Limited purchasing power

Insufficient buying power
Lack of purchasing power

Nature

Limited purchasing power refers to the reduced ability of individuals or households to buy goods and services due to insufficient income or rising prices. This economic issue often arises from stagnant wages, inflation, or high living costs, leading to decreased consumer spending and lower overall demand in the economy. As purchasing power diminishes, individuals may struggle to afford basic necessities, impacting their quality of life and contributing to broader social inequalities. Addressing limited purchasing power is crucial for fostering economic stability and ensuring equitable access to resources and opportunities for all members of society.

Incidence

According to the International Labour Organization, over 700 million workers worldwide lived in extreme or moderate poverty in 2022, earning less than US$3.65 per day. Limited purchasing power is particularly acute in sub-Saharan Africa and South Asia, where inflation and stagnant wages have eroded real incomes, restricting access to basic goods and services for large segments of the population.
In 2018, Argentina experienced a sharp currency devaluation and inflation exceeding 47%, drastically reducing the purchasing power of millions. Many families in Buenos Aires reported being unable to afford essential food items, leading to increased reliance on community soup kitchens.

Claim

People in developing countries are hungry because they are poor, not because there is insufficient food or land available there. Even when people are starving to death, there may be quite enough food within the country but they cannot afford to purchase what is available.

One of the major contradictions in the international economy is the fact that productive resources lie idle in developed-market economy countries because the largest group of potential customers, namely the developing countries, lack the means to purchase the output, even to the extent of satisfying basic human needs.

Counter-claim

Limited purchasing power is often overstated as a problem. In a world of abundant resources and innovative solutions, individuals can adapt and find alternatives to meet their needs. The focus should be on personal responsibility and resourcefulness rather than lamenting financial constraints. Many thrive despite limitations, proving that creativity and determination can overcome economic challenges. Instead of viewing limited purchasing power as a barrier, we should embrace it as an opportunity for growth and ingenuity.