Vicious Circle Of Poverty Essay

CHAPTER 2
LITERATURE REVIEW

2.1 Introduction
This chapter will discuss about the theory used to support the studies done by the researchers. Besides that, there are few descriptions related to the previous studies done by scholars that will be used to support this research.

2.2 Description/Definition of Concept
2.2.1 Theory of the Vicious Circle of Poverty
‘Theory of the Vicious Circle of Poverty’ is introduced by Ragner Nurkse (1952). Nurkse, (1952), proposed that “a country is poor because it is poor”. It implies that poverty exists in the country which is not developed and financially unstable. According to this theory, a circular relationship portrays both the demand and supply side of problem of the capital formation of economically

Therefore many rural-based poverty eradication and income redistribution strategies have been undertaken although it was in critical stage. Mainly, there were two strategies that were implemented in order to reduce this incidence of poverty such as the plan for better and more efficient services in education. Next, it focuses in providing greater job opportunities in the secondary sector (manufacturing, industry and others) and tertiary sector which targets more towards services. Thus, the role of public sector is essential towards creating a better environment and providing infrastructure to private sectors. This is because, private sectors functions as a major tools for the growth of Malaysian economy, (Ragayah, 2008).
According to Xavier, & Ahmad, (2011), as a developing country Malaysia is not capable to compete with high value-added economies. The progress of Malaysia is far behind in research and development compared to its rivals. Although many economic policies have been taken, yet income inequality still gets broader. The author criticizes that this can be due to wage growth that has not been maintained together with the economy growth in Malaysia. Besides that, this article has ignored the issue of poverty and mainly discussed about income disparity and economy growth in

In rural poverty the poor are discovered staying in disproportionate level in rural areas in which they are predominantly focuses to agriculture and primary activities as their main source of income. The major component of poor people in the world is women. Women are considered poor compared to others because of their lower ability and potential of earning higher incomes compared to men. In addition, women are more likely in getting low-productivity jobs with minimum wages and less social security benefits. As men are given more priority in job prospects, this will definitely leads to income inequality among men and women where the economy growth will be less productive. Furthermore, poverty and income inequality among minor ethnics and indigenous populations are from those facing major economy, political and social discriminations. Their chances of being malnourished, unemployed, poor health conditions and illiterate are higher compared to others as they are in extreme level of poverty and disparity of income. Other than that, one of the main studies in developing countries is between economic growth and income distributions because growth seems to be contradict with income distributions and finally results in higher inequality and failure in poverty elimination,