Economic Strengthening for the Very Poor (ES4VP)
Causes of Extreme Poverty and Vulnerability
What are some of the reasons these characteristics prevail among the poorest? Why do people in ultra poverty stay poor? In the last few years, much has been learned about the causes of persistent poverty and hunger. Three main observations are:
1. The location of a household—its country of residence and its location within the country— has a large impact on potential household welfare.
2. The coincidence of severe and persistent poverty and hunger indicates the presence of poverty traps—conditions from which individuals or groups cannot emerge without the help of others.
Three commonly found causes of poverty traps are
• the inability of poor households to invest in the education of their children,
• the limited access to credit for those with few assets, and
• the lack of productive labor of the hungry.
Within a trap, poverty begets poverty and hunger begets hunger. A number of studies at the level of individuals and households provide clear evidence that poverty and hunger in combination put into play mechanisms that cause both conditions to persist. Poverty and hunger inherited at birth, or resulting from unfortunate and unexpected events, can persist for years. These conditions or events in the life of a household—particularly serious illness— explain the descent of many households into absolute poverty.
3. The systematic exclusion of certain groups from access to resources and markets increases their propensity to be poor. These groups include ethnic minorities, disadvantaged castes and tribes, and those suffering from ill-health and disability. The exclusion of individuals from these groups from institutions and markets that would allow them to improve their welfare results in persistent poverty and hunger.
Immediate Causes of Poverty: those factors that are directly related to life and death situations; these can include famine, disease, conflict, natural disasters, etc.
Intermediate Causes of Poverty: related to improving people’s wellbeing. They generally point to what people lack (needs-based) and focus on: lack of access to basic services, lack of skills, lack of productivity, etc. The intermediate level is where currently the majority of development interventions are targeted.
Underlying Causes of Poverty: most often the result of a combination of political, social, economic and environmental factors that are related to the systemic and structural underpinnings of underdevelopment, residing at the societal and often global level. 
Not solely focusing on improving the human condition, i.e. focusing on improving people’s material conditions and needs so they can become livelihood secure, but also focusing on improving social positions – rights, inequality and discrimination. Not only cross-sector analysis but also deeper analysis of underlying causes of poverty. Underlying causes of poverty focus in particular on the aspects such as why intermediate causes are still there despite the development activities being carried out on regular basis. In order to identify the problems at this level, we have to ask a number of questions. These questions are: Why do the few people have access to resources? Why are majority of the people deprived of such access?
 IFPRI Paper on the Ultra Poor – Executive (p. xii)