Answer to Question #130923 in Economics of Enterprise for Tsholofelo

Question

“Cash transfer programmes could influence the behaviour of recipients in ways that could undermine the poverty‐alleviating effects and cost‐effectiveness of these interventions” (Black et al. 2017).
Do you agree with this statement?

Answer 1

Quite right, since the temptation to get easy money leads to deviations from the implementation of the programs under which cash transfers are given. Since the recipient of the transfer independently and uncontrollably generates cash flows within the country. Overcoming poverty in different countries is one of the main tasks of modern civilized society, but due to the lack of transparency in cash transfers, efforts to overcome poverty can be reduced to zero.

The profitability of monetary transfers can only be achieved when the funds received are directed to investment in order to modernize existing production facilities or to create new, high-tech enterprises. However, this may turn out to be too troublesome for the recipients of the transfers, which will reduce the efficiency of this operation.