Information and stories about economic growth.

Made in China 2025Over the last few decades, the Chinese economic miracle has astounded pundits across the globe. When reforms began in 1978 under Deng Xiaoping, China accounted for about 5% of the world economy. In 2020, that figure was more than 17% and rising quickly, second only to the United States. During the same period, extreme poverty was effectively erased, down from a high of 90% in 1981. The Made in China 2025 initiative aims to reduce poverty even further and ignite economic growth so that China can avoid the middle-income trap.

Poverty and the Middle-Income Trap in China

In some ways, many of these figures paint an inaccurate picture of the Asian giant. China is wealthy but its population is enormous, meaning that average incomes remain relatively low. In the United States, GDP per capita is almost four times higher than China’s. Furthermore, Chinese economic growth is slowing. Ballooning levels of debt and an aging population create worry for Beijing, even as the Communist Party celebrates its 100th anniversary. Economists fear that China could fall into the middle-income trap, a situation where rising wages for developing countries erode their manufacturing advantage but their innovative sectors remain too small to compensate.

Radical Planning for a Radical Problem

In 2015, preempting these concerns, Chinese leadership announced the Made in China 2025 initiative, hoping to move the nation up the value chain. As Harvard University explains it, the strategy intends to “secure China’s position as a global powerhouse in high-tech industries.” Furthermore, “the aim is to reduce China’s reliance on foreign technology imports and invest heavily in its own innovations in order to create Chinese companies that can compete both domestically and globally.” If China succeeds, it will create a blueprint for other developing countries in Africa and Asia to bypass the middle-income trap and liberate their populations from the grips of poverty.

Made in China 2025 outlines 10 key industries that the nation must master if it seeks to move up the value chain.

  1. Information technology
  2. Robotics
  3. Aerospace equipment
  4. Pharmaceuticals
  5. Medical equipment
  6. Electrical equipment
  7. Farming
  8. Railway equipment
  9. New energy vehicles
  10. Ocean engineering

From artificial intelligence to quantum computing, China has poured billions into developing cutting-edge technology. The U.S. administration cast the effort as an attempt to displace U.S. technological leadership, sanctioning Chinese companies from doing business with their suppliers in the United States. In reality, much of the motivation behind the Chinese initiative stems from a more basic goal: lifting the nation out of poverty and inspiring other nations to do the same.

Avoiding the Middle-Income Trap

The middle-income trap that confronts China is daunting as only a few countries have ever escaped its grasp. Most prominent were the Asian Tigers — South Korea, Taiwan, Hong Kong and Singapore — economies that defied the odds and delivered decades of sustained growth. But, many have failed to replicate the Asian Tigers’ success. Nations like Brazil and South Africa became mired in the middle-income trap, unable to escape the hard ceiling.

The danger for developing countries around the world is a run-in with the same fate. Before COVID-19, African nations were fast-growing. The World Bank predicted that many would reach middle-income status by 2025. But, upon achieving this milestone, they would encounter the same middle-income trap that Brazil and South Africa once faced. If this occurred, the region could be forever stuck in a grey zone, one where poverty would be reduced but not eliminated.

Looking to China

China offers a solution. If nations can move up the value chain with enough speed, they can escape the middle-income trap. Governments can help. The Communist Party has poured billions of dollars into research and development for Made in China 2025, creating some of the world’s largest technology companies in the process. African and Asian nations can do the same on their path to development.

Of course, investment has its downsides. Corruption takes a significant toll on the ability of a government to distribute funds in an appropriate manner. Tackling this problem will not be easy or simple, but a roadmap to success has been laid. With the rise of Asia and Africa in the decades ahead, countries have a chance to crush poverty and increase welfare for billions of people.

– Zachary Lee
Photo: Flickr

Greek and Cypriot povertyAfter decades of economic struggle which the pandemic and COVID-related restrictions exacerbated, Greece and Cyprus are optimistic about their economic futures. In 2019, both countries’ economies were in grim states. In Cyprus, 15.3% of the population was at risk of poverty as of 2020, a marginal rise from the previous year. Meanwhile, 30% of Greece’s population was at risk of poverty or social exclusion in 2020. Amid all the pessimism, however, there are reasons to have a bright outlook for the future of Greek and Cypriot poverty reduction.

EU Funding

Massive pandemic relief packages stemming from the E.U. budget have already allowed a solid recovery for Greece and Cyprus.

In June 2021, the E.U. approved a recovery plan worth 30.5 billion euros for Greece. According to E.U. Commission President Ursula von der Leyen, the plan “will help Greece build a better future.” The recovery plan could spur Greek economic growth by 7% within the next six years, giving people a reason to be optimistic about the future of Greece’s economy.

In Cyprus, the 1.2 billion euros that Greece secured from the E.U. Recovery and Resilience Program and 1.8 billion euros from the E.U.’s Structural and Investment Funds form part of the Cypriot president’s self-described “ambitious” recovery plan. The massive cash influx will help add at least 11,000 new jobs, a significant number for a country with a population of around 875,000. In addition, it will help Cyprus reverse course from the continuous austerity its government has implemented in recent years, which has proven counterproductive in the fight against poverty. These two gigantic pandemic relief packages from the E.U. will allow a bright future for Greek and Cypriot poverty reduction.

Optimistic Economic Growth Projections

Another major reason for optimism about Greek and Cypriot poverty rates is the countries’ economic growth projections. Despite the pandemic significantly shrinking both nations’ economies, economic growth projections for upcoming quarters and years are notably better than expected.

In Greece, for example, after a fantastic 4.4% rise in GDP in the first quarter of 2021 despite the COVID-related restrictions that were in place for almost the entire quarter, the E.U. Commission has released a favorable economic forecast for Greece for the remainder of 2021 as well as for 2022. It expects Greece’s GDP to grow by 4.3% in 2021 and 6% in 2022. Cyprus’s economy also appears poised to bounce back phenomenally from its shrinkage. Cypriot President Nicos Anastasiades has said that the E.U.’s relief plan will enable a 7% increase in GDP over the next five years.

Gabriel Sylvan
Photo: Flickr

Ghanaian local businessesOn June 26, 2021, the 22nd annual Vodafone Ghana Music Awards (VGMAs) crowned Diana Hamilton Artist of the Year. This honor makes her the first female gospel singer to ever win the trophy and comes on the heels of year-long praise for her song “Adom,” which also won Gospel Song of the Year. While Vodafone Ghana sponsors the VGMAs to support the celebration of Ghanaian musicians like Hamilton, the company also recently partnered with Invest in Africa to aid local Ghanaian businesses and ignite growth in Ghana’s economy.

A Promising Partnership

Created in 2012, Invest in Africa (IIA) operates in five African nations: Ghana, Kenya, Senegal, Zambia and Mauritania. According to Carol Annang, IIA’s Ghana country director, IIA strives to create jobs and attract investment opportunities for local businesses. By uniting small and medium-sized enterprises (SMEs) with large corporations, Annang says that these types of partnerships can help corporations “use their local buying power as a force for good.”

Since Vodafone Ghana has expressed its dedication to Ghana’s economic and social growth, the partnership with the IIA gives Vodafone Ghana the opportunity to utilize its resources in accordance with the company’s mission. Additionally, because Vodafone Ghana has served small businesses for years, the company can provide IIA with additional experience in “network-based IT and communication solutions.”

Specific Solutions

The IIA and Vodafone Ghana will focus on two solutions to propel the growth of Ghanaian local businesses:

  1. Red Trader: This mobile application and web portal assists traders in overseeing their inventory. Additionally, the application features tools that allow traders to track and collect payments.
  2. Your Business Online: This proposal helps SMEs expand their businesses online with the assistance of Vodafone Ghana’s team. The company’s experts help businesses create an online presence through professional site designs, “e-commerce integration and social media marketing.”

Through these measures, IIA and Vodafone Ghana hope to expand the digital presence of local Ghanaian businesses and boost the economic growth of these businesses. These solutions are set to begin implementation on April 1 for at least two years.

COVID-19 Setbacks and Steps Forward

As Ghana continues to recover from the COVID-19 pandemic, this plan for Ghanaian business growth comes at an opportune time. While coronavirus infections rose throughout the country and businesses permanently closed, by the third quarter of 2020, Ghana entered a recession for the first time since 1982. Additionally, Ghana’s GDP grew only 1.1% in 2020 compared to a growth of 6.5% before the pandemic began.

Because of this low GDP increase and Ghana’s high population growth, the real per capita income of Ghana was “1% lower [in 2020] than in 2019.” Moreover, according to the World Bank Group, additional impacts of the pandemic will include decreases in “foreign direct investment and tourism receipts.” Consequently, many families in Ghana have become impoverished and the country’s poverty rate has increased since the start of the pandemic.

However, one of the principal objectives of the collaboration between IIA and Vodafone Ghana is to help businesses recover from COVID-19 setbacks. In fact, William Pollen, the CEO of IIA, expressed how necessary it is to support SMEs because these enterprises employ the majority of people living in sub-Saharan Africa and constitute roughly 80% of business activity in the region.

The Road Ahead

On the whole, despite the past year’s struggles and the hurdles that arise on the road to economic recovery, the partnership between IIA and Vodafone Ghana presents a positive outlook for the future of local Ghanaian businesses. In the words of Tawa Bolarin, the director of Vodafone Business, “these are indeed exciting times for us and the entrepreneurial community in Ghana.”

– Madeline Murphy
Photo: Flickr

mega ports in Morocco
Morocco’s geographic location gives it an advantage when it comes to developing the country’s economy. Morocco borders the Mediterranean Sea to the north and the Atlantic Ocean to the west, making it the closest African country to Europe. Mega ports in Morocco are among the many infrastructure developments that are revolutionizing the country as Morocco proceeds to build and expand its transportation infrastructure to connect the two continents.

Tanger Med

The Tanger Med port adopted its name from the port’s home city of Tangier in northwestern Morocco. Because of its important geographic location, Tangier has played a significant role in trade between Africa and Europe since ancient times.

The first site, known as Tanger Med 1, has two terminals. The first terminal started in 2007 after the King of Morocco, King Mohammed VI, laid the first stone in 2002. Following that, the second terminal started just one year later. Tanger Med 1 has a capacity of 3.5 million 20-foot equivalent units (TEUs). The terminals created 6,000 jobs at the port and an additional 70,000 jobs in the trade zone area.

After the establishment of Tanger Med 1, the King gave the order for a second container port, Tanger Med 2, with an investment of $1.5 billion. The port contained two more terminals, beginning construction officially in 2015. In the summer of 2019, Tanger Med 2 formally opened. Tanger Med became the largest port in the Mediterranean region, exceeding Valencia and Algeciras’ container ports with six million TEUs. Because of the outstanding performance of Tanger Med, the first of the mega ports in Morocco and the biggest in Africa, the government decided to build similar mega ports in other cities.

Nador West Med

Nador West Med is the second of the mega ports in Morocco. With almost half of its construction complete, the port will be fully ready by the end of 2022. The project will cost $13.8 million, consisting of new infrastructure and an industrial port.

The first phase of the Nador West port will include a 1,520-meter container dock for larger ships. It will also include a 600-meter dock for general goods to serve larger merchant ships. Furthermore, the Nador West Med port will have oil and chemical tankers, each able to carry approximately 170,000 tons.

New road construction will expand the route from six meters to nine meters and fortify the pavement. Nador West Med will have a tremendous socio-economic impact on the region. Once the port opens, it will reduce the unemployment rate with more jobs, allow for easy entry to the region and provide tax benefits for the country.

Dakhla Atlantic Port

Another port, the Dakhla Atlantic Port, will be built in Dakhla, located in a long, narrow peninsula in the southwest of Morocco. In 2020, the King announced significant investments that will cover the southern region of Morocco, including a mega port in Dakhla. This port will enhance many sectors such as fisheries, mining, energy, tourism and agriculture, processing approximately 2.2 million tons of goods yearly. With a cost of roughly $1.1 billion, the port will elevate direct commerce between Africa, Europe and the Americas following its completion in 2026. It will also include a space of 1,650 hectares for industrial and logistical services.

Certainly, mega ports in Morocco are boosting the country’s economy with a powerful presence in the region. Due to its strategic geographic location, Morocco’s ports allow the establishment of more investments and create a significant number of jobs. Moving forward, these mega ports should continue to bring many benefits for the country and the region.

– Zineb Williams
Photo: Unsplash

Urbanization and Economic Growth
Even though historians often believe that urbanization and economic growth have a close connection, many people in developing countries are moving into crowded cities while still living in poverty. Stronger infrastructure in such cities could help decrease poverty rates.

Cities Grow But Retain High Poverty Rates

Over the last few decades, the populations of many developing countries have shifted from overwhelmingly rural to increasingly urban. For example, the population of Kinshasa, the capital of the Democratic Republic of the Congo (DRC), has grown from 450,000 in 1940 to around 12 million in 2018. Similarly, Lagos, the capital of Nigeria, grew from 200,000 to nearly 20 million in just two generations. According to Forbes economist Daniel Runde, around 96% of all urbanization will occur in the developing world by the year 2030.

However, rapid urbanization in developing countries has not seemed to promote economic growth. According to the Center for Strategic and International Studies (CSIS), sub-Saharan Africa currently suffers from negative per-capita income growth. As of 2014, approximately 55% of the sub-Saharan African urban population lived in slums, which the CSIS defines as informally constructed residences disconnected from city infrastructure and ill-prepared to face natural disasters.

Urbanization Used to Be a Sign of Wealth

Until recently, urbanization and economic growth have had a strong correlation. As the Roman Empire expanded in power and influence, its capital expanded in population accordingly. More recently, New York City welcomed its millionth resident in 1875, shortly after the industrial revolution had brought massive productivity to the surrounding farmland. In these cases, people moved to the city because they no longer needed to rely on subsistence farming to put food on the table. Those who stayed on the farms could transport their surplus crops to the cities, and those who moved to the cities used their newfound wealth to contribute to public utilities such as roads, sewage and fire departments.

Nowadays, due to the global economy and relative ease of long-distance transportation, people in developing countries do not necessarily see subsistence farming as the default. As a result, many are moving to these emerging megacities without the wealth to immediately benefit their communities. Cities such as Kinshasa in the DRC and Port-au-Prince in Haiti are now struggling with increased disease and crime, and many governments are not financially or logistically prepared to provide resources for all their residents. In these cases, the connection between urbanization and economic growth appears to have reversed.

Infrastructure Increases Urban Quality of Life

Even though many growing cities in the developing world are not attaining immediate prosperity, the mere presence of so many people in a concentrated area could soon result in economic growth and increased quality of life. Historically populous cities may have initially grown due to a baseline of wealth from nearby farmland, but the influx of people caused massive improvement in infrastructure, employment and professional cooperation. Presumably, the same could happen in the developing cities of the present.

The key factors holding back cities such as Kinshasa and Port-au-Prince from development are negative externalities such as disease, crime and famine, which typically result from poor infrastructure and government corruption. Notably, neither of those cities has a functional sewer system, and both have seen massive cholera outbreaks as a result.

Due to high poverty levels in both cities since their initial growth, public infrastructure may be more difficult to develop than it was in New York or London. However, even those cities’ development experienced stunting at times due to unsanitary conditions. For example, in London in 1854, 125 people died of cholera after drinking from a single contaminated well. Due to adequate public funding and stable institutions, the British government was able to mitigate this problem and make London a safer and more prosperous city.

Perhaps with some help and reform, the same could happen in Kinshasa, Port-au-Prince, Lagos and the rest. Investment in infrastructure projects in these cities could help create economic opportunities for their development and make urbanization and economic growth synonymous once again.

Sawyer Lachance
Photo: Flickr

Law in Timor-LesteAll states face economic, social and political pressure, but when the pressure exceeds a state’s ability to control it, the state becomes fragile. The Fund for Peace uses the Fragile States Index (FSI) to assess the vulnerability of 179 countries every year. The Southeast Asian nation of Timor-Leste has shown significant decreases in economic and environmental fragility in recent years. In 2020, for the first time, the Organization for Economic Cooperation and Development’s (OECD) report on the state of fragility did not list Timor-Leste as a fragile state. In the FSI’s 2021 report, Timor-Leste ranked first of all the world’s countries for yearly reduction in overall fragility score. Improvements to fragility and rule of law in Timor-Leste have also helped the nation reduce poverty.

History of Timor-Leste

Timor-Leste, formally known as East Timor, is one of the world’s youngest nations. It was a Portuguese colony until 1975, then remained under Indonesian sovereignty until 1999. In 1999, the U.N. organized the East Timorese Independence Referendum, in which citizens chose independence over greater autonomy within Indonesia.

Timor-Leste became the first new sovereign state of the 21st century after the formal ratification of independence in 2002. Timor-Leste has devoted the last 20 years to rebuilding infrastructure and formal institutions damaged by past conflict. Around 1.3 million people call the newly peaceful, democratic nation home.

Economic Growth in Timor-Leste

Timor-Leste’s poverty rate dropped from 50% in 2007 to 42% in 2014, indicating economic growth. Less poverty means less violence, so the drop in poverty means improvement in fragility and rule of law in Timor-Leste. The Timorese government has put great effort toward reducing disparities within the economy, especially through education.

After decades of conflict, the Timorese needed to rebuild nearly all institutions from the ground up. Between 2005 and 2008, the government devoted significant funding to primary education, leading primary education enrollment to increase from 68% to 85%. However, older youth and adults still lacked the education to participate fully in society and the economy.

In 2010, with only 36% of the population functionally literate, the World Bank launched the Second Chance Education Project. The program set up nine community learning centers with flexible hours, providing a second chance to those too old for primary school. By the time the project ended in 2017, 1,670 students had participated in the mature education course, 55% of whom were women. Timor-Leste’s recent efforts put the country on target to achieve U.N. Sustainable Development Goal 4 (quality education) by 2030.

Social Improvements

Improvements in health and nutrition directly improved fragility and rule of law in Timor-Leste. Malnutrition is the country’s leading cause of premature death and disability. Timorese children suffer the third highest stunting prevalence in the world, with more than 50% of children younger than 5 identified as stunted. Experts believe that loss of productivity due to malnutrition costs Timor-Leste $40 million per year.

To combat malnutrition, the World Bank implemented the Community Driven Nutrition Improvement Program. Operating in 49 villages, the four-year program taught families how to grow and cook nutrient-rich foods. The program gave more than 1,000 families sweet potato cuttings and provided more than 400 families with seeds for their home and community gardens.

With the help of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), Timor-Leste has also brought its malaria epidemic under control. The GFATM funded and helped launch the National Malaria Control Program in 2003. Following the launch, Timor-Leste saw a 97% decrease in reported cases, which dropped from around 223,000 cases in 2006 to only around 6,200 in 2012. The program followed a six-part strategy:

  1. Enhance early detection and effective therapies.
  2. Distribute long-lasting insecticidal nets.
  3. Conduct indoor residual spraying.
  4. Improve epidemic prevention, preparedness and response.
  5. Educate the public.
  6. Enhance monitoring and research.

Political Improvements

Timor-Leste’s democracy continues to flourish. Since gaining independence in 2002, the state has successfully held four peaceful, free and fair multi-party elections, all of which ended with a smooth transfer of power. Democratic stability will continue to improve fragility and rule of law in Timor-Leste. As one of Southeast Asia’s most stable democracies, the 2020 Sustainable Development Goals (SDG) Report classified Timor-Leste as on target for SDG 16 (peace, justice and strong institutions).

The Timorese government now prioritizes rebuilding infrastructure and public services. The Timor-Leste Road Climate Resilience Project is currently restoring 110 kilometers of road connecting three of the main districts in the country. Inability to travel throughout the country isolates communities and isolation hurts the economy. The project will connect 410,000 citizens, encouraging greater economic activity. The road will also help decrease malnutrition by giving families access to diverse foods grown in other parts of the country. The road restoration project is nearly 80% complete.

Goals for Timor-Leste Through 2024

In November 2019, the World Bank Group established the Country Partnership Framework for Timor-Leste. It plans to transform Timor-Leste’s “natural wealth into improved human capital and sustainable infrastructure” with three main objectives:

  1. Promote private sector-led growth and diversify the economy.
  2. Improve human capital.
  3. Continue to rebuild infrastructure, especially transportation.

Along with Timor-Leste, the OECD also removed Egypt, Malawi, Nepal and Rwanda from the list of fragile nations in 2020. As fragility and rule of law in Timor-Leste and other nations improve, their neighboring nations will also find more stability. There is always room for improvement but the world should take a moment to celebrate the significant progress in the small, young country of Timor-Leste.

– Ella LeRoy
Photo: Flickr

mint countries Mexico, Indonesia, Nigeria and Turkey, also known as the “MINT” countries, are the fastest-growing emerging economies in the world. While COVID-19 has socially, physically and economically impacted the MINT countries, the nations are still playing a tremendous role in helping alleviate poverty for millions of people.

Mexico

Mexico is the perfect example of an emerging economy. Due to its strong trade relationship with the United States, its GDP is higher than almost all developing countries. However, Mexico’s overall GDP is not yet enough to meet the standards for a developed country. Similarly, while the poverty rate remains high in Mexico, the percent of people living on less than $3.20 has dropped from 12.8% in 2010 to 6.6% in 2018.

However, during the COVID-19 pandemic, Mexico’s economy has declined sharply. In fact, the Mexican GDP decreased by 8.3% during 2020, its largest drop since the Great Depression. While the country has partially recovered from its economic downturn due to increased trade, it still has a long way to make up for its GDP drop from 2020.

Indonesia

Indonesia is the fourth-most populous nation in the entire world and ranks 56th in economic freedom. This statistic is a result of low tax burdens and increasing political participation. Similarly, the country is one of the top-ranked Asia-Pacific countries in terms of its economy and the country has seen steady financial improvements since 2017. In fact, Indonesia cut its poverty rate by more than 50% from 1999 to 2020.

While COVID-19 had major effects on the country, economic activity has rebounded significantly. For example, in July 2020, the government eased lockdown restrictions, which allowed for increased exports and stronger government support. Without the burdens of the COVID-19 recession, Indonesia can continue to develop its economy and reduce poverty.

Nigeria

Nigeria has the largest economy in Africa. However, the country saw relatively minimal growth during the last few years because of high oil prices. The drops in oil prices are significant because Nigeria is Africa’s biggest exporter and contains Africa’s largest natural gas reserves. Similarly, the COVID-19 pandemic has had disastrous effects on the country. The economy contracted by 6.1% in the second quarter of 2020 with 27% of Nigerians unemployed.

However, the country has made recent strides to tackle poverty and improve its economy. Due to eased lockdowns in the country, Nigeria’s oil prices have improved. Furthermore, its economy has grown by 0.5% in the first quarter of 2021, helping the country exit its COVID-19 related recession. In fact, the president of Nigeria inaugurated the National Steering Committee of the National Poverty Reduction with Growth Strategy (NPRGS) in June 2021. The inauguration marks Nigeria’s commitment to raising 100 million people out of poverty within 10 years, fueling optimism about the country’s future.

Turkey

Turkey, one of the wealthiest MINT countries, has had an impressive economic run since the 2000s due to open trade with other countries and cooperation with the EU. Similarly, the Turkish government has implemented government reforms in most impoverished regions of the country. These reforms successfully cut poverty rates in half.

Even with the COVID-19 pandemic, Turkey has been able to recover, and its economy remains strong. While the leaders of Turkey have been accused of political corruption and Turkey saw a COVID-19 spike in April 2021, the number of infections has dropped by 72% since then because of a total lockdown measure. Similarly, Turkey’s recovery from COVID-19 is expected to boost the country’s GDP by 5% by the end of 2021.

Even with the factors of COVID-19, political instability, corruption and more, the MINT countries have shown resilience and progress. By decreasing poverty, implementing reforms and recovering from the pandemic, the MINT countries move toward a bright future.

– Calvin Franke
Photo: Flickr

Economic Development in NicaraguaEconomic development in Nicaragua has encountered issues that have slowed the country’s development. Nicaragua declared itself an independent country in 1821. However, it has directly felt the crippling effect of economic issues from the onslaught of crimes. As recently as 2020, Nicaragua was recognized as a critical threat location for crime by the Overseas Security Advisory Council. Nicaragua has also encountered natural disasters. As of November 2020, Hurricane Eta and Hurricane Iota, Category 4 and 5 hurricanes respectively, caused more than $740 million in damage.

However, even with mounting external and internal pressure, economic development in Nicaragua has shown potential for improvement. This change is based on securing educational opportunities that turn into growth in economic projects. Private organizations have created community centers and offered low- and middle-income citizens better access to education. Such organizations have also created jobs by amplifying the reach of renewable energy, agricultural irrigation expansion and fortification of infrastructure.

Nicaraguan Poverty

Nicaragua has faced an uphill battle in economic growth due to its criminal and poverty-stricken background. The conflict between rival gangs within the country exacerbates this issue. This instability has also caused a decline in economic fortitude. Moreover, inflation has reached undeniably high levels, and people have left Nicaragua in droves to pursue better economic opportunities. The people left behind continue to suffer from a lack of proper healthcare and education.

Education Improves Economic Development

The educational system within Nicaragua is adjacent to the poverty level. Children within the educational system find themselves facing the challenge of completing school due to a wide range of reasons. A recent study from the USAID reported that an estimated 72% of Nicaraguans do not finish secondary school, leaving them likely to be impoverished. In addition, more than 18% of teachers do not have more than primary school education. This creates a new generation of unprepared Nicaraguan citizens.

The correlation between educational attainment and job development is significant. It is the bridge that keeps many Nicaraguans in impoverished income brackets. With the constant issues that many lower-income Nicaraguan students face, there has been an increase in steering them toward an attainable educational path and improving educational success.

Formative Ways of Change

Outside help from the U.N. and the U.S. has created a shift in economic and educational development in Nicaragua in recent years. Organizations such as Save the Children and the World Bank have supported the upturn of educational prowess within Nicaragua. Save the Children has created an infrastructure for educational access by establishing toll roads and paving new ones. Additionally, the World Bank has established more community centers with creative and technical workshops to teach and fortify skills. The skills taught include knowledge of irrigation, infrastructure fortification and a new era of clean and renewable energy.

The organizations have also increased job development and commercial development projects from the private sector. These development projects have provided more job opportunities within the industries of agricultural irrigation, the fortification of infrastructure, renewable energy and the reinforcement of trade.

Projects of this magnitude were given more than just a prime objective with the World Bank portfolio. Such projects totaled more than $400 million for nine planned projects. These projects include the enhancement of telecommunications, roads, education, health and insurance for natural disasters. Two credits have already been passed together, worth more than $100 million, to combat COVID-19 and help those most affected by hurricanes.

The Nicaraguan educational system has had a rise in scholars coming through the ranks to create an ever-growing class of job-ready individuals. Problems of organized crime and violence have troubled Nicaragua in the past, but there is hope to establish a better economic system that can create many more jobs and lead Nicaragua to a better future. Organizations like the World Bank and Save the Children are instituting an educational and job pathway for young and experienced Nicaraguan citizens alike to create a more prosperous Nicaragua.

Mario Perales
Photo: Unsplash

Globalism Reduces PovertySeveral factions surround globalism, some cite statistical reduction in poverty, while others decry effects on local communities. As in all reductive thinking, oversimplification misstates the complexity, succumbing to the facility of a universal perspective. What is absolutely clear, however, is the initial decades of global trade created categorical winners and losers — the most impoverished 5% gained $.07 in daily income, while the top 1% averaged $70. The theory that globalism reduces poverty is multifaceted, and such, globalism is best described as a “two-way street.”

Global Inequality

As the global pool of wealth undeniably grows, financial resources are increasingly concentrated among a powerful economic cadre, actually increasing global inequality. Subsequently, inter-national economies are seeing more parity, but intra-national wealth distribution is increasingly unequal.

Absent the economic investment from global trade, however, developing nations struggle to modernize. Lacking foreign capital investment to create sustainable industries, an estimated 95% of Indian youth are forced into informal child labor. In the nation-state equivalent of “Sophie’s Choice,” governments are forced to participate while the premise that globalism reduces poverty remains dubious.

Relative and Absolute Poverty

Early returns from globalism showed a reduction in extreme poverty from 36% to 19% between 1990-2008 and capitalists trumpeted imminent eradication of poverty by the benevolent “invisible hand” of market forces. Undoubtedly a monumental achievement, millions have benefited from access to foreign markets.

As always, the devil is in the details. Poverty is an indiscriminate measure, a theoretical categorization defines the powers that be. For the World Bank, poverty is a function of daily income. But, between 1990-2018, the threshold indicating extreme poverty has preposterously risen a mere $0.90 while global GDP grew by $60 trillion during the same period. Given such disproportionality, it is difficult to see how globalism reduces poverty.

Global Poverty or Global Inequality

Ambiguous poverty metrics belie a true consequence of globalism, that the top percentile claimed more than 60% of growth. To retain these substantial gains, it is the providence of influential international corporations and institutions to promote globalism. Exceedingly fungible, poverty metrics become a prism through which various interests and policymakers justify exploitative agendas, often accompanied by stifling conditionalities.

As the International Monetary Fund and European Union counsel draconian measures to fledgling economies, local “governments often find it politically easier to cut the public expenditures for the voiceless” impoverished as connected wealthy classes are “disinclined to share in the necessary fiscal austerity.”

Equally as true in developing nations, entrenched hegemonies have little incentive to shoulder the burden of globalism and frequently siphon economic growth for personal enrichment. Irresponsible stewardship of finances and resources, as always, disproportionately affects voiceless and impoverished communities.

Generations after the ouster of foreign monopoly United Fruit Company from Latin America, indigenous farmers’ share of profit is essentially stagnant as corrupt domestic entities pocket revenue. Globalism reduces poverty only when sufficient protection is guaranteed to populations most at risk of exploitation and achieved only when international, federal, corporate and municipal institutions communicate with disenfranchised communities.

Paternalism in South Africa

Under the best of circumstances, sudden inundation of investment and foreign influence is devastating. For countries without robust legislative institutions, it is cataclysmic. The hyper-racialized-apartheid bureaucracy of South Africa was particularly ill-prepared for the rapid modernization required by globalism.

Despite democratic revolution, political bodies could not address the dual responsibilities of erasing paternalistic and racist policies while simultaneously reentering international trade. After centuries of protectionism and isolation, South African society was a manicured house of cards temperamentally opposed to foreign influence.

The draconian society, which enslaved the Black majority, created a delicate homeostasis and the post-apartheid government was manifestly incapable of protecting the citizenry as globalism began in earnest. A systematically underprivileged class was ripe for exploitation.

Skills-Based Bias

During apartheid, underpaid, low-skill labor provided the engine for economic growth in South Africa. Known as “lumpenproletariat,” these peri-urban shantytown workers relied on the largesse of landed aristocracy for survival.

As a matter of course, economic opportunities through education represented an existential threat to White hegemonies. Because “it is surely the lack of opportunities of the less advantaged that is the real concern” in reducing poverty, undereducated South Africans were dispositionally unable to profit from economic growth.

Compounded by exclusion from land ownership, Black South Africans possessed neither the capital nor the skills for socio-economic gain. Various policy initiatives for Black Economic Empowerment (BEE) have targeted inequality, but generations of subjugation cannot be erased during the short lifespan of South African democracy.

Case Study: South African Winemakers

Overregulation and heavy subsidies throughout the 20th century created an extremely inefficient South African wine industry. Traditional focus on bulk production for domestic markets encouraged widespread plantation of high-yield, low-quality cultivars that were antithetical to international demand for higher quality. With a contorted supply chain entirely unfit for global competition, South African winemakers responded by replanting 50% of vineyards between 1990 and 2005.

To finance these changes, producers required foreign investment. At the behest of multinational distributors, conglomeration through a spate of mergers destabilized traditional market structures — the consolidation of Distillers and Stellenbosch Farmers Winery eliminated 2,000 jobs alone.

Moreover, a weak currency forced producers to rely on foreign capital for infrastructure improvements to replace apartheid-era slave labor. As South African winemakers became increasingly dependent on external financing, mechanization reduced permanent employment by 60%.

The Unequal Distribution of Benefits

Nonetheless, foreign investment allowed the wine industry to grow. Exports increased tenfold during the 90s, and by 2002, South Africa was the fastest-growing sector in the all-important British market. Representing 45% of domestic exports, the fortunes of South African winemakers were existentially linked to unpredictable foreign markets.

But, native producers have seen little benefit. As of 2018, the average return on investment for those costly infrastructure upgrades is an abysmal 2%. And after three decades of democratic rule and countless land reforms, Black ownership in the wine industry is 3%. However, a goal of 20% by 2025 was established in 2007.

A Two-Way Street

In the hyper-competitive wine trade, “survival is not made any easier by the fact that globalization is a two-way street.” The South African wine industry is just one example of countless local communities at the mercy of free markets.

Nonetheless, increased trade and economic growth from globalism affect poverty. The 21st century will be judged by how well the fruits of international wealth are distributed to the most vulnerable populations. As early growing pains subside, poverty eradication is within grasp if the world so chooses.

Kit Krajeski
Photo: Flickr

China's Economic Status
China is part of Southeast Asia and the third-largest country in the world. In 2020, China’s economic status declined due to the COVID-19 pandemic as businesses shut down and a halt on exports resulted in a loss of $2.1 trillion. However, as of 2021, the country is gradually recovering from the impact of COVID-19.

Why China is Growing so Fast

The Central Economic Work Conference (CEWC) had initially estimated a 6% growth for China in 2021. However, in 2021 so far, China has jumped to an astonishing 9% GDP growth. This increase is due to COVID-19 vaccine distribution throughout the country, which has encouraged China’s president and government to reopen businesses. China’s leaders are also working to provide more goods and services, control carbon emissions and advertise the positives of reform. Retail sales have increased 34% due to the country lifting its restrictions.

Climate and Pollution Control

China took inspiration from California on how to reduce carbon emissions. California had a six-year plan to reduce carbon in the atmosphere. Ever since the U.S. withdrew from the Paris climate accord, China has taken the lead in guiding itself and the rest of the world in reducing climate change. In 2018, China’s Five Year Plan brought attention to the carbon market. Essentially, reducing carbon also reduces pollution and health conditions.

In China alone, pollution kills 1.6 million a year. Yet as of February 1, 2021, China’s carbon market policy officially emerged in an effort to reduce carbon in the country. Moving away from industrialization and providing a more significant focus on energy consumption could potentially provide future generations with a higher expectancy. Although it will take time to reduce carbon dioxide emissions due to China’s many coal-dependent companies, the country is already setting plans in motion to replace coal with solar power and windmills. The country hopes to achieve these goals by 2030.

Technology

Competition between the U.S. and China involving developing technologies has existed for decades. In highlighting potential on educational and technological advances, China has a chance of becoming one of the world’s most advanced countries. China has chosen to focus on basic research to lead to a higher percentage of research and development. Between 2021 and 2025, China hopes to create laboratories that focus on various categories such as biomedicine and energy efficiency.

Looking Ahead

By implementing these plans, China is on the road to recovery from the COVID-19 pandemic as vaccines make way for much-needed economic improvement. Moreover, funding for education, technology and businesses will keep China out of dept as it continues to rise as a world power. As trade opens back up, China will guide other countries in keeping their economies relatively successful, hopefully leading to a reduction in health issues and global poverty.

– Selena Soto
Photo: Flickr