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Angkeara Bong
31 January 2015
Paper Code: Pub20150001
CamEconomist
Advancing your knowledge
www.cameconomist.info
The views expressed in this paper are those of the authors and do not necessarily reflect the
views or policies of CamEconomist. CamEconomist accepts no responsibility for any
consequence of their use.
1. Introduction
Poverty1 can be visualized as the receipt of real incomes too small to enable people to live at
minimum standards of health, education, and welfare (Stevenson, 1960). Every second, children
die from AIDS and extreme poverty and more than one billion people could not afford their
living. Six million children pass away from malnutrition every year (Cozay, 2009). Poverty is
one of the major obstacles for the developing world and needed to be settled in our generation.
Therefore, Sachs has made news with a plan to end extreme poverty and hence, he wrote a book
entitled ‘The End of Poverty’ which focuses on how to end poverty. The Goals are to halve
Jaffrey Sachs is a well-known economic adviser to the governments around the world. He is the
Earth Institute Director at the Columbia University and also a Special Advisor to the United
Nations on the Millennium Development Goals (MDG). He has been to more than 100 countries
to help reduce disease, poverty, environmental damage and armed conflict, and offer advice on
the national economies. Sachs’s main purpose is to end poverty by 2025. He addresses certain
issues which are one of the most compelling plans to alleviate poverty that economists often
1
Poverty, however, can also be defined physiologically an income below the least amount of money that maintains
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underestimate. He tries to show a big picture of how the whole societies emerge from poverty by
explaining his work in Bolivia, India, Russia, Africa, China, and other countries integrating the
set of solutions for economic, environmental, social, political problems which challenge the
poorest countries. Yet, there are some strength and weakness which he made in his book.
Therefore, this critical paper will discuss and analyses some of his assertion in his book on how
to end of poverty.
I divide this paper into three parts: first, a summary of his book relating to poverty alleviation;
second, I discuss some strength and weakness and analytical aspects of some of his arguments.
2. Summary:
The main thrust of Sachs’s book focuses on how to end extreme poverty2 in our time. He has
seen extreme poverty, disease, and malnutrition around the world and particularly, while he
focuses on the sub-Saharan Africa. More than eight million people around the world die each
year because they are too poor. Sachs’s main argument is our generation could help ending to
halve extreme poverty by 2015 and end it by 2025, and ensure that all of poor countries could
make reliable progress up the ladder of economic development. And it can be ended not in the
time of our grandchildren, but in our time. The rich world could help to escape from poverty and
2
Sachs refers to two closely related objectives: the first is to end the plight of one sixth of humanity that lives in
extreme poverty and struggles daily for survival. The second is to ensure that the entire world’s poor, including
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Sachs’s book covers 18 chapters which combines his practical experience with sharp
professional analysis and clear exposition on its topic. Since I make a summary of his book at
this point, a brief summary of his discussion and arguments should be entailed. Sachs focuses on
the ladder of economic development which helps the poorest of the poor to escape the misery of
extreme poverty. Thus, they might start their own ascent up the ladder of economic development
(p. 18-20). He visits some countries such as Malawi, Bangladesh, China, and India.
During his visit to these countries, he finds that more than one million African children succumb
to malaria each year. Roughly 900,000 Malawians infected with the HIV virus and died of AIDS
because of lack of treatment and around140 million people are living in the flood plains of the
deltas of the two great rivers in Bangladesh. Sachs realizes that the problem is simply that
Malawians die this day as a result of their poverty because the world has overlooked
impoverished people. Their incomes are around 50 cents per person per day or around 180
dollars per person per year. Sachs also focuses on the economic growth of some nations which is
necessary to develop a better understanding of the forces shaping the productivity factors. This
means that once the industrial revolution was under way, the same combination of modern
technologies and social organizational could spread to other parts of the world which forces an
Sachs emphasizes that due to the faults of the poor such as retrograde cultures and corrupt
leadership impeding its country development. However, he also indicates that there are eight
major categories of problems which can cause the economy to decline such as poverty trap,
physical geography, fiscal trap, governance failures, cultural barriers, geopolitics, demographic
trap, and lack of innovation. He then argues that the poorest countries could get out of the
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poverty trap unless their main economic development objectives aim to gain a foothold on the
ladder (p. 56-73). In addition, Sachs proposes a new method for economic development called
clinical economy which outlines the similarities between good clinical medicine and good
development economics. Sachs indicates seven parts of the diagnostic checklist of any
impoverished country such as the extent of extreme poverty, economic policy, fiscal framework,
physical geography and human ecology, patterns of governance, cultural barriers to economics
development, and geopolitics which a clinical economics approach will point the way to a better
He argues that markets are powerful engines of development when the preconditions of basic
infrastructure such as roads, power, human capital, education, and health are in place. He
believes that it is encumbent upon successful market economies to bring the few areas of the
Sachs consults with countries in crisis such as in Bolivia in the mid 1980s and goes on to work
with Russia in 1992, Poland in 1989, and other countries. He discusses the practical
Sachs distinguishes between three degrees of poverty: first, ‘extreme poverty’, representing one
sixth of the world population or one billion people, who literally fight for survival every day;
second, ‘moderate poverty’, representing 1.5 billion people, who live above the subsistence level
but still struggle to make ends meet; third, ‘relative poverty’, representing 2.5 billion people,
mostly in urban centers, who have access to housing, transportation, some education, and some
3
A logical extension of the United Nations' Millennium Development Goals which aim to halve extreme poverty by
2015.
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nutrition. Sachs shows that the world economy has changed considerably since 1980, with over
half the world experiencing economic progress in the past 25 years. Sachs also put some
criticisms to the main institutions such as the International Monetary Fund (IMF) and the World
Bank which he believes that these organizations have tended to represent the interests of creditor
banks rather than the poor and so have often exacerbated the problem of global poverty.
3. Analysis:
The heart of Sachs’s book focuses on how to end global poverty. He raises how to eradicate
poverty from the world and proposes some solutions on why his plan should be carried out. The
globe is ensnared in a poverty trap - the combination of poor infrastructure, poor health care, and
poor geography renders some societies to generate economic surplus for the future. Sachs states
that extreme poverty4 could be ended by 2025 if all the rich countries adhere to their previous
Sachs criticizes the International Monetary Fund (IMF) and the Bush Administration for lacking
concern for the poor instead of bullying approach to the world affairs. The United States (US)
said it would contribute .7% of its GDP to help the poor countries. The rich countries including
the US contributed to the Millennium Development Goals (MDG) for alleviating poverty,
disease and hunger and improvement of education and the lives of children and women. I reckon
Sachs’s argument might be true at some points. If all the rich countries in the world could
4
Sachs distinguishes three degrees of poverty: first, ‘Extreme Poverty’ refers to households that cannot meet basic
needs for survival; second, ‘Moderate Poverty’ refers to conditions of life in which basic needs are met, but just
barely; third, ‘Relative Poverty’ is construed as a household income level below a given proportion of average
national income (p. 20-21).
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commit to what Sachs set in the GDP, it might more or less help to eradicate poverty. There is a
strong reason for the presence of government’s policy to focus on this issue but they do little to
resolve the extent to which it should attempt to deal with these issues. Sachs uses a ladder of
economic development to describe extreme poverty. He explains that people who live in extreme
poverty could not seize even the bottom rung of the ladder.
This means that they do not have the basic necessities to maintain life such as food, clean water,
and shelter. It is impossible to pursue education without basic sustenance. For instance, Sachs
raises Malawi as ‘the perfect storm’ of extreme poverty5. Malaria epidemics and AIDS culminate
into a horrific maelstrom and the world community has so far offered little help. China is also
However, at some point in history, they blocked themselves off from the rest of the world; they
lost all the opportunities due to the free flow of information and relatively free trade in the rest of
the world. Sachs argues that the market forces as powerful factor to help end extreme poverty. At
this point, I think Sachs is right because more competitive market is seen as a necessary response
to the new global economic forces (Beresford, 2000). This means that a country’s ability to
improve its standard of living over time is highly dependent on its ability to raise its output per
workers and thus competitive free markets work perfectly because they distribute resources to
the most productive areas of the economy which could bring about to raise the living standard of
its people.
5
Currently, more than eight million people around the world die each year because they are too poor to stay alive
and more than 20,000 people died yesterday because they couldn’t afford the basic necessities required for human
life.
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For example, the combined impact of global free market between nations could open up many
new opportunities for wealth creation which could also attract the foreign investment. And it
would help to create more jobs or new employment opportunities for the countries. As Beresford
states that a free market or trade is supposed to benefit all countries by creating opportunities to
produce and trade on a larger scale than is possible in as system where trade within nation is
protected from outside competition (p. 80-83). Therefore, the growth of free market or trade have
resulted in a growth in competition between nations to attract and retain finance investment
capital, which is the basis of growth in jobs and the uptake of new technology, contribute to the
Based on the title of Sachs’s book and the pre-conceived notions of how this task is difficult to
achieve in the near future, Sachs shows a straightforward strategy to end poverty. He indicates
the differences in the levels of economic development across the various countries of the world
to establish the reasons for slow or stagnant economic growth in the less developed countries
which he intends to get them to reach the first rung of the ladder of economic development to
eradicate extreme poverty6 by the year 2025. He shows that the economic development is not a
zero sum match. He believes that everyone could win and he refers to the vision of Keynes on
the end of poverty by the twentieth century in Britain and other industrialized countries during
Similarly, he indicates that the developed world is of the resources to benefit from it by
elaborating a strategy of collective action to show that extreme poverty could be ended in our
6
According to the World Bank statistical standards, extreme poverty, as opposed to moderate or relative poverty,
refers to the inability of households to meet the basic needs for survival, with an income of $ 1 per day per person.
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time. I agree with Sachs that that the collective action which is supplemented by the effective
government provision of education, health, foreign assistance, and infrastructure could bring
Sachs argues that the United States should not focus more on the military option to eradicate
global terrorism than on the option of economic development which instead undermines some of
the fundamental factors that breed terrorism. Sachs argues if the rich countries offer 0.7 percent
of the Gross National Product (GNP) to the poor countries as targeted, the extreme poverty could
be eliminated as planned.
However, the United States currently offers only 0.15 percent of its Gross National Product in
aid which is far below all other wealthy countries. I argue that in order to end extreme poverty, it
is beneficial that all the industrialized countries around the world need to commit its
commitments and help to contribute their aid to the poor countries as set in the Millennium
Development Goal which aim to half extreme poverty by 2015 and end it by 2025. According to
Kennedy, there are elements of choice in the process of adjusting to these challenges, but
relatively few countries are well prepared to commit it given to their political and economic
Sachs has lots of experience in development and worked many countries in world. He details
how he has applied his clinical economics around the world and emphasizes a clinical diagnosis
of what each nation actually needs to eradicate extreme poverty. He thinks that the United
Nations could carry out the assessments and to coordinate aid. However, Sachs finds that the
United Nations is reluctant to invest in the United Nations’ Millennium Development Goals.
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Sachs claims that a 5 percent income tax on incomes over 200,000 dollars will suffice to bring
the US foreign direct assistance up to the level needed to support the United Nations’
Millennium Development Goals. This means that if all the rich countries could contribute 0.7
percent of its Gross National Product to alleviate the global poverty, he is confident that we
could end of the extreme poverty by 2025. I think it is beneficial that he uses it as a system
approach to consider all aspects such as poverty, fiscal policy, geography, governance, culture,
Sachs also argues that extreme poverty could be ended with investment of capital by the
developed world. The ending deep poverty was not only a moral necessity for the developed
world but it works to their positive good. I think his central point is that poverty has specific
causes which some of relevant problems involved such as bad infrastructure, bad health, bad
geography, and poor education. All of these factors could lead to poverty.
In addition, the growth of investment capital is the basis of growth in jobs and the uptake of new
technology in the sense that it is linked to the real economy. It is one of the major driving forces
to enhance economic development and it is also the engines of wealth and income generation in
the global economy through their capacity to enhance the volume of investment. However, it
could also be solved with specific types of aid programs and can eliminate the worst of extreme
poverty in the world, and would be relatively inexpensive for the developed world.
Sachs indicates that extreme poverty has been being eliminated via free enterprise, trade, and
investment in countries such as China, Bangladesh, and India. Sachs constructed a plan to
improve education, local infrastructure, technology, and healthcare which are needed in the poor
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countries. For this reason, he argues that the long-term sustainable economic development can be
fostered. Sachs aims to end extreme poverty as such action could expand the world economy.
However, it could also eliminate the breeding grounds for disease, terrorism, and civil unrest.
Sachs considers the creation of the preconditions for takeoff is a matter of building social
overhead capital including railways, roads, ports, and shifting the economic setting from
agriculture and trade to manufacture is beneficial. I also argue that by enhancing free enterprise,
trade and investment could be one of important factors to contribute to end poverty. According to
Smith argues that a freedom of trade and enterprise are considered as a means of increasing the
I strongly agree with Sachs that the unspecific aid programs and lacking of clear goals will tend
to fail. That is why some of the Western assistance has not produced the necessary effects for the
poor countries. However, this failure does not mean that the Western aid fails but the more
specific aid programs, the greater the capacity needed for execution. Thus, the greater need for
robust and competent governance should be fostered. It is not clear how to make the aid
Although, I reckon that the objectives of foreign aid have been many, the core of its program
aims to promote the economic recovery and help encourage the growth of the underdeveloped
countries. It is conceivable that the international situation confronting the nation in the future
will realign the order of the importance of these objectives. Still other objectives have been
present in the minds of the sponsors and of the administrators of the many foreign aid programs.
For instance, there have been many foreign aid programs in many countries for many years
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which they have been aimed at several political and economic objectives, both short term and
long term. However, it is hopeless to look for any single clear standard of these aid programs.
More or less, I reckon that the foreign aid could contribute to the economic growth of other
nations but specific goals and programs are required to effectively achieve its goal. But I still
acknowledge that the judgment of the success of foreign aid programs is difficult. Therefore, the
aid programs he was setting forth should be tailored to the specific countries and conditions
In addition, Sachs argues that the foreign aid7 should be increased in order offer a greater return
to private investment. I agree with Sachs that when these investments are made, the private
entrepreneurs will earn a greater rate of return on their businesses which could trigger market-led
economic growth. The market economics involve human capital, business capital, public
institutional capital, infrastructure, and knowledge capital could challenge in the market and
thus, the extreme poverty can be met. He also argues that the extreme global poverty (8) could be
eliminated by 2025 if the world rich countries intend to increase their combined foreign aid
budgets between 135 billion and 195 billion dollar for the next decade and properly allocate that
money. Sachs might be persuasive that the political, economic and ethical returns to improving
the plight of 1.1 billion people would be enormous and thus, he brings a unique background to
this issue.
7
It consist of financial flows, technical assistance, and commodities given by the residents of one country to the
residents of another country, either as grant or as subsidized loan (Perkins, Radlet & Lindauer, 2006, p 521).
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In this context, foreign aid is as an important ingredient in fighting poverty and accelerating
economic growth in developing country, especially in the very poorest countries, where people
may not be able to generate the resources needed to finance investment or health and education
program. However, Sachs’s experiences in Russia did not turn out so well. I think what Sachs is
proposing is that he aims to provide aid to countries to remove the barriers for them to become
self sufficient.
However, some barriers would be highly involved such as disease, lack of access to education,
poverty traps, geography traps, and fiscal traps, among others. Poverty itself will take a bit
longer although the huge amount of assistances and help from the rich countries for the poor
countries. I also argue that although, aid has not always worked well, it has been critical for
poverty reduction and growth in many countries and helped prevent event worse performance in
many other countries. This means that many of the weaknesses of aid have more to do with the
donors than with the recipients’ countries. For instance, a range of successful aid recipient’s
countries such Korea, Botswana, Indonesia, Mozambique, and Uganda (Perkins, 2006).
Sachs argues that corruption and poor governance are one of the root causes of poverty and
stresses that untreated diseases, like HIV/AIDS and malaria, climate change, and geographical
factors play the major role. Sachs sees the issue of poverty from the point of view of real
impoverished people due to the fact of his experiences. The present aid situation is not adequate.
While the rich countries pretend to help the poor, many poor countries pretend to reform (p.
266). Thus, the direct assistance from the rich countries to poor countries should increase
dramatically but the funds should be used in six categories of key investments such as first,
human capital to improve health, nutrition, and skills; second, business capital to improve
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technology in agriculture, industry, and services; third, infrastructure to improve roads, power,
sanitation, transportation, and communications; fourth, natural capital to improve soils and
ecology; fifth, public institutional capital to improve legal, governmental, and police systems;
sixth, knowledge capital to improve scientific and technological expertise. Instead, if there is
strong governance and institutions, it could help improve the environment for investment by
reducing risk and increasing profitability. For instance, investors are more likely to make long
term investments where they feel property rights are secure and their properties will not be
confiscated. While low levels of corruption help reduce the costs of investment, reduce risks, and
increase productivity.
However, corruption and poor governance are not the only problems, some factors are involved.
For example, Bolivia got the critical handicaps on the international economic stage. The
Bolivia’s exports demand a very high price due to the transportation difficulties. Thus, Bolivia
could not build development on agricultural products’ exports or the low level manufactures
which the developing countries often use as stepping stones. For this reason, it seems to me that
Bolivia could not develop the export of services to increase its development but they need a
certain economic foundation. In addition, he argues that the primary problems of development
stem from poor governance in the developing world. However, I argue that although some of the
well governed countries which have better resource, infrastructure, and health could hardly to
Sachs also emphasizes the Keynes’ theory about the scientific and technological innovation to
maintain a long-term economic growth. Sachs predicts the growth during the throws of the Great
Depression in America and his predictions become correct. This means that the technological
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and scientific innovation play major roles in alleviating extreme poverty in America, and the rest
of the world. The scientific and technological enhancements permit goods and services to be
traded freely which are impediments to the economic stability and growth in the underdeveloped
However, there is no one-size-fits-most panacea; I agree with Sachs that the importance of
grassroots programs tailored to demographics, and specific needs. The rest of the world often
thinks that the Africans are as one ethnicity which faces similar challenges. When this area
considers as one of the neediest, it is no surprise that the small-scale operations aimed at specific
countries. Therefore, when knowledge is shared, the world can take real steps toward the end of
poverty.
Sachs says that help would be required not just for a few years but for most of the period until
2025. Then, Sachs raises the question whether the developed world could afford to help the poor
countries given the technological progress; the question is whether they could afford not to. The
central strategy of Sachs aims to address the issue of how much the total official development
assistances are required to achieve the goal of ending extreme poverty by 2025. Sachs also
acknowledges that the governments should not invest in business capital. Particularly, when the
governments manage businesses, they tend to do so for political rather than economic reasons.
However, I think Sachs fails to consider the case of the government of Nigeria and Kenya which
they allocate health and education investments in a nonpolitical manner. The assumption that
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In addition, Sachs focuses on the economic development such as Bolivia, Poland and Russia by
highlighting on geography, climate, disease and level of infrastructure which he believes it has a
significant impact on the speed of economic growth. For instance, roads are important not only
to connect urban commercial facilities but to connect remote villages to markets so they can by
goods more cheaply and sell their products at better prices to a larger market.
In this way, it is true that better infrastructure such as building roads could be an important
ingredient in the alleviation of rural poverty. I agree with Sachs that by ending the global poverty
by 2025 does need the resolute efforts from both the rich countries and the poor countries. And
thus, they could start a global compact between them. It is true that this strategy is required not
only for scaling up the investments which could end poverty but also for a system of governance
that could empower the poor. Hence, this approach could offer the tools to the impoverished
countries across the world for sustainable development by indicating the plans and financing
4. Conclusion:
Finally, Sachs’s aim is to tackle the issues of underdevelopment and global poverty and how to
end poverty by 2025 set in the Millennium Development Goal. He addresses certain issues which
are one of the most compelling plans to alleviate poverty that economists often underestimate.
He tries to show a big picture of how the whole societies emerge from poverty by explaining his
work in Bolivia, India, Russia, Africa, China, and other countries integrating the set of solutions
for economic, environmental, social, political problems which challenge the poorest countries. I
come to several conclusions: First, Sachs might be right that poverty can be eradicated by 2025.
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Second, more needs to be done. Third, the current system is not properly focused. Fourth, we can
all play a role to eradicate poverty. Although, there have been efforts made in the past but they
were not well-planned and put in place as they should have been.
I am strongly confident that Sachs’s book is a road map to end poverty and what I find most
encouraging, useful, interesting, that the concepts and plans that he discusses could surely bring
real tangible benefit to the poor areas. Although, many argue that lot of money has been offered
to solve the problem. However, I agree with Sachs that the right amount of money must be
allocated to the right things and with specific goals. I am confident that one time that this
understanding might become the centre piece of the industrialized countries. However, despite
the potential shortcomings of the specifics of his plan, I think that Sachs starts the conversation
at the right spot that the poverty could end in our generations. And, I think his book is quite
challenging and ambitious and it is necessity to serve as a useful tool for the future academic
research.
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References:
Berestford, Q., (2000), Governments, Markets and Globalization, Allen & Unwin,
NSW, Australia, p. 117
Cozay, (2001), Extreme Poverty in Africa: Poverty Never Takes a Holiday, Fight
Poverty and Hunger, Global Issue Forum, Viewed on 12 June 2009,
http://cozay.com/
Jeffrey, S., (2005), ‘The End of Poverty’, Economic Possibilities for Our Time, Penguin
Group, pp. 1-395
Kennedy, P., (1960), Foreign Investment, In Stevenson, D., (1960), Economic Policy,
Business and government, The George Washington University, Houghton Miffin,
Boston, p. 652
Perkins, D., Radlet, S., & Lindauer, D., (2006), Economics of Development,
International Student Edition, Sixth Edition, US, pp. 520-521
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