Directions: Read the following excerpt from the e-text and answer the question below using the RACES method. As a reminder, you must use evidence from the provided text.

Question

What Are the Region's Economic Challenges?
Many countries, including Mexico, have made significant strides against difficult economic problems. Yet, severe challenges remain. Many people in Middle America live in poverty. Haiti is by far the poorest country, with a GDP per person of less than half that of the next poorest country, Honduras. In nearly every country in the region, many people live in poverty.
Poverty hurts an economy in several ways. First, the government has to use resources to help people living in poverty so that they can survive. Second, poverty limits educational opportunities. That holds back economic growth, because workers with little education or training are less productive than skilled workers.
Income inequality is a problem as well, with a growing gap between the rich and poor. The richest 20 percent of the population earn more than half of all the country's income in Costa Rica, the Dominican Republic, Guatemala, Honduras, Mexico, Nicaragua, and Panama.
Crime and corruption are another source of economic challenges for Mexico and many Central American countries. When corrupt government officials may demand payments as a condition for doing business, businesses may avoid creating jobs in that country.
Due to poverty and the illegal drug trade, the region has a high rate of crime, which also hurts the economy. In 2014, Honduras had the highest murder rate in the world. High crime rates also discourage investment. Businesses do not want to open offices or factories in a country if they think they will be robbed or face a risk of violence.
A lack of good infrastructure or networks of structures such as highways, clean water supplies, and electrical grids-also holds the region's economy back. If a business cannot count on reliable transportation to its customers or on clean water or electricity, then that business is not going to create jobs in a region.

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Question: How does poverty harm a country's economy?

Answer 1

Poverty harms a country's economy in several significant ways. First, as noted in the excerpt, when a large segment of the population lives in poverty, the government is compelled to allocate resources to provide essential support for survival. This diversion of resources can hinder investments in other critical areas such as infrastructure and education. Additionally, poverty severely limits educational opportunities, which diminishes the potential for economic growth. Workers with limited education or skills tend to be less productive, leading to a less efficient workforce.

Furthermore, the excerpt highlights income inequality as an exacerbating factor, indicating that in many countries, the richest individuals earn a disproportionate share of income, trapping the poor in a cycle of poverty that further constrains economic development. Lastly, poverty is connected to higher crime rates, which create an environment of instability. Businesses are deterred from investing in regions with high crime rates, as they fear theft or violence, thus preventing job creation and economic advancement. Overall, these factors demonstrate how poverty undermines economic stability and growth.