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THE ECONOMIC MEANING OF THE CONCEPT OF POVERTY AND ITS
THEORETICAL FOUNDATIONS
"Andijan State Technical Institute" Department of "Economics"
PhD student
Djalilova Shaxlo Ismoiljon kizi
Andijan Region, Andijan City, Mashhur Street, 8
Abstract:
This article delves into the multifaceted concept of poverty, examining its economic
significance and the theoretical frameworks that underpin its understanding. By exploring
various definitions and measurements of poverty, we highlight how economic theories, including
classical, neoclassical, and Marxian perspectives, inform policy approaches and interventions.
The analysis also addresses the limitations of purely monetary measures, advocating for a
broader view that encompasses multidimensional poverty indicators such as health, education,
and living standards. Furthermore, we discuss the implications of poverty on economic growth
and social stability, suggesting that a comprehensive understanding of its economic meaning is
crucial for developing effective poverty alleviation strategies.
Key words:
poverty, economic significance, theoretical frameworks, multidimensional
indicators, economic growth, social stability, policy interventions.
"Andijon davlat texnika instituti" “Iqtisodiyot”kafedrasi tayanch doktoranti
Djalilova Shaxlo Ismoiljon qizi
Andijon viloyati, Andijon shahri, Mashhur ko’chasi 8-uy
Annotatsiya:
Ushbu maqola qashshoqlikning ko'p qirrali tushunchasini o'rganadi, iqtisodiy
ahamiyatini va uni tushunishga asos bo'ladigan nazariy ramkalarni ko'rib chiqadi.
Qashshoqlikning turli ta'riflari va o'lchovlarini o'rganish orqali iqtisodiy nazariyalar, jumladan,
klassik, neoklassik va marksistik nuqtai nazar, siyosat yondashuvlari va aralashuvlarni qanday
ma'noda ta'sir etishini ta'kidlaymiz. Taqdimot shuningdek, faqat moliyaviy o'lchovlarning
cheklovlarini muhokama qiladi, sog'liq, ta'lim va yashash sharoitlari kabi ko'p qirrali qashshoqlik
ko'rsatkichlarini o'z ichiga olgan kengroq nuqtai nazarni taklif qiladi. Bundan tashqari,
qashshoqlikning iqtisodiy o'sish va ijtimoiy barqarorlikka ta'sirini muhokama qilib, uning
iqtisodiy ma'nosini tushunishning samarali qashshoqlikni kamaytirish strategiyalarini ishlab
chiqishda muhimligini ta'kidlaymiz.
Kalit so'zlar:
qashshoqlik, iqtisodiy ahamiyat, nazariy ramkalar, ko'p qirrali ko'rsatkichlar,
iqtisodiy o'sish, ijtimoiy barqarorlik, siyosat aralashuvlari.
"Андижанский государственный технический институт" Кафедры "Экономика"
докторант
Джалилова Шахло Исмоилжон кизи
Андижанская область, город Андижан, улица Машхур, дом 8
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Аннотация:
Эта статья исследует многогранную концепцию бедности, рассматривая её
экономическое значение и теоретические рамки, которые лежат в основе её понимания.
Изучая различные определения и измерения бедности, мы подчеркиваем, как
экономические теории, включая классическую, неоклассическую и марксистскую
перспективы, влияют на политику и интервенции. Анализ также касается ограничений
чисто денежного измерения, выступая за более широкий взгляд, который охватывает
многомерные показатели бедности, такие как здоровье, образование и уровень жизни.
Более того, мы обсуждаем последствия бедности для экономического роста и социальной
стабильности, утверждая, что комплексное понимание её экономического значения имеет
решающее значение для разработки эффективных стратегий по борьбе с бедностью.
Ключевые слова:
бедность, экономическое значение, теоретические рамки, многомерные
показатели, экономический рост, социальная стабильность, политические интервенции.
Introduction
In the development of the national economic system, one of the main priorities of the economy is
to stimulate active economic growth in order to ensure its sustainable level. The sustainable
development of the country's economy is directly dependent on the positive level of the main
macroeconomic indicators: real growth of gross domestic product (GDP), inflation, exchange
rate, unemployment rate, balance of payments, etc. The unemployment rate, which is one of the
main macroeconomic indicators mentioned above, is considered one of the factors causing
poverty.
Poverty means the lack of sufficient financial resources, which people, households and society as
a whole do not have the means to purchase the basic things necessary for survival or achieving a
bright future. The lack of such means can lead to a struggle to purchase food, clothing, shelter
and medicine.
Poverty has different interpretations and opinions in different countries. In general, in world
experience, poverty is a concept that describes economic conditions such as the lack of minimum
needs, work capacity, and the ability to continue one's life for an individual or social group.
There are several limits to determine this, and a certain standard is set for the population to live a
decent life. If a person's income (or expenses) is below the established standard, he is considered
poor.
The poverty line is determined by assessing the expenses or income received to purchase the
minimum daily amount of food and necessary products, as well as the family's ability to use
goods and services in a certain group. For example, according to the poverty measurement
methodology of the State Statistics Committee, people who consume (spend) less than 2100 kcal
per day in Uzbekistan are considered poor.
Material and methods
Income inequality and poverty are the main focus of scientific research by scientists from leading
universities in the world. For example, scientists such as Muhammad Shahbaz and Shamim, who
are research scientists at the Beijing Institute of Technology, put forward the following theories:
Poverty is a concept related to the lack of resources and the inability to live. Poverty includes a
wide range of factors, including insufficient food and housing, poor health and problems, lack of
health care, inability to offer services in the labor market, and political incompetence[1]. In
addition, the scientific works of Nobel Prize winner Amartya Sen also explore knowledge such
as measures to reduce poverty, effective policies to increase population income, and reforms that
increase population well-being. Amartya Sen's perspective on poverty reduction is based on the
idea that poverty is more than just a lack of income; it is the deprivation of the basic capabilities
that enable people to live a full life. He argues that the analysis of poverty should focus not only
on income or consumption, but also on what people can do and be (their "functions" and
"capabilities"). Sen's approach emphasizes the importance of social structures and individual
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agency in addressing poverty, and advocates policies that expand people's freedoms and
opportunities[2].
For their research on poverty reduction in the world, American Michael Kremer and Indian-
American Abhijit Banerjee and his wife implemented innovative ideas to identify and completely
eliminate it[3].
American economist Angus Stewart Deaton won the Nobel Prize in 2015 for his analysis of
consumption, poverty, and welfare. He analyzed the relationship between the choices each
consumer makes, the income of the population, and the level of consumption of the population in
difficult times, as the most important factors for the formation of economic policies that ensure
economic development and reduce poverty[4]. The issue of poverty was studied by Danish
scientist Gesta Esping-Anderson[5], American scientist Jeffrey Sachs and other scientists in
connection with the problems of the existing socio-economic system and as a problem of
population well-being[6].
In contrast, structural theories explain poverty in terms of living conditions: unemployment,
underemployment, poor education, and poor health. As is well known, the classical approach to
poverty is centered around the works of prominent scholars such as Adam Smith and David
Ricardo. In classical economics, poverty is viewed as the result of poor choices made by
individuals and individual households. For example, poor people are viewed as those who are
unable to provide for themselves, which is detrimental to their productivity. Poor choices made
by individuals are viewed as the main factors that lead people to poverty or to poverty traps.
However, classical economists agree that different genetic predispositions can be potential
causes of poverty among people. Therefore, according to classical economists, there is a
minimum threshold at which government assistance is necessary to help the poor and prevent
poverty[7].
Economic development and poverty reduction are closely related and both are means to improve
lives, but the development of a country does not always lead to the complete elimination of
poverty. Inequality of thought, that is, inequality in development, is a major factor[8]. According
to the neoclassical view, inequality is not a problem because it is difficult to avoid, but rather
modernization, industrialization and development lead to the reduction of inequality.
Unemployment and underemployment are at the root of poverty. For the poor, labor is often the
only asset they can use to improve their well-being. Therefore, creating productive employment
opportunities is essential for poverty reduction and achieving sustainable economic and social
development. Providing decent jobs that provide income and opportunities for the poor,
especially women and youth, is crucial.
Rapid economic growth can potentially generate high rates of productive and gainful
employment expansion, which can lead to poverty reduction. Given the importance of
employment for poverty reduction, job creation should be central to national poverty reduction
strategies. Many employment strategies are often linked to agricultural and rural development
and include the use of labor-intensive agricultural technologies: the development of small and
medium-sized enterprises, the promotion of micro-projects in rural areas. Many strategies
promote self-employment, non-agricultural employment in rural areas, targeted employment
generation activities, microfinance and credit as tools for employment creation, skills
development and training.
The social perspective on development emphasizes the view that decent work is the best way to
achieve socio-economic development, poverty eradication and personal well-being. Decent
employment opportunities contribute significantly to achieving internationally agreed
development goals, in particular the Millennium Development Goal of halving extreme poverty
by 2015[9].
Results and Discussion
In his Address to the Oliy Majlis of the Republic of Uzbekistan on January 24, 2020, the
President of the Republic of Uzbekistan Shavkat Mirziyoyev stated that “Poverty reduction
means awakening the spirit of entrepreneurship in the population, fully realizing the internal
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strength and potential of a person, and implementing a comprehensive economic and social
policy to create new jobs.” He emphasized the need to continue the large-scale socio-economic
reforms that have been carried out over the past three years based on the principle of “Human
interests above all else.” The report touched upon the need to increase the well-being of the
population, strengthen its social protection, and also noted that the majority of the population in
the regions, especially in rural areas, does not have sufficient sources of income, and that, like in
any country, there are low-income groups in Uzbekistan, noting that, according to various
estimates, the low-income groups make up approximately 12-15 percent of the population[10].
Currently, it is believed that poverty reduction can be achieved by providing practical assistance
to the needy segment of the population by increasing transfer payments, i.e. social benefits and
pensions. This, in turn, is a one-sided solution and cannot fully solve this problem. Poverty
reduction means awakening the spirit of entrepreneurship in the population, fully realizing the
internal strength and potential of a person, and implementing a comprehensive economic and
social policy to create new jobs. Indeed, on February 27, 2020, a video selector meeting was held
under the chairmanship of the President of the Republic of Uzbekistan Shavkat Mirziyoyev,
dedicated to measures to reduce poverty through entrepreneurship. “According to preliminary
estimates, 12-15% or 45 million people are poor. This means that their daily income does not
exceed 10-13 thousand soums. Or a family may not have a car or a pet, but if a person is
seriously ill, at least 70% of the family income goes to his treatment. Can such a family be called
self-sufficient? As President, I am troubled every day by questions about what is happening in
the lives of our people, such as food, medical care, education, and clothing for their children. At
the meeting, the Head of State added: “Poverty reduction does not mean an increase in monthly
or pension benefits, mass loans. For this, first of all, it is necessary to establish vocational
training, financial literacy, entrepreneurship, infrastructure, education for children, quality
treatment, targeted benefits, - said the President[11].
Unfortunately, the lack of sufficient funds mainly affects the rural areas of our country. The
majority of the poor rural population has low cultural literacy and their level of education is
mainly primary school. Most poor households are relatively backward and still remain in the
period of an undeveloped agrarian economy. They are content with the status of not having the
ability to get rich and do not strive to improve their living standards. Market prices and
production volumes fluctuate sharply, and the feeling of poverty among poor people is not high
enough.
Conclusion
In conclusion, there have been notable successes and ongoing difficulties along Uzbekistan's
path to economic diversification and poverty alleviation. Even though the results show
improvement, especially in urban areas and developing sectors, reforms and strategic investment
must continue. By removing current obstacles and utilizing entrepreneurship and technological
opportunities, Uzbekistan can create the conditions for long-term economic growth that benefits.
All facets of Uzbekistan's population stand to gain from sustained economic growth if current
obstacles are removed and entrepreneurship and technological opportunities are taken advantage
of.
A Poverty Reduction Strategy project has been developed for the period up to 2030, which
includes priorities such as ensuring macroeconomic stability, implementing a balanced regional
policy, comprehensive development of infrastructure and entrepreneurship, and ensuring
employment. In addition to economic mechanisms, there are plans to increase the efficiency of
the education and health systems and to improve the system of social assistance and services for
vulnerable groups.
A national poverty line has been established based on minimum consumer expenditure.
According to this criterion, the poverty rate was 17% in 2021, decreased to 14% in 2022, and is
estimated to further reduce to 12% in 2023.
The goal is to double the economy's volume by 2030 and join the ranks of countries with above-
average incomes. In addition, there are plans to halve poverty by 2026.
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References
1. Shahbaz, M., Shamim, S. A., & Aamir, N. (2010). Macroeconomic environment and financial
sector's performance: econometric evidence from three traditional approaches. The IUP Journal
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2. You, Amartya. 2000. Development as Freedom. New York: Alfred A. Knopf. 88-89
3. https://nplus1.ru/material/2019/10/14/nobeleconomic
4. Deaton A. The Great Escape: Zdorove, fortune i istoki neravenstva. - M.: Izd-vo Institute
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5. Esping — Andersen, Gjost. Tri mira blagosostoyania kapitalisma. — Princeton, New Jersey:
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8. Nielsen, F. (1994). Income inequality and industrial development: Dualism revisited.
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9. United Nations. Department of Economic and Social Affairs. Sustainable Development
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11. We should give our people a fishing rod, not a fish - President: https://kun.uz/news.
