Microcredit Does This Truly Reduce Poverty in Bangladesh or Is It Kind of Oppression or Exploitation.
Chapter 1
Introduction
|Economic Principle of Microcredit |
|Concept & Definition |
|Microcredit or Microfinance Institution in Bangladesh |
|Operational way |
Bangladesh economy is characterized by unfavorable per capita land, low per capita income, glaring and accentuating income disparity, high level of unemployment, low productivity, and persisting high levels of poverty and deprivation. Under the circumstances, micro-credit has been promoted to help the poor to take up self-employment on tiny micro scales with a view to improving their living conditions. The appropriateness of microcredit as a tool for reducing poverty depends on local circumstances. Poverty is often the result of low economic growth, high population growth, and extremely unequal distribution of resources. The proximate determinants of poverty are unemployment and the low productivity of the poor. When poverty results from unemployment, reducing poverty requires creating jobs; when poverty results from low productivity and low income, reducing poverty requires investing in human and physical capital to increase workers' productivity. In many countries, such as Bangladesh, poverty is caused by lack of both physical and human capital. Consequently, the best way to reduce poverty is to deal with both problems: increasing productivity by creating employment and developing human capital. One way to increase the productivity of the poor is through broad based economic growth. Such growth ensures more inclusive participation in development by providing widespread employment. Microcredit is the extension of very small loans (microloans) to poor
Introduction
|Economic Principle of Microcredit |
|Concept & Definition |
|Microcredit or Microfinance Institution in Bangladesh |
|Operational way |
Bangladesh economy is characterized by unfavorable per capita land, low per capita income, glaring and accentuating income disparity, high level of unemployment, low productivity, and persisting high levels of poverty and deprivation. Under the circumstances, micro-credit has been promoted to help the poor to take up self-employment on tiny micro scales with a view to improving their living conditions. The appropriateness of microcredit as a tool for reducing poverty depends on local circumstances. Poverty is often the result of low economic growth, high population growth, and extremely unequal distribution of resources. The proximate determinants of poverty are unemployment and the low productivity of the poor. When poverty results from unemployment, reducing poverty requires creating jobs; when poverty results from low productivity and low income, reducing poverty requires investing in human and physical capital to increase workers' productivity. In many countries, such as Bangladesh, poverty is caused by lack of both physical and human capital. Consequently, the best way to reduce poverty is to deal with both problems: increasing productivity by creating employment and developing human capital. One way to increase the productivity of the poor is through broad based economic growth. Such growth ensures more inclusive participation in development by providing widespread employment. Microcredit is the extension of very small loans (microloans) to poor