The Impact of Financial Inclusion on Poverty from the Neoclassical Theory in the Fourth Industrial Revolution

This chapter explains how Neoclassical economics relates to the Fourth Industrial Revolution and how financial inclusion affects poverty. This chapter evaluates what it means to be poor from a neoclassical economics perspective and whether the Fourth Industrial Revolution will affect those conclusions. This chapter explains how classical economics influenced the Neoclassical school. Marshal building on the Classical argued that in a free market economy, unequal talent endowments, skills, and capital lead to poverty. Neoclassical economics blames poverty on externalities, moral hazards, adverse selection, and insufficient knowledge. Uncertainty will aggravate poverty because impoverished people are more vulnerable to negative shocks like recessions, sicknesses, and family breakdowns. The chapter ends by addressing the Fourth Industrial Revolution's advances and their effects on poverty from a neoclassical perspective.