Poverty is a vicious cycle. It continues over generations and generations and perpetuates itself. The major correct way to fix the perpetuating cycles of poverty is by countering poverty by economic growth.
Economic growth is synonymous with development. Development of cities, infrastructures, localities and development of human resources and human capital is necessary for cutting down poverty.
Why Economic Growth is Important?
Economic growth is necessary for a number of reasons :
Economic growth helps reduce poverty
It has been consistently seen that a rise in average incomes in a country leads to a reduction in poverty. Sustained growth of the country helps cut poverty down.
About 10% increase in incomes has been correlated with a 20-30% decrease in poverty. In a study conducted, it was found that a one per cent increase in per capita income reduced poverty by 1.7 per cent.
Since the 1980s, India has experienced considerable reductions in poverty, with rates that accelerated into the 1990s. This has a close connection to India’s outstanding track record of progress during this time.
Economic growth creates jobs
As the economy develops, there is greater generation of jobs and employment. More and more people get employed and earn decent incomes and raise their standards of living.
Employment expansion has been essential to achieving higher growth. Since the international economy has experienced rapid expansion over the last ten years, most people who are of working age are now employed.
Higher Human Development Occurs
There is not just a material aspect of economic growth. Growth also leads to fulfillment of values that people cherish. Freedom and higher standards of living, greater opportunities arise from the higher growth.
There is a vicious cycle of prosperity and happiness that gets created with higher development and growth of the economy.