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

 

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

poverty in china
By the year 2020, according to most financial and political analysts, China will surpass the U.S. as the largest economy on the planet. The World Bank even reported that China opening itself to free-market reforms in the last few decades managed to raise more than 800 million people out of poverty in China.

The Positives

In addition to this positive news, the financial institutions also added the reassuring fact that thanks to this unprecedented growth rate, the Chinese economy improved the living standards for a massive percentage of its population. A closer look at the data reveals how in 1981, 88.3 percent of China’s population lived on less than $1.90 a day (roughly 870 million people), and 99.1 percent lived on less than $3.10 a day (over 980 million people).

The last reported year for which the World Bank gathered official data is 2010, and the results are staggering — only 11.2 percent (almost 150 million people) lived in poverty in China in 2010. The overall prospect, then, seems quite promising; however, there are some further considerations of note in regard to this set of data.

The Divide

Taking into account China’s enormous social and economical strides since the Communist Party took power, one can see that there is a massive divide in income between rural and urban areas.

More specifically, in 1978 only 23 percent of the population was employed in urban areas; by 2014, over 770 million Chinese citizens were urban workers. Such figures acknowledge the significant improvement in the urbanization process, while also concealing the fact that the rest of population still lives and works in rural areas.

Those families are largely stuck in the same economic and social distress they were before the Communist revolution and unfortunately, haven’t made significant steps forward. Other statistics reveal how China’s per capita GDP, for example, is still very much below the standards of a developed country. It ranked, in fact, at $6,894.50 in 2016, which is 55 percent below the world’s average.

The Question

How can a country whose GDP grows at an annual rate of 6.9 percent still have children begging on the streets and families living on less than $2 a day? While it’s hard to provide a definite answer, a few considerations are worth bringing forth about the Chinese political system.

The country is still ruled by a one-party system which owns and controls the vast majority of enterprises and sectors of the economy. Private property is still very weakly protected and the judicial system is dominated by the Communist Party that arbitrarily appoints judges and influences court operations and verdicts.

Moreover, the regulatory framework is also arbitrary and very intricate — details that make it difficult for a private enterprise to blossom and grow. Corruption is also a massive issue which, when paired with the state-controlled financial system and state-owned enterprises, highly depresses foreign investments and contributes to enriching the economic elite and maintaining poverty in China.

China has made improvements in its poverty alleviation efforts, but there is clearly still room for improvement. Only time will tell how the nation keeps up with its progress.

– Luca Di Fabio

Photo: Flickr

How Economic Inequalities Harm SocietiesThe idea that economic inequalities are socially corrosive has been around for decades. But there now exists statistical evidence substantially supporting the notion.

Since Richard Wilkinson’s enlightening TED talk presented the impact of income gaps and unequal societies on the wellbeing of both the rich and the poor, the issue has received unprecedented attention. A professor emeritus of social epidemiology, Wilkinson based his results upon statistical data, presenting conclusive, irrefutable evidence to prove how economic inequalities harm societies.

He chose widely accepted parameters of quality of life to draw the comparison between societies. These parameters include:

  1. Life expectancy
  2. Infant mortality
  3. Teenage births
  4. Imprisonment
  5. Obesity
  6. Mental illness
  7. Social mobility
  8. Homicide
  9. Math and literacy

However, the 15-minute presentation focused on developed countries only. Other studies in the recent past have revealed a similar pattern in developing and impoverished economies. In nations like India and China, where glaring income gaps continue to exist despite steadily increasing rates of economic growth, data illustrating how economic inequalities harm societies has been found. A United Nations Development Programme (UNDP) report published in November 2013 gives a lucid explanation of what inequality is and how economic inequalities harm societies.

According to the report, inequality within a society takes two main forms: inequality of outcomes and inequality of opportunity. Inequality of outcomes includes income inequality resulting in inequalities in nutrition, education, etc. On the other hand, inequality of opportunity refers to unequal access to education and basic resources, among other things. As the report notes, both types are “opposite sides of the same coin” and cannot be viewed as independent.

More importantly, to answer the key question of how economic inequalities harm societies, it is important to note the relationship between factors that were earlier assumed to be independent. For example, poor countries with unequal distribution of income face greater political instability, lower investment in human development, higher taxation, less secure property rights and negative impacts on growth. Moreover, surveys conducted by UNDP found that citizens in such countries showed little or no trust in government policies formed to bridge income gaps.

Both Richard Wilkinson’s research and the UNDP report found that even the rich in unequal societies suffer from lack of trust, harsher sentencing (partially because of stricter laws), greater incidence of physical and mental illness (due to the pressure to “watch your back”) and higher taxation, among several other crucial indicators of quality of life. Undoubtedly, an equal society is in the best interest of all people.

– Himja Sethi

Photo: Flickr

Income_AfricaThe idea that guaranteed basic income can solve poverty was first proposed by lawyer Thomas More in the 16th century. Guaranteed basic income, also known as universal basic income is an unconditional periodic money transfer to ensure that a citizen can pay for his or her basic necessities no matter what. The idea that everybody will be paid money every month, whether or not they have a job, is undeniably radical.

Guaranteed Basic Income Has Supporters and Detractors

Economists are divided into two groups over the idea: one in favor of guaranteed basic income and the other against it. Those opposing the idea believe that it will undermine the incentive to do a job, that more people would end up in low-wage jobs or that a “handout” is by no means a tool to “turn things around”. Some of them also argue that even if guaranteed basic income can solve poverty, a program like this can be very expensive and hence negatively affect a nation’s economic growth.

On the other hand, the idea has found acceptance among several intellectuals, politicians, historians, economists and entrepreneurs alike. One of them is Facebook CEO Mark Zuckerburg, who has called for others to embrace the idea, in case people start losing their jobs to automation and artificial intelligence.

Current Studies Testing the Efficacy of Basic Income

To see how guaranteed basic income can solve poverty, many experiments are underway around the world. A nonprofit organization in Kenya called GiveDirectly has launched one of the most comprehensive economic and social experiments in human history. They will be selecting groups of people who will receive $22 per month for a period of two to 12 years, no strings attached.

To date, the organization has distributed more than $70 million among 80,000 households in Kenya, Rwanda and Uganda. “What’s interesting about basic income is that, coincidentally, it’s a conversation people are having all the way from Silicon Valley, where they are worried about job loss to robots, to some of the poorest countries in the world,” said Paul Niehaus, professor of economics at the University of California San Diego, co-founder of GiveDirectly and a firm believer that guaranteed basic income can solve poverty.

In Finland, the government randomly selected 2,000 unemployed citizens for a one of a kind experiment started at the beginning of 2017. To study how guaranteed basic income can solve poverty, these people will receive €560 every month for two years, tax-free. A key goal of the Finland experiment is to give unemployed people incentive to work by providing them with financial assistance even after they become employed again. Researchers chose the €560 monthly amount because it roughly equals the current level of unemployment benefits.

In a recent interview given to NPR, Stockton, California mayor Michael Tubbs said,” In fact, I think [it] will make people work better and smarter and harder and be able to do things like spending time with their families [be]cause we’re not robots.” Stockton will start a similar experiment by the end of this year.

What Basic Income Can Do for Impoverished People

The proponents of guaranteed basic income caution that the amount paid must be sufficient to be of assistance when misfortune strikes but not large enough to satisfy all of a person’s wants. They also argue that the freedom to start a new business or to say yes to a job that pays little but yields joy, or to say no to a job that pays too little or is demeaning, should not be reserved only for the wealthy.

Historian Rutger Bregman highlights an experiment conducted in India by American psychologists involving Indian sugarcane farmers. These farmers get around 60 percent of their income all at once. Hence, they are relatively rich during one part of the year but poor the rest of the year. The farmers were subjected to an IQ test before and after the harvest. The results showed that farmers gained nine IQ points after the harvest, as the extra money freed up mental resources that were previously concerned with making ends meet.

A similar study conducted between 1974 and 1979 in Dauphin, Canada proved that a guaranteed basic income can solve poverty by making the recipients smarter, healthier and richer. Further studies can bolster the effectiveness of basic income worldwide and could lead to it becoming an important tool in ending global poverty.

– Himja Sethi

Photo: Flickr

social justice and economic justice
There is an enduring and powerful relationship between social justice and economic justice. Social justice has many definitions. 
The most common definition, according to the Oxford Dictionary, is: “Justice in terms of the distribution of wealth, opportunities and privileges within a society.”

The definitions that are most applicable to alleviating poverty, however, are:

  • The idea that every person should have equal rights to basic liberties and needs, and inequalities should be arranged to the greatest benefit for those considered lowest in society.
  • From the Huffington Post: “…promoting a just society by challenging injustice and valuing diversity. It exists when all people share a common humanity and therefore have a right to equitable treatment, support for their human rights and a fair allocation of community resources.”

However, the current functioning of global society violates each of these definitions almost completely, and therefore expresses the lack of and need for social justice in all areas of the world, especially developing nations.

The United Nations Development Programme reports shocking statistics from poverty elimination research, detailing that as of 2000, there were 323 million people living on less than $1 a day, 185 million people who were undernourished and 273 million people without access to improved water sources in sub-Saharan Africa, the most impoverished region overall.

These harrowing numbers from sub-Saharan Africa were accompanied by information stating that 44 million primary age children were not in school, 23 million primary age girls were not in school, five million children under five years old were dying each year and 299 million people were without access to adequate sanitation. These statistics demonstrate that simple economic failure and injustice is not an isolated issue, but rather closely parallelled by social failure and injustice as well.

In contrast, the statistics from central and eastern Europe are staggeringly different. Only 21 million people were living on less than on $1 a day, only 33 million people were undernourished, only 29 million people were without access to improved water sources, only three million primary age children were not in school, only one million primary age girls were not in school, less than a million children under five years old were dying each year and an insignificant amount of people were without access to adequate sanitation as of 2000, so low that it was not even reported numerically.

As can be clearly seen, there is a direct correlation between social justice and economic justice, and a very large gap between developed nations and impoverished countries. The more economically impoverished a nation remains, the more social injustice thrives and prevails. The greater the poverty, the fewer people are given fair and equal access to basic needs and rights.  

To start fighting such global, national and statistical chasms and deprivations, the United Nations’ Millennium Development Goals have started targeting social justice, specifically to help achieve the goals of:

  • Eradicating extreme poverty and hunger
  • Promoting gender equality and empowering women
  • Ensuring environmental sustainability

The hope is that the new information and educational awareness of the relationship between social justice and economic justice will kickstart the alleviation of poverty by focusing on the social injustices in each region and developing country to foster a new approach for decreasing poverty overall.

– Lydia Lamm

Photo: Wikimedia Commons

Credit Access in NicaraguaAs the largest country in the Central American isthmus, Nicaragua has also struggled for decades as the poorest country in the Americas. After suffering hereditary military dictatorship by the Somoza family that unevenly distributed the already meager national wealth, the country has taken steps to redistribute wealth as a democratic republic. However, 48 percent of its citizens live below the poverty line, with 79.9 percent surviving on $2 a day. Credit access in Nicaragua is deemed one way to a better economic future.

Need for Strong Credit 

Currently, agriculture and tourism are the largest industrial sources in Nicaragua. Agriculture makes up about 60 percent of its total annual exports with crops such as coffee and tobacco. While the stability of these industries helps with economic growth, one of the most important aspects of economic autonomy is improved credit access in Nicaragua. A stable financial system contributes to a country’s growth, and an inadequate credit system weakens it.

The civil war of the 1970s and hyperinflation in the 1980s severely hampered credit access in Nicaragua and the development of credit unions. For farmers, the civil war and land reform caused uncertainty regarding property rights in the legal system and many poor farmers cannot use property titles to support loans.

Purchase for Progress

These are the reasons why the World Food Program set up the Purchase for Progress (P4P) program. With this program farmers can receive higher loans than those offered by banks. Since 2008, P4P has set up a revolving fund of over $400,000 with interests considerably lower than private bank rates. Through this program, it’s much easier for farmers to make a profit with better inputs and higher yields.

Microcredit

The previously mentioned program also highlights a significant style of credit access in Nicaragua: microcredit. The microcredit movement which focuses on small loans and access for those who do not have much to support loans, like farmers, began in the 1990s. The Winds for Peace Foundation (WPF) is another organization that provides a framework for increased access to credit for small-scale farmers through its Local Development Fund, which was founded under NITLAPAN, a research institute in Nicaragua.

Originally, WPF invested in multinational microcredit groups that provided capital and low-rate loans across Central American countries. Soon after it began to support Nicaraguan groups because of their reach into the agricultural sector. By placing the support in Nicaraguans, this program allows for both credit access and for a Nicaraguan institute to autonomously control the path of money and support.

World Bank Improvements

In 2008 the World Bank enacted a plan to provide more financial services and credit across Nicaragua. Through technical support, the World Bank focused on major needs such as

  • improvement of regulations for microlenders;
  • reduction of commercial risks for state-supported banks;
  • and enhanced support services for microlenders.

Through these actions, the World Bank was able to expand the number of deposit and loan accounts in a four-year period by 68 percent.

By developing more stable forms of credit, these programs have created a more stable Nicaragua. For a small farmer with little to his or her name, credit access, even in microcredit form, allows for more stability and more consistency. Through credit access, Nicaragua will gradually diminish its poverty.

– Nick McGuire

Photo: Flickr