Human Capital Investment in SomaliaSomalia is one of the 10 poorest countries in the world. UNICEF estimates that 43 percent of the Somali population live on less than a dollar a day, while around half of the labor force is unemployed. Social unrest caused by a long civil war, coupled with weak institutions have contributed to devastatingly high levels of poverty in the region. One especially prominent effect of this has been the incredibly weak education system in Somalia. Only half of the Somali population is literate and in 2016, only 32 percent of Somali children were enrolled in school. This has undermined much of the government’s attempts to build successful anti-poverty initiatives, as economic development requires substantial improvements in the human capital development of Somalia.

Partnership with the World Bank

Somalia had previously been unable to attain a partnership with the World Bank, due to high levels of debt carrying over from previous World Bank loans. However, the ambitious economic reforms of the new Somali government which was established in 2012, offer hope for improvement, culminating in the new Country Partnership Framework established by the World Bank in 2018. The World Bank has dedicated its resources to aiding the Somali government in developing stronger institutions and economic growth, in line with the government’s National Development plan. As a result of the new partnership, the World Bank now accounts for 15 percent of total financing (around $28.5 million) for Technical and Vocational Education and Training programs in Somalia.

Human Capital Investments

These investments play a significant role in human capital development, as they offer an opportunity for Somalia to diversify its economy and offer the potential for granting individuals access to sustainable long-term income. This is especially true of the role that education plays, as creating a more educated population can be vital to ensuring continued economic growth, reducing the overall reliance on foreign aid. Improvements in human capital have the potential for massive returns. The World Bank estimates that human capital growth can produce a 10 to 30 percent increase in per-capita GDP, providing economic resilience, as well as developing the tools necessary to help lift a country out of poverty. 

Such programs can play a vital role in improving employer confidence and organizing effective human capital advances. While many other reforms may contribute to economic growth, it is important to note that since the World Bank began the partnership in 2018, the country’s GDP has grown by 0.7 percent.

Overall, by securing this partnership with the World Bank, Somalia is working toward major educational reforms to boost human capital development for this and future generations.

– Alexander Sherman
Photo: Flickr

Economic Growth in Nigeria
Nigeria, a country located on the western coast of Africa, makes up to 47 percent of the population of Africa. With the rising amount of people surrounding the area, there has been a vast amount of poverty overtaking the country. Recently, the economic growth of Nigeria has risen due to many factors such as its production of oil. However, no matter how much the economy grows, poverty continues to rise as well due to the inequality between the poor and rich.

Economic Growth

In 2018, the oil and gas sector allowed the economic growth in Nigeria to grow 1.9 percent higher than the previous year when it only grew to 0.8 percent. Although that is where more of the growth is, the oil sector does not have physical bodies working to ensure that the industry continues to grow. This leaves no growth in the stock of jobs, leaving the unemployment rate to rise to 2.7 percent since the end of 2017. Many hope that the new Economic Recovery and Growth Plan (ERGP) will promote economic resilience and strengthen growth.

ERGP

ERGP projects that there will a growth rate of 4.5 percent in 2019, but within the first quarter, there was only a growth of 2.01 percent. Charles Robertson, the global head of the research at Renaissance Captial, believes that ERGP’s 4.5 percent target was not unrealistic, especially since Nigeria was unable to meet those projections. Because most of the country’s economic growth comes from oil, there have not been many other non-oil jobs that have made a lot of profit.

The plan not only focuses on the rate of economic growth but also makes predictions that the unemployment rate will decrease to 12.9 percent. With the lack of available jobs, there has been little to no change in this rate as well. Many of the individuals that do have jobs, however, are earning up to $1.25 or less per day, which is not enough to pay for one household.

Inequality

As the economic growth in Nigeria grows, so does the gap between the poor and the rich. With the poor as the bottom 23 percent, the gap between the two has widened to 16 percent. A lot of the high-paying jobs are looking for people that have received high-quality degrees. If one does not have the money to pay for a good education, then they automatically miss out on the job opportunities that are out there. This means, that the children that come from rich families are the only ones that will be able to get the best jobs in the market.

The current government has been running a cash transfer program that provides 5,000 nairas to each household per month, which is approximately $14. This amount is not enough to relieve any household expenses because “less than 1 percent of poor people are benefiting.” Without any increase in money for each household, one cannot do much to decrease poverty.

Although there is economic growth in Nigeria, poverty is still on the rise. Many countries have faced this problem with trying to break the balance between the two and found it has not helped to decrease poverty as much. Hopefully, as the ERGP continues, it will help make changes.

Emilia Rivera
Photo: Flickr

Regional Inequality
China’s regional inequality has historically been an issue. It is common for developed countries to have regional wealth and income disparity between rural and urban areas. Enormous wealth inequality exists between rural and urban regions of China with 90 percent of all poverty being rural poverty.

The Current State of Regional Inequality in China

Along with China’s regional poverty, an educational disparity has widened within China. The government has supported and subsidized education in urban centers but neglected to invest in opportunities for rural education. Since the 1950s, rural attendance at the Universities of Tsinghua and Peking has declined from over 50 percent to less than 20 percent in 2005 despite the rural population making up the majority of China’s population at that time. The lack of educational opportunities in rural communities in China has fed into the downward spiral of stagnation for such regions, as an educated populace is a crucial asset for creating economic growth.

Previous Efforts to Combat Regional Inequality in China

Recently, the Chinese government has recognized the need to address the growing problem of China’s regional inequality and has enacted a series of relatively new but ambitious policies to tackle the crisis.

China proposed the first of these in 1999. The Great Western Development Strategy is a $1 trillion (Chinese Yuan) development plan that aims at investing in development and growth in the inland Western Regions of the country. The plan slowly began in the early 2000s with spending on infrastructure projects in the west.

One of the most major projects was the construction of the West-East gas pipeline which began in 2002 and ended in 2005. This was a very ambitious project that created numerous jobs and revenue for the west while also benefitting the east coast. Other energy initiatives focused largely on the creation of hydropower plants throughout the region. Other infrastructure projects have focused on transportation. The Qinghai-Tibet Railway and the Southern Xinjiang Railway finished in the mid-2000s as a part of the strategy. These new railways employed many people and improved transportation substantially in their respective regions.

The Great Western Development Strategy also hopes to entice foreign investments in the region. The primary strategies for this objective are environmental conservation and improvement in educational opportunities. The plan has waived tuition fees for compulsory education in west China in hopes of improving the overall education of its citizens. Huge ecological conservation policies, such as Returning Grazing Land to Grassland seek to convert vast swaths of farmland into natural grasslands, as well as protect and expand forestry.

Recent Efforts to Combat Regional Inequality in China

The Northeast Revitalization Plan aims to rebuild traditional industries in the northeast, but with added economic and environmental regulations. The plan has also abolished taxes on agricultural workers and farmers, hoping this policy will be favorable towards the regions declining agricultural industry.

The new proposal, the Rise of Central China Plan, focusses on improving China’s agricultural heartland. Many often refer to Central China as “China’s Breadbasket.” The region has experienced only a fraction of the growth that coastal regions have undergone. As of 2002, the region’s real Gross Domestic Product (GDP) was only 75 percent the national average. The Rise of Central China Plan will promote investment in advancements in agricultural techniques and technology with the hopes of increasing farming efficiency and creating larger yields in the region.

This is especially important for China as the issue of food security has risen for the highly populated nation. The Rise of Central China Plan also focuses on the development of transportation infrastructure in central China. A huge reason for central China’s economic stagnation has been lack of sufficient transportation, which has stifled its growth despite the region’s abundance of natural resources such as coal and its massive population.

Regional inequality in China has deep roots in past policies. The rural-urban divide has prompted a wave of bold new reforms aimed at combatting rural poverty and though the effort has just begun, these programs are showing promising results.

Karl Haider
Photo: Flickr

10 Facts about corruption in NigeriaCorruption in Nigeria is largely upheld by the state and its institutions, all the way from the police force, to the federal and state executive councils. National officials believe the source of corruption lies in the economy of Nigeria’s natural resources, specifically oil and natural gas. Addressing the source of corruption is integral to both the political stabilization and economic growth of Nigeria. Here are 10 important facts about corruption in Nigeria.

10 Facts About Corruption in Nigeria

  1. Corruption in Nigeria is persecuted via the Criminal Code and the Corrupt Practices and Other Related Offenses Act. Bribes, embezzlement and money laundering are punishable with prison terms between seven and 15 years. However, according to Transparency International, “nearly half of Nigerians perceive the judicial system to be corrupt… plagued by understaffing, underfunding, inefficiency and corruption.”
  2. In 2007, the Nigerian government passed the Fiscal Responsibility Act (FRA), which seeks to increase transparency within the country’s economic transactions. However, to date, there is no available data on the Act’s direct impact on minimizing corruption in Nigeria. To combat this shortcoming, civil society organizations have been working to assess the adequacy and legality of major Nigerian institutions suspected of corruption.
  3. The Public Procurement Act of 2007 works in conjunction with the FRA to eradicate corruption within government procurement of goods, a practice which is regulated very strictly internationally. During Goodluck Jonathan’s five year term as President, the Presidential Committee on Arms Procurement discovered that more $15 billion were diverted from the state treasury under fraudulent weapon exchanges.
  4. The Nigerian judiciary system has rather comprehensive laws against corruption, but its officials are often primary targets for bribes. In the fall of 2016, Supreme Court Justice Sylvester Ngwuta was persecuted on 15 different counts of fraud. In October of that year, the Nigerian government also uncovered a conspiracy including other Supreme Court justices involving more than $800,000.
  5. Government officials are also often bribed by companies seeking to evade corporate laws. The GAN Business Anti-Corruption Portal estimates that one in four companies “give gifts in order to obtain an operating license.” Standardizing the licensing process would likely result in a decrease in bribery at this level.
  6. Oil companies specifically have been closely monitored for both economic and political corruption. In 2015, President Goodluck Jonathan was accused of funding his reelection campaign with more than $2 billion from Excess Crude Oil.
  7. Tax evasion is also a common practice among big companies. In 2016, the Nigerian government discovered 700,000 businesses that had never paid taxes. Studies estimate Nigeria’s tax revenue at 8 percent of the country’s GDP, which is low in comparison countries of similar size, demographics and economy.
  8. Acquiring property in Nigeria can be difficult, given the competitiveness of owning land that is rich with natural resources. As such, businesses often bribe state governors to be given preferential construction permits. The Federal Capital Development Authority, located in Abuja, Nigeria, oversees this.
  9. PricewaterhouseCoopers, or PwC, estimates that the state of corruption in Nigeria “could cost up to 37 percent of GDP by 2030” without immediate intervention. While there have been a handful of legislative efforts to address these issues the past two decades, the World Bank’s report on Fiscal Governance and Institution also stresses the importance of developing data collecting methods to facilitate the implementation of more statistical evidence-based policies. Increasing the resources allocated to the National Bureau of Statistics and the National Population Commission seems like a promising solution for identifying more clearly consequences of corruption and minimizing its instances.
  10. The Federal Ministry of Finance Whistleblowing provides an anonymous online reporting service which provides between 2-5 percent compensation for that tips that recover funds from fraudulent transactions. More than $180 million worth of funds have has been recovered since its opening in 2016.

These 10 facts about corruption in Nigeria only paint a small picture of the country’s sociopolitical landscape. While identifying these issues is important, understanding and celebrating Nigerian history and culture is similarly integral to supporting this West African nation today.

– Jordan Powell
Photo: Carnegie Endowment

U.S. Aid to Afghanistan
For the past 18 years, U.S. involvement has been a constant in Afghanistan. Much of that involvement takes the form of financial aid. The economic and development aid offered to Afghanistan by the U.S. since 2001 has had a positive impact, but an emphasis on military aid diminishes that impact greatly. This article provides 10 facts about U.S. aid to Afghanistan.

10 Facts About U.S. Aid to Afghanistan

  1. As of 2016, U.S. aid to Afghanistan amounted to $5.1 billion per year. Of that aid, $3.7 billion went towards security. Afghanistan also received more economic help from the U.S. than any country outside Africa.
  2. Total annual U.S. spending on Afghanistan amounted to about $45 billion as of 2018. Most of that spending was funding to military forces and security objectives. The U.S. spent only $800 million on economic development.
  3. Afghanistan’s GDP has increased from $4.055 billion in 2002 to $19.444 billion in 2017. Primary school enrollment increased from about 22 percent in 2001 to 98 percent in 2004 after only three years of U.S. aid and has not gone below 90 percent since then. In 2002, the average life expectancy in Afghanistan was about 56. It has increased steadily since then and reached about 64 by 2017.
  4. USAID involvement in Afghanistan began in 2002. Humanitarian aid from USAID has had long-term impacts on conditions in the country. USAID faces more challenges with regard to development projects because of ongoing violence. USAID cooperated with the U.N. to transport emergency food supplies to Afghanistan by air.
  5. In 2018, USAID spent over $145 million on initiatives in Afghanistan. The three primary initiatives of 2018 focused on responding to natural disasters and providing food-related aid.
  6. In 2018, U.S. aid to Afghanistan targeted agriculture more directly. USAID repaired 177 kilometers of irrigation systems, positively affecting about 30,000 hectares of land. USAID also distributed vouchers allowing Afghan farmers to purchase more farming equipment and formed the Agriculture Development Fund, which provides credit and assistance for farmers and their families.
  7. USAID also works to improve Afghan infrastructure. USAID increased access to electricity in Afghanistan by 73 percent from 2010 to 2016. Currently, USAID is supporting a project to expand access to electricity to the entirety of southern Afghanistan. The construction of hundreds of schools and hospitals occurred in Afghanistan with U.S. support. In the past decade, over two million Afghans gained access to clean water thanks to USAID cooperation with the Afghan government.
  8. Despite the amount of U.S. aid sent to Afghanistan, poverty persists. The poorest Afghans continue to struggle with illiteracy and unemployment. High amounts of military aid have not affected the high rates of poverty that exist in Afghanistan.
  9. As of 2018, the U.S. was spending more on Afghanistan than ever. But the U.S. only used $780 million of the $45 billion for economic and development purposes. Most of the $45 billion was used for military and security purposes.
  10. Since 2012, the majority of U.S. aid to Afghanistan has been military aid. In 2012 alone, $9.95 billion of the total $12.9 billion in U.S. aid to Afghanistan was military aid. This decision led to criticism from the Human Rights Watch.

Military aid cannot solve poverty in Afghanistan alone. U.S. development and economic aid are vital to Afghanistan at this time. To protect this type of U.S. aid to Afghanistan, U.S. voters can email their representatives in Congress.

– Emelie Fippin
Photo: Flickr

 

understanding industrialization
The systemic ills of many African countries find their roots in the Scramble for Africa, the period between the 1880s and World War I where European countries claimed African territories for themselves. Countries like Nigeria, Kenya and Uganda found themselves under the control of foreign powers. The long, historical fight against poverty in Africa starts by understanding failed industrialization and the decades of colonial rule by rich and powerful European countries that exploited Africa’s resources, labor and infrastructure.

Colonialism, Influence and Poverty

After the tumultuous first half of the 20th century, western powers tried to right the wrongs of colonization by industrializing newly independent African countries. Import substitution industrialization (ISI), a common and popular form of industrialization, involves manufacturing goods that other industrialized countries import usually. This means that countries enact policies to shut out outside competitors and give local industries, such as agriculture and power, larger market shares of the domestic economy. ISI also tries to create a more nationalistic and powerful domestic economy by encouraging local industries with subsidies, while discouraging outside influence with tariffs.

Unforeseen Consequences of ISI

While the theories behind ISI presented simple fixes to complex issues, African countries that attempted ISI now find themselves behind the curve in the global economy. Kenya’s GDP (adjusted for purchasing power parity) sits at $163.7 billion making it the 74th poorest country in the world. Kenya also still heavily relies on agriculture with 34.5 percent of the economy dedicated to agriculture as of 2017. Compared to China, which industrialized in the same time frame, Kenya has a low GDP and a high percentage of the economy in agriculture. China has the largest economy in the world with a GDP of 23.21 trillion (adjusted for purchasing power parity) and agriculture makes up only 7.9 percent of its economy.

Kenya’s failure shows that ISI could not provide the solution the country needed. ISI may strengthen a domestic economy, but it weakens the overall product. Countries using ISI do not expose themselves to international competition, so their products may not be as good as international products. This allows other countries creating superior, cheaper products to outperform domestic products. The inability to compete globally stifles domestic markets and creates a system of poverty. When the economy fails to produce meaningful success, the impoverished become worse off. The fact that Kenya cut off global markets limited its trade partners and opportunities for innovation.

Overcoming Industrialization

Kenya’s road to recovery begins with opening its economy to the world. Agra, an NGO dedicated to supporting African agriculture, starts the process of economic revitalization with fixes to Kenyan agricultural policy and practice. Agra’s main goal is to create initiatives that drive productivity and benefit small farmers’ incomes, food security and nutrition. Agra plans to support a more streamlined and efficient marketplace for agricultural leaders to conduct business. With an easily accessible market, farmers can begin to engage with the global market in a more effective way.

Agra also works toward making agriculture a more inclusive industry by helping more young people and women work in agriculture. Agra believes that more participation from women and youth will increase economic independence among rural farmers and the market will become a stronger base for further developing the Kenyan economy.

One must undergo the process of understanding failed industrialization and how it contributed to poverty in Africa in order to fix those wrongs and ensure the success of the continent’s countries. The old economic industrialization theory of ISI broke many African countries, but with a greater understanding of the economy comes a more focused effort to right the wrongs of the past. By starting small and building up businesses from the roots of the Kenyan economy, NGOs like Agra play a crucial role in getting not only Kenya’s economy back on the right track, but also that of Africa as a whole.

– Spencer Julian
Photo: Wikimedia Commons

Blue Economy in Bangladesh

Whether it is through the network cables across the ocean floor on which global communications rely, the oil and gas exploration on the ocean floor or the availability of fishery resources, the ocean has been an integral part of the global economy for a long time. Since the government of Bangladesh resolved its maritime boundary disputes with Myanmar in 2012 and with India in 2014, it has been engaging in research to promote and take advantage of blue economy in Bangladesh.

Four Facts About Blue Economy in Bangladesh

  1. The economy in Bangladesh derives more than $6 billion annually from the ocean with the potential to increase. In the 2014-15 fiscal year, the gross value addition (GVA) of Bangladesh’s ocean economy was around $6.2 billion, which is 3.3 percent of the country’s total GVA. Yet, while settling disputes has given Bangladesh the right to explore resources within 118,813 square kilometers of the Bay of Bengal, the country has not yet seized the opportunity.
  2. Almost 90 percent of Bangladesh’s trade is done by sea. Approximately 17 million people are employed in the fisheries and the agricultural sector with even more people depending on the sea for income, food security and nutrition. So, if realized to its full potential, blue economy could have a major positive impact on the country.
  3. Because of poor initiative in Bangladesh, much of the potential in the 26 sectors identified for a blue economy has not yet been realized. In 2017, the Blue Economy Cell (BEC) was established under the Ministry of Power, Energy and Mineral Resources, but that is the extent of the actions taken by the Bangladeshi government. So far, this cell has only held a few meetings.
  4. On October 25, 2018, the Bangladeshi government and the World Bank signed an agreement to finance a $240 million project. “The Sustainable and Marine Fisheries Project will help improve the fisheries management system, necessary infrastructure and value-chain investments and it will encourage the private sector to invest more towards the availability and quality of sea fish.” The project will also assist in reforming policies and regulations for fisheries. Since the fisheries sector is the second largest export earning sector of the country, this project should add more to the initiatives for blue economy in Bangladesh.

Uses of Blue Economy in Bangladesh

  • Marine Biotechnology: The opportunity to apply marine biotechnology in Bangladesh is very promising. Marine organisms can be used as a source of new materials in healthcare, including antibiotics, anti-cancer, bioactive compounds, nutritional supplements and other pharmaceutical drugs.
  • Carbon Sequestration: Bangladesh is blessed with mangrove forests, saltmarsh and seagrass beds. While the carbon stored by these ecosystems still needs to be researched, it could provide carbon trading mechanisms.
  • Oil, Gas & Minerals Mining: There is potential for oil, gas and mineral resources that have yet to be explored within the boundaries of the Bay of Bengal. Managed correctly, these resources could be used to create more jobs, infrastructure and improvements in public service.
  • Policy Reforms: Developing this sector would require different policy scenarios, taking into account the costs and benefits of the different paths that Bangladesh’s blue economy could take. Once that is done, the government could set targets and goals accordingly.
  • Coordinated Planning Process: A coordinated planning process for the sustainable development of blue economy in Bangladesh would need the active participation of ministries and public organizations. At present, the Ministry of Environment and Foreign Affairs, Ministry of Fisheries and Livestock, Ministry of Power, Energy and Mineral Resources, Ministry of Shipping and Ministry of Civil Aviation and Tourism are reviewing or designing policies that could impact some of the sectors under blue economy.

Despite the many challenges ahead, blue economy in Bangladesh could serve as an important path for sustainable development in the country. More research, policy reforms and collaboration among different organizations could help the country realize the true potential of this economy.

Farihah Tasneem
Photo: Flickr

The Russian Ruble vs. The American Dollar
There is a commonly understood equation that all world travelers parse out during their adventures to foreign countries: “How much will (x) of my currency buy (y) of their currency?” If an American travels to any of the 27 European nations, they will need to exchange a large portion of U.S. dollars into the EU’s respective currency, the Euro (€). Similarly, if Russians travel to the United States, they will need to buy American dollars ($) with their Russian Rubles (₽).

Purchasing Power Parity

The relative worth of one holder’s currency pegged to another’s in consideration of the purchase of the same basket of goods and services is referred to among economists as the purchasing power parity (PPP). The parity is a theory that suggests “exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries” (University of British Colombia School of Business).

The basis of PPP is the law of one price across nations; however, in the world of global economies and integrated wealth and trade, $10 spent in Russia gets one more goods and services than $10 spent in the United States. This is the economic disparity that leaves Russian consumers worse off in both their own country and the U.S.A.

Experimental Practicality

In order to better understand the purchasing power parity and how it adversely affects the Russian middle class, the following example will better illustrate its practicality:

Consider the two experimental countries, Russia and the U.S. A tall-sized latte from Starbucks costs approximately 255 ₽ or an American equivalent of $4.50; however, in the U.S., an identical product costs $2.95. The PPP between Russian and the U.S.A. for a tall-sized latte from Starbucks is the price paid in Russia in U.S. dollars ($4.50) divided by the price paid in the United States in U.S. dollars ($2.95).

Simple arithmetic leads to the conclusion that for this item, the PPP between Russia and the U.S. is approximately 1.52, which means the consumers pay $1.52 to make a purchase in Russia that would cost $1.00 in the United States. Alternatively, Russian consumers are using their weaker national currency to pay a 50 percent premium on a tall-sized latte from Starbucks. Apply this to the purchase of a flat, college education or vehicle, and the numbers and basic economic principle alone illustrates how worse-off the Russian middle class is than that of its western counterpart.

Poverty in Russia

The PPP between Russia and the U.S. and any other first-world country is relevant to the overarching issue of poverty in Russia because of relative wealth distribution and purchasing power. Russia’s geography necessitates a strong import business relationship with the world’s leading trading partners, including and especially the United States where embargoes do not apply. For Russian consumers, this means higher prices for finished goods and services that are not justifiably priced in the Russian Ruble (₽).

When Russian consumers want to spend on big-ticket items, they have to work harder and longer, save more and manage their money better than consumers in the U.S. Economics and the PPP explain why Russians often work abroad and repatriate foreign currencies with higher PPP than the Ruble so to afford goods and services in Russia. This consumption strategy tightens the labor market for Russians; however, in the long run, this is not an economically viable alternative to internal market corrections.

Creating Middle-Class Improvement

How can the rest of the world equal the playing field for Russia? The answer is difficult. First, the law of incentives must be prioritized in Russia’s labor environment to keep skilled and unskilled labor in Russia and reduce currency repatriation. Secondly, Russia needs to begin to play by the rules set by developing countries if the country wants to reduce its PPP relative to trade nations. Last but not least, these prior measures will work to benefit Russian importers, businesses, and most importantly, Russian consumers. It is time to bring more power back to the Russian Ruble for the middle class of Russia.

– Nicholas Maldarelli
Photo: Flickr

Fastest Growing EconomiesIt is no secret that developed countries experience a markedly lower incidence of poverty than their developing counterparts. Furthermore, the poverty that these developed countries experience is often not the extreme variety that is endemic to developing regions of the world. If a country’s level of development can serve as a rough gauge of the magnitude of poverty experienced in the country, then it is worth exploring which economies are growing the fastest and developing at the most rapid pace. Below is the list of the five fastest-growing economies right now using the most recent data with the annual GDP growth rates from The World Bank.

Libya

Annual GDP growth rate of 26.7 percent (2017)

Situated on the Mediterranean Coast of Africa, the large country of Libya recorded a monumental economic GDP growth rate in 2017. The country’s economy is almost entirely driven by oil and natural gas exports, which have pushed the Libyan growth rate to this level. In 2017, oil production reached its peak for the last five years and, in combination with the rise in oil prices, spurred growth.

Since ousting of dictator Muammar Gaddafi in 2011, the country has seen severe political instability with different military groups claiming different regions of the country. However, in the summer of 2018, at meetings led by French President Emmanuel Macron, the main two opposing factions in Libya agreed to hold elections in December. If successful, the elections could lead to stability in this volatile region and give the Libyan more financial and political security.

Guinea

Annual GDP growth rate of 5.8 percent (2017)

Located on Western Africa coast, Guinea’s economy is driven largely by exports of bauxite, high-grade iron ore, gold and diamonds. Furthermore, The CIA World Factbook states that Guinea has the potential to be a major exporter of hydroelectric power due to its river potential. Additionally, the untapped mineral deposits of the country are poised to attract international investment. Guinea has seen a recovery from the severe Ebola crisis, but it is still under the threat of political instability. However, the pieces for a more prosperous Guinea are beginning to fall into place.

Ethiopia

Annual GDP growth rate: 10.2 percent (2017)

Ethiopia, Africa’s 10th largest country, lies on the eastern side of the continent within the horn of Africa. Ethiopia also holds Africa’s second largest population and one of the most dynamic economies in the region. Ethiopia’s GDP consists mostly of the service sector, agriculture and industry, respectively. According to recent estimates, Ethiopia is poised to be the fastest growing economy in sub-Saharan Africa by the end of 2018.

Furthermore, the sustained decade-long growth that country has experienced contributed to a reduction of poverty in the country, with the extreme poverty rate declining from 55.5 percent in 2000 to 33.5 percent in 2011. The government of Ethiopia has recently implemented the 2nd phase of its growth and transformation plan that aims to increase GDP growth and create jobs by a 20 percent expansion of the industrial sector of the economy.

Macau SAR, China

Annual GDP growth rate of 9.1 percent (2017)

Macau, a Special Administrative Region of China, is located off the southern coast of the Chinese mainland.  Macau’s economy is dominated by the services sector and there are little natural resources on the island. The economy of the region is driven primarily by gambling and tourism, and the area mainly serves as a playground to people from the Chinese mainland and to those from Hong Kong.

The economy of Macau is the third richest in the world in terms of GDP per person; however, this wealth does not translate to everyone in the country equally. Officially, the poverty rate is claimed at 2.3 percent, but the charitable organization, Caritas, estimates this percentage to be closer to 10 percent. Macau’s political system is also rampant with corruption, which unfortunately hampers the reduction of poverty.

Maldives

Annual GDP growth rate of 8.8 percent (2017)

The Maldives consists of over 1,190 bordering along the Indian Ocean. Only 188 of the islands are inhabited since the population is concentrated on the larger islands, including the 39 percent of the population living in the capital Malé. The economy of the Maldives is largely driven by tourism, shipping, and fishing. The most recent data on poverty was published in 2009 and it shows the poverty rate to be 15.7 percent improved from 23 percent in 2002.

These emerging economies represent some of the most promising regions on Earth because of their improvement on quality of life. Strong economies are the backbone of both political and social stability and ultimately greater well-being of people. These five countries look poised to fulfill these goals as the fastest growing economies.

– William Menchaca
Photo: Pixabay

Mexico
Recently, immigration has been at the forefront of political controversy given its potential for economic impact on both nations. The underlying economics of U.S.-Mexico immigration offers a glimpse into the roots of the issue and how it is being addressed today.

Escaping Drug Activity

Currently, a great deal of the migrants come from economically and politically troubled states where a great deal of blame is directed at drug organizations battled by federal governments. The poorer states tend to have a disproportionate amount of drug-related activity, which can bottleneck growth to the drug-elite in the states.

Take, for example, Michoacán. The state is a leader in the most migrants sent to the United States and has also been noted as one of United States’ five states to avoid when traveling in Mexico. While the state is 15th in GDP, it accounts for 57 percent of Mexico’s ‘very poor’ population.

Seeking Economic Stability

Drug activity, however, is only a part of the problem. While job prospects are available, the pay rate is very low. Unemployment sits around the three percent mark, but the minimum wage rate is just below five dollars. The high opportunity cost of those working in cartels serves as a major factor in why many may join. For others, crossing the borders to the north is a better option.

Of the 50 states, California receives the most of the legal and illegal immigration from Mexico (37 percent). Consequently, the state and private organizations have taken significant measures to try and remedy underlying economic stressors and ensure smooth transitions for immigrants in the U.S.

Decrease in Emigration

Over the years, factors in the economics of U.S.-Mexico immigration have shifted. Although there is increased media coverage, emigration from Mexico has actually decreased. Since 2008, the number dropped from 6.4 per 1000 residents to 3.3 and has continued to fluctuate around the number.

Part of the reason is that conditions in the United States, while better, are not easy to access. Stanford scholars at the university’s Immigration Policy Lab found that a high cost of naturalization actually prevents low-income immigrants from becoming citizens. The fee to apply for citizenship in the United States is $725, a steep price for numerous immigrants.

Outside Aid

To address the economic issues in Mexico, Mexican organizations such as ProMéxico have tried to change the image globally by attracting foreign investment. At the core of its goals is the belief of “obeying the principle of the common good and contributing to sustainable development.” As the organization develops over the next few years, it hopes to expand its reach and deepen its impact.

Similarly, American initiatives have followed suit. LatinSF is a public-private partnership between the San Francisco Office of Economic and Workforce Development and the San Francisco Center for Economic Development that works to “promote business and trade between San Francisco and the Latin American region.”

Starting a formal connection between San Francisco and the Latin American region is key for mutual development. This effort helps individuals working in Mexico and provides an opportunity for immigrants arriving in the United States.

Academic and Technological Influence

Once immigrants are in the United States and settle in states like California, local universities pitch in. UC Berkeley and Stanford University each have their own Immigration Law Clinics which offer “law assistance to economically disadvantaged immigrants.”

The clinics help prep immigrants, regardless of immigration status, with interviewing, document filing and other legal matters. Private organizations such as the ACLU and Immigrant Legal Resource Center have contributed in the same way as well.

The issue is not just being addressed by the legal field. Studies conducted at UC Berkeley have led to new developments such as an app that recognizes immigrant concentrations and government funds that are not being allocated to the correct locations.

By correcting spatial differences, Jasmin Slootjes, executive director of the Interdisciplinary Migration Initiative, notes that the initiative is “providing local officials with the facts about immigrant communities and their service needs.”

Unweaving the Complex Economics of U.S.-Mexico Immigration

The immigration issue is undoubtedly complex. It is important to remember, however, that the underlying economic factors are the first steps to resolving the issue.

Addressing the problem will require the continued effort of both proactive organizations like ProMéxico and universities that help immigrants acclimate to a new world, and such combined efforts should make a world of impact.

Mrinal Singh
Photo: Flickr