POVERTY REDUCTION STRATEGY

Poverty Reduction Strategy

Poverty Reduction Strategy

Introduction

In recent years, ambitious targets to reduce poverty in the world in general and Canada in particular have been approved by the international community. A renewed focus on increasing economic growth in the developing world has also emerged. Growth is clearly an important condition for large-scale poverty reduction, at least provided that the poor can benefit from these increases in growth. Creating opportunities for economic progress and empowering the poor to participate in this process are widely recognized mechanisms to achieve these objectives (Dercon, 2006, 136).

This process of growth and poverty reduction has to take place in a risky environment in Canada where shocks often threaten any gains in the living standards of the poor. Natural disasters, drought, conflict, and insecurity continue to disrupt local economies. The high incidence of health problems hinders many of the poor to take advantage of opportunities. Economic shocks, including currency crises, commodity price shocks, and the contagion effects of worldwide recession, undermine growth and contribute to continuing high poverty (Dercon, 2006, 137).

The strategies employed by households and individuals to respond to risk, come at a cost in terms of long-term earnings. Low risk activities often give a lower return. Keeping liquid savings to cope with shocks may imply that fewer productive assets are acquired, again resulting in lower incomes. In the long-run, lower incomes are obtained, and this may be a cause of poverty persistence. In this situation, the lack of insurance results in an efficiency loss, while under reasonable circumstances any initial inequality will be exacerbated due to the missing insurance market (Dercon, 2006, 138).

Ontario is the largest economy of Canada and one of the most prosperous jurisdictions in the world. Yet nearly one in every six children is growing up in poverty and the gap in income between rich and poor families is at a record high. The poverty rate for children and families remains as high as it was 20 years ago. Each month 132,000 children in Ontario rely on food banks. (Statistics Canada, 2007) Someone working full time, full year at minimum wage cannot earn enough to live out of poverty.

Poverty and Income inequality are one of the high causes for many citizens to become homeless. First of all before proposing an economic solution for this problem lets identify what poverty is. "Poverty statistics in Canada's low-income cut-offs (LICOs) represents the level at which people spend so great a proportion of their income on basic necessities such as food and rent that they are living under "straightened circumstances". The LICO varies by family size and community." The economic solution that is going to be proposed in this paper is that let more private corporations into the field and eliminate government out of citizens lives. For example, In Canada about 16% of the population is under poverty (Statistics Canada, 2007). In Ontario alone about 14% of the population is under poverty (Statistics Canada, ...