Vicious Circle of Poverty has two sides demand side and supply side. It creates because a poor country remains the poor. A country struck in Vicious Circle of Poverty and cannot be progressing. Many factors are involved in it. First of all it has shortage of capital. Because of it many problems are faced by the country. Another factor is less production. Because of it countries national income and per capital income cannot be increased. Shortage of capital causes low production because raw material cannot be purchased.
Shortage of power resources also creates hurdles. Production cannot be increases and many other things are also affected by this. Lack of education is also one of the main factors. Without increase in literacy rate country cannot be progressed and flourish. Lack of health facilities slow down the power of human resources and mostly money is spent on treatment.
Lack of job opportunities creates burden on the society because man cannot run their houses without earning. Then they move towards crimes like theft lying etc. social problems increases by this way.
Lack of quality production reduces the exports and foreign earnings become less. This is because of low quality of raw materials and lack of capital. Unstability of Government also creates difficulties for a country. Our societies become a consumption oriented societies so the main part of earnings are spent on these luxuries items which are useless.
These all factors are interdependent on each other because of which country cannot be become out of the circle.