving back and making a difference. In return, the developing nations would be given an opportunity to earn money at a healthy work environment. The increased and steady income would allow them to spend money on basic healthcare services, food, and education, which would directly affect the overall state of the economy of the nation as a whole.