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Jun 12

What are strength and weakness of nurkse vicious circle of poverty?


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Jun 12

The Nurkse vicious circle of poverty, formulated by Ragnar Nurkse, is an economic theory that explains the perpetuation of poverty in developing countries. It suggests that poverty creates conditions that reinforce and perpetuate poverty, leading to a vicious circle of poverty. While the theory provides valuable insights, it also has its strengths and weaknesses. Let's discuss them:

Strengths of the Nurkse vicious circle of poverty:

  1. Comprehensive analysis: The theory offers a comprehensive analysis of the interrelated factors that contribute to the persistence of poverty. It considers a range of economic, social, and institutional factors that form a complex web of causation.
  2. Emphasis on structural factors: The theory recognizes that poverty is not merely a result of individual shortcomings but is primarily caused by structural factors. It focuses on factors such as low savings, inadequate capital accumulation, technological backwardness, and limited market access.
  3. Feedback mechanisms: The theory highlights the presence of feedback mechanisms that amplify poverty. For example, low savings and investment lead to limited capital accumulation, which in turn hampers productivity and perpetuates poverty. This emphasis on feedback loops helps understand the self-reinforcing nature of poverty.

Weaknesses of the Nurkse vicious circle of poverty:

  1. Limited focus on external factors: The theory places significant emphasis on internal factors within a country while paying less attention to external factors that influence poverty. Factors such as global trade policies, international debt, and unequal power dynamics between countries can have a profound impact on the vicious circle of poverty.
  2. Neglect of cultural and political factors: The theory tends to overlook the role of cultural and political factors in perpetuating poverty. Factors like corruption, political instability, social inequality, and cultural norms can significantly affect a country's ability to break free from the vicious circle of poverty.
  3. Lack of concrete policy prescriptions: While the theory provides a framework for understanding the perpetuation of poverty, it does not offer clear and actionable policy prescriptions. It does not provide specific strategies for breaking the vicious circle, making it challenging to implement effective poverty alleviation measures based solely on the theory.
  4. Overemphasis on capital accumulation: The theory places a strong emphasis on capital accumulation as the primary driver of development and poverty reduction. While capital accumulation is undoubtedly important, it does not fully account for other factors such as human capital development, social welfare, and equitable distribution of resources, which are crucial for sustainable poverty reduction.

In conclusion, the Nurkse vicious circle of poverty offers a valuable framework for understanding the self-perpetuating nature of poverty in developing countries. However, it has limitations in its scope and policy implications, as it neglects external factors, cultural and political dynamics, and fails to provide concrete policy prescriptions beyond capital accumulation.

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