Reasons for poverty and the role of IMF on reduction of poverty Term Paper

Reasons for poverty and the role of IMF on reduction of poverty - Term Paper Example Poverty reduction is fundamentally dependent on the developing countries’ substantial efforts, particularly with regards to implementing reforms required to enhance economic growth. However, these countries usually lack required capacity to do this, as well as to effectively utilize potential foreign assistance. The IMF, which is a major foreign lender for developing countries struggling to end poverty, has began to play a critical role in helping poor countries develop capacity needed to achieve the Millennium Development Goals aimed at reducing global poverty (Whitman, 2011: p52). This paper discusses the reasons for poverty and the role that the IMF should play in alleviating poverty. There are several reasons why poverty is so widespread, especially in the developing nations across the world. One of the most stated causes of poverty is colonial history of some of the poorest, developing countries in the world. Acemoglu and Robinson (2012: p66) contends that majority of the poorest nations in the world are former exporters of slaves to the developed world, as well as territories from which the colonial powers have systematically extracted resources to be used in their countries. Although some former colonies have been able to overcome this resource outflow, such as Canada, Australia, and the United States, most of the other colonies suffer from the legacies of colonialism, which have led to conditions that prevent its citizens from accessing education, capital, land, and other resources required for a society to adequately support itself. For most of these countries and territories, one of the most debilitating legacies of colonial history has been poverty and in equality. Since most colonial powers settled and developed areas from which they were extracting resources, other regions in the same colonial territory were left grossly