Poverty traps

Poverty traps is a hotly debated topic in the literature, but the evidence on the existence is today still mixed and not that strong. Many possible causes are named, which may drive countries into a poverty trap, or keep them in one. This thesis studies the possible causes of poverty traps empirically, focusing on the countries in sub-Saharan Africa during the period 1980-2010. A multivariate logistic regression model is used to study the possible causes, but first all variables are tested for significance using a univariate logistic regression. The significant variables are concluded in the final multivariate logistic regression. The results suggest that more freedom, less corruption, more FDI and a higher HIV prevalence rate lowers the chances of a country of being in a poverty trap.