Information and stories about economic growth.

Prosperity in TaiwanAfter World War II, Taiwan faced severe poverty. The conflict between China and Japan ravaged the land, and the Chinese Civil War that followed brought about even more destruction. By then, the majority of the Taiwanese people lived in absolute poverty; over 60% of the population were farmers just scraping by. However, as of 2019, Taiwan’s GDP broke $1.2 trillion. With a Purchasing Power Parity of $52,300, Taiwan now ranks 19th highest in terms of GDP per capita. So, how did prosperity in Taiwan develop so quickly?

Foreign Aid

After the war, nations, especially the United States, provided aid for hundreds of millions. From 1950 to 1965, U.S. Aid accounted for roughly 6.5% of Taiwan’s GDP. The stimulus worked: the funds sparked Taiwan’s economy and resulted in self-sustainable and rapid economic growth. The country became part of a group called The Four Asian Tigers, consisting of Singapore, South Korea, Hong Kong and Taiwan. The rapid industrialization of these nations pushed their economic growth rates near 8%, which is an extraordinarily high mark. In Taiwan’s case, this phenomenon became known as the Taiwan Miracle.

Agricultural Economy

When the Japanese occupied Taiwan, they established a tenant farming system. More than 70% of farmers were part of this system, where they labored only to give the majority of their harvest to their landlords. The distribution of land, wealth and power was absurdly unequal.

However, after the war, in 1949, Taiwan’s Provisional Governor, Chen Cheng, advocated for land reform that would allow farmers to own the land they toiled. The revolution took place without bloodshed. Moreover, rice yield went up 46% in just a 4-year span after the reform, from 1.037 million metric tons in 1948 to 1.517 million metric tons in 1952. This increased yield freed up a vast labor source, who left the farms and sought new opportunities.

Investing in People

With little natural resources on the island, Taiwan took to investing in its greatest asset: the people. An indicator called the Human Development Index score is calculated in regards to the standard of living, life expectancy and education of a country. Taiwan’s Human Development Index score of 0.880 ranks them 6th in Asia.

Taiwan’s investments in education led to valuable innovation. In 1987, Taiwan established the world’s first semiconductor foundry, Taiwan Semiconductor Manufacturing Company (TSMC). Today, TSMC is the third-largest producer of semiconductors, right behind South Korea’s Samsung and the United States’ Intel. These chips are found in electrical devices around the world, and, moreover, TSMC provides thousands of high-paying jobs. The current state of the Taiwanese economy sets a definitive difference from the agricultural economy just a few decades ago; prosperity in Taiwan is exponentially greater today than it used to be.

Conclusion

Taiwan’s rapid shift from poor to prosperous, also known as the Taiwan Miracle, demonstrates how foreign aid can greatly influence the development of a nation. Their story is one of rags to riches on a national scale.

Today, prosperity in Taiwan marks the country among the wealthiest in Asia despite its small size. Taiwan has experienced the first-hand benefits of aid; now, Taiwan has become a donor itself. The country works to lessen poverty, increase harvests and assist with medical care across the globe. Perhaps the countries receiving Taiwan’s aid will someday become the next helping hand, and the Taiwan Miracle will live on in the receiving and giving of other developing countries to continue the chain effect of poor to prosperous.

Jacob Pugmire
Photo: Unsplash

Poverty in Rwanda
Rwanda is a small landlocked country in the center of Africa. With a sprawling savanna in the east and mountainous jungle in the west, the country has impressive natural features that have increasingly drawn international intrigue. Beyond Rwanda’s natural wonders, there have been great strides to combat poverty in Rwanda since the 1994 genocide in which 800,000 people died in 100 days. While the country faces substantial obstacles, there are many positive indicators of Rwanda’s future economic stability.

The Good News

Over the last two decades, Rwanda has shown an average annual GDP growth rate of 7%; this is consistently above the average in Sub-Saharan Africa. Another promising factor is that Rwanda has an increasingly diverse economy. Traditional sectors, such as agriculture and services, are contributing alongside emerging sectors, such as electricity, infrastructure and construction. Tourism has also been a key factor and now contributes to 10% of the national GDP.

Due to these economic advances, Rwanda has become the darling of the World Bank. The World Bank consistently invests hundreds of millions of dollars in public improvement projects in areas ranging from education to renewable energy. The results of those projects are promising. From 2009 to 2019 national electricity access jumped from 9% to 47%. Additionally, through the World Bank-supported Rwanda Urban Development Project, six cities have directly benefited from a massive increase in urban roads and stand-alone drainage.

The Obstacles

Poverty in Rwanda is still significant; around 39% of the population lives below the poverty line. One contributing factor is that Rwanda suffers from a poor education system where only 68% of first-graders end up completing all six years of primary education. Another component is that domestic private investment in Rwanda has yet to take off, mainly due to low domestic savings. Additionally, many rural Rwandans operate subsistence farms and thus have little disposable time and income.

According to The Washington Post, the authoritarian streaks of Rwanda’s President, Paul Kagame, are another hindrance to the alleviation of poverty in Rwanda. In recent years, tourists have marveled at the clean streets of Rwanda’s cities. What those tourists cannot see, is the forced removal of “undesirables” into detention centers.

In rural areas, the government has burned farmers’ fields because they did not grow their assigned crops. Rural residents have also had to deal with Kagame’s heavy-handed approach to modernization. In some villages, Rwanda’s regime has stripped villagers of their grass roofs with the promise they would return with metal replacements. When the new roofs do not come residents live in exposure which leads to illness and fatalities.

Some of Kagame’s policies have drawn international outrage. In 2012, Kagame supported Congolese rebels which resulted in the United States and the European Union suspending international aid. Another similar scenario may be on the horizon with recent reports of Kagame’s regime manipulating poverty statistics.

In 2019, a Financial Times analysis of poverty statistics found that the government was misrepresenting data to exaggerate the decrease in poverty. Despite that claim, the World Bank has continued its myriad of investments in the country and so have many other major donors. However, as countries on a global scale focus more resources domestically due to the COVID-19 pandemic, international aid to Rwanda is in danger. Aid is still necessary to prevent catastrophic consequences as Rwanda is experiencing a dire humanitarian situation. The silver lining is that many of Rwanda’s usual donors are still in positions to assist.

The pandemic has also adversely affected tourism and exports, which are huge pillars of the Rwandan economy. Furthermore, as the country directs its healthcare workers and fiscal resources towards emergency response, other health concerns, such as the AIDS epidemic, move to the sidelines.

Hope for Poverty in Rwanda

Though Rwanda has problems that it cannot easily solve, there still is hope. Before the pandemic, Rwanda’s economic growth exceeded 10% in 2019. A two-thirds drop in child mortality and near-universal primary school enrolment accompanied this statistic.

Additionally, two World Bank-funded projects including the Rural Sector Support Program, and the Land Husbandry, Water Harvesting and Hillside Irrigation Project have increased the productivity and commercialization of rural agriculture. As a result, maize and rice yields doubled and potato yields tripled between 2010 and 2018. These results are especially promising considering poverty in Rwanda is the most severe in rural areas.

Rwanda has also achieved a strong level of political stability. Women make up 62% of the national legislature and previously marginalized opposition parties have gained parliamentary seats without disrupting the system’s stability. These are indicators that will increase confidence in foreign investors. While Rwanda has a troubled history, the future holds a lot of potential.

Cole Penz
Photo: Wikimedia

Women-Owned BusinessesNonprofit organization Mary’s Pence is working towards a world of empowered women making changes in their communities. To get there, Mary’s Pence partners with grassroots organizations in Canada, the U.S. and Central America to provide funding and development programs for women-owned businesses.

Executive director Katherine Wojtan believes Mary’s Pence is different from other nonprofits because the organization not only cares for the individual women, but also oversees the sustainment of their small businesses. Mary’s Pence also values the idea of “accompaniment,” explained by Wojtan as utilizing the abilities of everyone to accomplish a long-term shared vision. This concept is applied to the organization’s execution of both the programs in the states and in Central America, focusing on improving the whole rather than the individual.

ESPERA

The program in Central America called ESPERA, or Economical Systems Providing Equitable Resources for All, was created almost 12 years ago. “Espera” is the Spanish word for hope, a fitting name for the life-changing program working with women in Mexico, Guatemala, Honduras, Nicaragua and El Salvador.

“This is very intentional, it is not about making individual women rich, but about ensuring all women have access to resources and skills to make their way in the world and earn what they need for a good life,” Wojtan said.

ESPERA aids women who were victims of domestic or gang violence or are single mothers struggling to make ends meet. By giving grants to grassroots organizations in struggling communities, Mary’s Pence creates community-lending pools which women can take loans from to start local women-owned businesses that generate income. To ensure success, the staff of Mary’s Pence teach the community loan management and help elect leaders to track the lending.

Gilda Larios, ESPERA team lead, grew up in Guadalajara, Mexico and worked with Central American refugees before starting work with Mary’s Pence. ESPERA funding gives back to the whole community, not just the women receiving aid. Instead of focusing on building credit, women realize the importance of circulating money and products.

“Their confidence grew – first they asked for a very small loan, and over time they asked for larger loans and grew their businesses,” Larios told The Borgen Project. “With their strength, they are role models for new leadership in the community.”

ESPERA and COVID-19

ESPERA has helped develop many small women-owned businesses that create jobs for their communities and generate income for struggling women. Unfortunately, the COVID-19 pandemic put many of these businesses at risk as workers feared for their lives, but the ESPERA team responded fast, changing their focus from long-term development to responding immediately to the needs of the women.

As some women panicked about their businesses and the effects of the pandemic, the ESPERA team responded with a 12-week emotional wellness series, delivered via WhatsApp, and supported stores so they could keep reasonable prices for the communities. For women in the midst of paying back loans to the community-lending pool, their status is put on hold until they have the income to continue their payment.

Despite the support network ESPERA provides, the pandemic revealed some gaps in the system. It was challenging to ensure the safety of women experiencing domestic violence. The lack of access to phones and the internet made communication between communities and ESPERA leaders challenging. However, this time of crisis also brought the communities closer and proved the importance of working together through local businesses.

In her interview with The Borgen Project, Larios told of a woman named Aminta, who is in the ESPERA program in San Salvador, El Salvador. She transitioned from working in a “maquila,” or factory, to starting her own business sewing uniforms for local sports teams. During COVID-19, she also began sewing masks to help keep her community healthy. Success stories of women-owned businesses like this one propel communities into further financial security and empower other women to do the same.

Confidence and Creating Futures

Above all, ESPERA and Mary’s Pence hope to give women confidence in their own abilities to create the future they want for themselves and for their families. For Larios, the most rewarding part of working with ESPERA women is the “feeling of satisfaction and joy to see them embrace their possibilities and capacities that before they thought they didn’t have.”

Through ESPERA and their role in the creation of women-owned businesses, Mary’s Pence continues to change women’s lives by showing them the power they already had within themselves.

– Kiyomi Kishaba
Photo: Google Images

Eliminate Poverty in Germany
Germany’s economy is booming. Since reunification, the unemployment rate has steadily decreased and Germany has turned itself into one of the richest countries in Europe. Nonetheless, poverty in Germany remains a potent issue. In 2017, more than 15% of people in Germany were impoverished. Here is some information about the country’s poverty rates as well as its plan to eliminate poverty in Germany.

The Rise of Poverty in Germany

According to the European Union’s (E.U.) standards, the number of individuals living in poverty in Germany is continuously increasing. In 1995, 12% of Germans were making wages that qualified them as at risk of or living in poverty. By 2014, that number had risen to approximately 16%. As of 2017, approximately 19% of people in Germany were at risk of living in poverty. Over 15% were already living below the poverty line. The Institute of German Economic and Social Research defined the poverty line as a 60% median net income.

The above percentages only represent households in Germany and do not include those living in refugee camps who may be experiencing poverty. As of 2018, Germany had more than 1 million refugees living within its borders.

Despite the country’s economic success in manufacturing and trade with the E.U., Germany’s poverty rate continues to reach record highs year after year. While the economic boom helps the country in certain ways, the benefits oftentimes do not reach the impoverished. People living in poverty often lack the resources necessary to escape impoverishment. Though new jobs are available, the wages are generally meager, while the profit tends to go to those who are already wealthy. Many attribute the rising poverty rate in Germany to the exploitation of the poor.

Unequal Poverty Across Germany

Impoverishment does not affect all regions of Germany equally. Southern Germany, the least impoverished area of the country, still has a poverty rate of about 12%. The region with the highest poverty rate, the North, has a poverty rate of a staggering 18%. Additionally, the North also experiences the highest poverty growth rate.

This inequality is largely attributed to the Ruhr region, a highly industrial area in Northern Germany. The Ruhr is the most densely populated region in the country, with production focusing largely on coal, steel and chemical manufacturing. During World War I and World War II, the Allied bombing destroyed nearly 75% of the region. Since then, Northern Germany has experienced long term impoverishment that continues to contribute to the growing poverty rate.

Solutions

Despite the growing rate of poverty, the country is aware of the issue and is actively working to eliminate poverty in Germany. The country is continuously creating more jobs and working towards a stronger economy. Additionally, Germany also raised its minimum wage in 2015 to 8.50 euros an hour. Experts believe that this increase in the minimum wage helped approximately 4 million people grow their wealth. The country has also strengthened support for vocational training in an attempt to increase the amount of employed low-skilled workers. Germany is aware of the economic inequality facing many of its citizens and is working hard to create more policies that help the poor escape poverty’s clutches.

Poverty in Germany is a pertinent issue. Despite the country’s wealth and economic growth, the rate of poverty continues to rise, consistently reaching new highs every year. Although the issue of impoverishment may seem overwhelming, the German government continues to persist and develop programs designed to eliminate poverty in Germany.

– Paige Musgrave 
Photo: Flickr

Economic Growth in Madagascar
Despite Madagascar’s 74 percent poverty rate in 2019, the small African country has one of the fastest growth rates in the world. GDP growth hovered around 5 percent in 2018 and 2019 and projections determine that it will remain at that rate in 2020 and 2021. Public and private investments in infrastructure, mining, energy and tourism helped drive the country’s recent economic growth. However, poverty still remains high, especially in the more than 60 percent of the total population that works in agriculture. Increased economic growth in Madagascar is drawing international investors to open businesses in the country, creating jobs and stimulating further growth in the developing nation.

Current State of Business

The main industry in Madagascar is agriculture. About 80 percent of Malagasy work in agriculture and approximately 86 percent of that number are in poverty. In addition, the country relies heavily on vanilla exports. The African nation is the world’s largest vanilla producer. Transitioning out of agriculture and diversifying the economy could help spur development. In 2017, the Economic Development Board of Madagascar helped reform the business climate to encourage outside investors to expand to the country. This also entailed fighting against corruption and money laundering. With Madagascar improving the business environment, international businesses may see potential in expanding to the island nation.

International Mining

Mining is yet another area driving economic growth in Madagascar. Madagascar is rich in natural resources such as oil, gas and ilmenite. There are more than one million jobs related to mining in the country. Additionally, 30 percent of export revenue comes from mining. Madagascar is abundant in ilmenite, zirsill and monazite. Rio Tinto, an Anglo-Australian company, is one of the large-scale mining companies. About 90 percent of Rio Tinto’s employees in 2018 was Malagasy. Although mining tends to be part of land degradation, Rio Tinto agreed to restore wetlands and biodiversity to its previous state after it completes mining.

Tourism Growth Resulting in Hotel Developments

Tourism remains an important industry that helped increase economic growth in Madagascar. More than 250,000 people visit the country annually to bring in $748 million in tourism revenue. The tourism industry grew by 20 percent in 2016 alone. Hotel development is one growing sub-category that could potentially add jobs to locals, particularly those seeking higher pay than they receive in the agriculture industry. The Economic Development Board of Madagascar stated that 11 percent of total employment is related to tourism.

More than 70 percent of visitors to the country stay for two weeks or more, expressing the value these visitors place on the economy. International hotel chains took notice of the increased demand for hotels in Madagascar. Radisson Hotel Group planned two hotels and one apartment complex in the country in 2019. All three buildings should open in 2020. Marriott International is opening hotels in many African countries, and one country on its list is Madagascar. Hotel and tourism growth could promise more jobs to Malagasy.

Clean Energy for the Future

The energy sector has even greater importance than tourism. Only 15 percent have access to electricity, which is one main impediment to economic growth in Madagascar. This holds back the country due to energy being one foundation to a developed economy. Schools, hospitals and other buildings require power to function at their maximum potential. As a result, the government of Madagascar set its goal high with the challenge of attaining 70 percent of electricity access by 2030. The country is already making progress to reach this goal. The country’s largest employer, Groupe Filatex, is building four solar power plants that will generate 50 MW.

As of 2019, Madagascar’s total capacity was 500 MW. Groupe Filatex employs more than 15,000 people and will add more jobs in the future to meet the high demand. Lantoniaina Rasoloelison, Minister of Energy and Hydrocarbons, explained that the country’s energy policy for 2015-2030 supports the transition to the energy mix for electricity and lighting. This will include 80 percent of renewable resources.

Growth Ongoing

International investors such as Radisson Hotel Group and Marriott International took notice of economic growth in Madagascar within the last two years. Three sectors seeing growth in the country are tourism, mining and energy. Additionally, the government’s goal of increasing electrification is a good next step to growing the country into a developed economy with less poverty and increased livelihoods. The addition of more jobs to these industries could reduce poverty.

Lucas Schmidt
Photo: Flickr

The Ethiopian Education SystemTo the west of Somalia and the north of Kenya lies a heavily populated East African country called Ethiopia. Known as one of the least developed countries in the world, Ethiopia has been suffering. The Ethiopian education system has a correlation with the high poverty rates, which are some of the highest in the world. As the second-largest country in Africa, with a population of 105 million, extreme poverty is impacting an abundant amount of people.

Economic Conditions

Although the country had previous successes during its Civil War, it has a very politically unstable economy. This is largely due to Ethiopia’s location. The country is between some of the most politically unsound countries in the world including Djibouti, Eritrea, Kenya, Somalia, South Sudan and Sudan. The citizens of Ethiopia are almost always in conflict with governmental leaders. Despite this, the Ethiopian economy is the fastest-growing in the world; considering the state of the economy two decades ago and the current state, it is truly inspiring growth. In the past decade alone, the economy averaged a 10.9 percent growth annually.

Poverty in Ethiopia

Although the economy is developing rapidly, poverty rates are very high, with an income per capita of $790. Ethiopia’s poverty line sits at 24 percent. With the growing economy and developing infrastructure, that poverty rate has actually improved from 30 percent in 2011. This national development is likely to further decrease poverty rates.

According to the World Bank Ethiopian Poverty Assessment, the reductions in poverty were largely due to agricultural growth, which supports economic growth. The Assessment explains other ways that the citizens are working to improve the state of the nation and the Ethiopian education system.

The Ethiopian Education System

The Ethiopian education system still has substantial work to catch up to the nation’s economic growth rates. These high poverty rates induce greater struggles in building the Ethiopian education system. Similar to many countries that suffer from extreme poverty, poverty is severely impacting the education system in Ethiopia. According to the World Bank, Ethiopia is one of the most educationally disadvantaged countries in the world.

Although rates of educational enrollment have grown exponentially in elementary, secondary and higher education, elementary education enrollment increased from 29 percent in 1989 to 86 percent in 2015 and secondary education enrollment increased from 16 percent in 1999 to 26 percent in 2015. Further, higher education has grown from 16 universities and less than 18,000 enrolled students in 1986 to 30 universities and 352,144 enrolled in 2015. This growth outlines the growth of the Ethiopian education system.

Due to the nation’s economic growth and decreased poverty rates, more schools are likely to open, causing enrollment rates to rise. The British Council projects the number of tertiary students in the Ethiopian education system will increase by an additional 1.7 million students by 2025. Further, the World Bank stated that Ethiopia should reach lower-middle-income status by 2025. These growth rates are profoundly promising to the development of the nation.

– Sarah Mobarak
Photo: Pixabay

Venezuela’s Rum
Extended hyperinflation continues to cripple Venezuela’s economy with prices of basic groceries skyrocketing to five times the monthly minimum wage from 2015 to 2017. Estimates determined that extreme poverty in Venezuela in 2016 was 82 percent. Yet, there is a shimmer of light with potential economic growth through Venezuela’s rum industry.

Fall in Whiskey Sales

For a long time, people have seen Scotch as a status symbol in Venezuela and often only for the upper-class to enjoy at home or for middle-class friends to have on a night out. In 2007, Venezuelans consumed over three million boxes of whiskey, fifth in consumption worldwide and priced at nearly $151 million in imports. In 2009, imported Scotch whiskey outsold Venezuela’s rum sales nearly two to one.

However, with hyperinflation setting in, reaching over 60,000 percent in 2018 and almost 350,000 percent in 2019, imports experienced restriction and the tightening of currency controls, putting whiskey out of reach for many. At the black market rate, a bottle of Chivas Regal 18-Year-Old Whiskey costs $31, more than the country’s monthly minimum wage.

Rise in Rum Sales

The popularity of whiskey began declining in 2013, with a 29 percent drop in sales. At this point, the country had only recently crossed the hyperinflation threshold of 50 percent, while Venezuela’s rum sales increased by 22.6 percent. During that same time period, domestic rum production increased from 15.8 million to 21.8 million liters.

In addition to the rising cost of imports, the government’s recent introduction of relaxed regulations and loosening price controls has bolstered domestic rum production. This has led to Santa Teresa, one of Venezuela’s rum distilleries, to become the first in the country to release a public offering in 11 years, selling one million shares on January 24, 2020. With banks hesitant to lend, public offerings provide alternative forms of capital that can allow businesses to grow and become more competitive in the global market.

Project Alcatraz

Project Alcatraz, a recreational rugby initiative, launched as a means of rehabilitation and to serve as a deterrent for gang violence after gang members broke into the grounds of the Santa Teresa rum distillery. Now, Project Alcatraz includes vocational training, psychological counseling and formal education, reaching roughly 2,000 adolescents and a few hundred inmates.

Additionally, experts believe that the project has led to a drop in the murder rate of the local municipality. In 2003, the year the project originated, there were 114 murders per 100,000 people; as of 2016, that number had dropped to 13 per 100,000 people.

Cocuy

Venezuelan rum has not been the only liquor that has seen recent success in the country. Cocuy is a liquor similar to that of Mexican tequila because it comprises of fermented agave plants. Cocuy has a long history in the country, with indigenous groups originally making it 500 years ago. The country reportedly outlawed the drink prior to 2006 to boost Venezuela’s rum and beer production and sales. Cocuy production companies regained licensure, resulting in the drink gaining popularity throughout the years. This once stigmatized drink meant for the poor and less refined is now one of choice primarily because of its low price point.

While the rise in domestic liquor sales may be seemingly insignificant, the growth of any domestic industry can play a critical role in the reversal of the economic climate of an impoverished nation. Venezuela’s rum revolution in the past decade could turn the country’s economy around.

– Scott Boyce
Photo: Pixabay

Bolivia's Poverty Reduction
Bolivia is a South American country that continues to reduce its high poverty rate. Poverty lowered substantially from 66 percent in 2000 to 35 percent in 2018. The government of Bolivia took direct action to develop its economy, reduce its poverty and income inequality and increase foreign investment. The Latin American country still has a high poverty rate, yet its progress in the past 20 years shows promise that Bolivia’s poverty reduction and economic development will continue.

Government’s Direct Involvement in Poverty Reduction

The Bolivian government approved the National Economic and Social Development Plan 2016-2020 to bring about change in its country. Former President Evo Morales fought for income equality and higher wages as Bolivia’s president, and the country is still fighting for his goals. The country intends to help its people live a prosperous life without worrying about the effects of poverty, such as hunger and an inability to afford health care. The main objectives of the plan include eliminating extreme poverty, granting basic services to the entire population and diversifying its economy. The plan set forth a continuation of Bolivia’s poverty reduction progress since 2000 while also lowering income inequality.

Poverty almost reduced by half from 2000 to 2018, which economic growth partly drove after Bolivia transitioned into a democratic society during the 1990s. Income inequality lowered as the Gini coefficient demonstrated. If the Gini coefficient is zero, then income inequality is zero. This income inequality indicator showed a reduction from .62 in 2000 to .49 in 2014. For reference, the U.S. Gini coefficient in 2017 was .39. The 2016-2020 plan sought to continue its efforts in reducing income inequality. Although the Gini coefficient lowered, income inequality still remains an issue in Bolivia.

Poverty Reduction Through Economic Growth

Economic growth is another factor that helped with Bolivia’s poverty reduction efforts. Bolivia’s GDP growth hovered around 4 percent since the early 2000s. From 2000 to 2012, Bolivia increased its exports that consisted mainly of minerals and hydrocarbons. Although hydrocarbons grew controversial in Bolivia, hydrocarbons and minerals accounted for 81 percent of all exports in 2014. In 2000, its exports accounted for only 18 percent of GDP, yet exports grew to 47 percent in 2012. Bolivia’s decision to focus on exports helped grow its economy, add jobs and reduce income inequality. In time, Bolivia may transition to cleaner sources of energy for its future.

Economic growth led to wage increases for many Bolivians, which expressed the idea of poverty reduction through economic growth. Bolivia’s GDP grew by a massive 80 percent from 2000 to 2014, and there were various positive side effects of this growth. Salaries increased after the government took direct involvement in income inequality. The real minimum wage increased by 122 percent in the years 2000-2015. The average labor income also increased by 36 percent during 2000-2013.

The International Monetary Fund (IMF) came to the conclusion that labor income was the number one factor that led to reductions in poverty and income inequality from 2007 to 2013. Nonlabor income such as remittances, rents and transfers contributed a small amount to these reductions. Nonlabor income was an important aid for the elderly though.

Bolivia’s Progress in Income Inequality and Economic Development

Bolivia is an excellent model for what is possible through a government’s direct involvement in poverty reduction. Economic growth helped fuel Bolivia’s objectives in reducing poverty and bringing income equality to its people. Although poverty remains high, Bolivia’s progress in the past 20 years shows promise that poverty will continue to lower. Income inequality remains an issue, and as shown from the IMF’s research, wage increases are key to Bolivia’s poverty reduction.

Lucas Schmidt
Photo: Flickr

Investment Zones in Africa
Although populous, rich in natural resources and blessed with an abundance of arable land, many countries in the African continent continue to contend with poverty and food insecurity. That said, the status quo in Africa is far from all doom-and-gloom. More than 400 African companies boast annual revenues of $1 billion or greater, and the continent’s average GDP increased at an annual rate of 5.4 percent from 2000-2010. Meanwhile, a 2018 report from the World Bank noted that six of the world’s 10 fastest-growing economies were in Africa, with Ghana claiming the top spot. New markets and investment zones in Africa offer entrepreneurs a host of business opportunities.

Competition for African Business

Africa’s economic revolution and ongoing population boom are an enticing prospect for international companies and foreign investors. China, Russia and India are just three of the nations competing for African business. In 2019, Chinese-African trade accrued $170 billion in profits, more than 20 times what it was in the early days of the current millennium. Foreign powers import Nigerian crude oil and cobalt from the Democratic Republic of the Congo or establish utility contracts in West Africa and this is only the beginning – Africa’s fast-growing economies promise even greater profits down the road.

Agriculture

Africa owns more arable land than any other region on earth, but most of that land is unutilized. African agricultural imports account for only 10 percent of the world market, while 60 percent of the world’s uncultivated land lies in African borders. Agribusiness has the potential to become one of the most profitable investment zones in Africa, as cash crops like sugar, tobacco and coffee have already yielded dividends for exporters even at less than optimal production.

Industry and Infrastructure

Given Africa’s generally outdated energy grids and telecommunications networks, infrastructure projects should prove a lucrative investment sector. Egypt initiated a full-scale infrastructure overhaul in 2015, while the Infrastructure Consortium for Africa (ICA) financed a number of ventures across the continent, including the North-South Power Transmission Corridor project. Some people project Africa’s domestic gas markets to grow 9 percent annually through 2025. African manufacturers are on track to double their production to roughly $1 trillion by 2030, giving the region the capability to undercut traditional (and more costly) manufacturing exporters like China.

Profit for a Purpose

Continued industrialization and population growth in Africa should lead to an influx of new markets and future generations of consumers. Importantly, the locals also stand to benefit from new revenue streams and investment zones in Africa, not just multinationals. African investors are increasingly trying their hand in the international stock exchange, contributing $13.39 billion to global Foreign Direct Investment (FDI) projects, and $10.2 billion to FDI funds in Africa itself. Africa, it seems, should become the next big player at the international economic table.

Dan Zamarelli
Photo: Flickr

Economy in Croatia
While beautiful, Croatia is not the most affluent in terms of economic standards. As of 2015, 19.5 percent of the Croatian population was below the poverty line. The financial crash of 2008 stunted the development of gross domestic product the country experienced since 1998. The convergence gap widened by 3 percent, launching the country into a recession. Luckily, RIMAC and its car, the Concept Two, is impacting the economy in Croatia in a positive way by offering Croatian’s jobs and allowing Croatia to compete in the international market.

Croatian Economic Slump

Various key issues lead to a poor economy in Croatia including labor shortages, minimal pay, lack of adequate education and subsequent lack of skill. Such domestic problems are integral to why many Croats are unable to find opportunities that match up to wealthier Western European countries such as the United Kingdom, Germany, Sweden and/or Switzerland. According to the Croatian Employers Association (HUP), firms in Croatia are unable to fill some 30,000 jobs. Most of these openings exist in the tourism industry, making up at least 20 percent of Croatia’s gross domestic product.

Potential for a Great Economy

Despite the current state of the economy in Croatia, an emerging market may turn it around. Croatia, along with many other European Union member states, has benefited from the integration and trade of modern goods and services, specifically in technology.

Concept Two’s Impact

In 2018, a zoomer of a car sped onto the world’s tech radar at the Geneva Motor Show called the Concept Two. This car may support the development of a thriving economy in Croatia. Some have deemed the vehicle as “alive with technology,” elevating the bar as the fastest electric car around the globe.

The CEO of RIMAC, Mate Rimac, developed the lightning-fast vehicle. Mate Rimac began the development roughly 10 years ago when he turned his gas-powered vehicle into an electric car. The CEO has also discussed his desire to create opportunities in Croatia, “a country where people usually emigrate from,” to keep citizens from leaving. Further, Mate Rimac has already hired individuals of 22 different nationalities to work at his company.

The company manufactures all components of the Concept Two in-house. With the pricey, technologically loaded unit selling for more than $2 million, the average Croat would not be able to afford such a speedster. although, this hefty price tag could bring in a large influx of stimulation for the economy in Croatia.

RIMAC’s Impact

According to recent reports, the manufacture and production of the Concept Two are now employing many. The company has listed 429 full-time employees as of October 2018. Prior to this report in 2017, a venture capital funding organization noted the availability of 100 new jobs at RIMAC. These efforts have resulted in a growth of nearly double.

Further, the European Investment Bank (EIB) notes RIMAC as a good investment. In 2018, the EIB provided a direct loan to expand the research and development department, in part due to RIMAC introducing jobs and growth of the economy in Croatia.

Investment in Innovation

Often, the best way a country can improve the national economy is to grow business that can compete on an international level. Countries in the Baltic have been able to improve the internal business climate by increasing competition at the global playing field. One can promote allowing businesses to start and grow through investment in innovation, much like the Concept Two with RIMAC. One of the most productive methods to increase economic growth is through research and development in modern technology.

Companies like RIMAC should improve the business climate and economy in Croatia. With enough investment and support, companies with bravery and innovative force have the potential to be a major player in promoting Croatia into the international economy.

– Robert Forsyth
Photo: Wikimedia