Homelessness in South Korea
It is easy to dismiss homelessness in South Korea, as the nation ranks as one of the top 20 economies in the world. High-tech society can overshadow the unfortunate reality that many of the homeless face in South Korea. In 2017, the South Korean government estimated that there were more than 11,000 homeless people in South Korea. This is not a surprise to many South Korean. When walking in Seoul for an extended amount of time, it is common to come across the homeless.

Factors that Contribute to Homelessness

  1. Housing Index: While homelessness in Seoul has dropped significantly, from 4,505 people in 2014 to 3,478 in 2018, there is still a sizable homeless population in Seoul. A variety of factors contribute to homelessness in South Korea. The rapid rise in housing prices all around the country is making owning a home more difficult for many Koreans. The housing index, a trend of average housing prices across the country, in South Korea is on a constant rise. The housing index rose from 33.60 points in 1987 to 100.20 points in 2019. This lack of affordable housing is one of the factors that contributes to homelessness in South Korea.
  2. Financial Bankruptcy: Financial bankruptcy is another leading cause of homelessness in South Korea. According to a study by the Seoul Metropolitan Government, 24 percent of the homeless lost their homes due to snowballing debts. The study stated that the average age of homeless people in South Korea is in their mid-50s.
  3. Alcoholism: For the homeless who suffer from alcoholism, receiving support can be especially difficult. Mr. Lee, a homeless in Seoul who was interviewed by South China Morning Post, testified to this issue. Since many homeless shelters have a zero-tolerance policy toward alcohol, many of the homeless elect to live on the streets. When questioned about why he left the homeless shelter, Mr. Lee said, “I used to receive support from organizations, but I stopped going to these centers because there was no freedom there.” This further reflects the prevalence of alcoholism among the homeless in South Korea.

Government Efforts to Reduce Homelessness

The South Korean government is making positive steps toward reducing homelessness in South Korea. In Seoul, the homelessness problem is still easy to spot; however, the homeless population is in a steady decline. A 2017 assessment by the Seoul government found that there had been a 30 percent decrease in the homeless population in Seoul since 2010.

South Korea’s commitment to supporting the homeless is also very public. With the election of President Moon Jae In, the Ministry of Welfare announced an expansion to assisting the homeless. The South Korean government pledged to increase the supply of housing for the homeless, creating jobs and providing job training programs for the homeless.

Currently, the city of Seoul is running an outreach program. Simin Chatdongi or “People Visiting Their Neighbors” is a program that encourages citizens to alert the authorities about their neighbors who might be on the verge of becoming homeless. Citizens who want to participate can sign up for the outreach program online or visiting a program booth at a residents’ assembly or neighborhood festival. As of Dec. 2019, the program gathered 8,563 reports.

 

Homelessness in South Korea is caused by many factors, including the housing index, financial bankruptcy and alcoholism. However, the South Korean government’s commitment to helping its less-fortunate populace leaves a silver lining to this otherwise bleak reality. Many in South Korea look forward to the positive changes that are to come for the homeless.

YongJin Yi
Photo: Flickr

Randomized Control Testing
“It can often seem like the problems of global poverty are intractable, but over the course of my lifetime and career, the fraction of the world’s people living in poverty has dropped dramatically.” – Dr. Michael Kremer

In October 2019, Michael Kremer of Harvard and Esther Duflo and Abhijit Banerjee of MIT won the Nobel Prize in Economics for their extensive, randomized control testing-based research in tackling global poverty. At 46 years old, Duflo is the youngest economics laureate ever and only the second woman to receive the prize over its 50-year history.

Incorporating Scientific Studies

The trio set out to establish a more scientific approach to studying the effects of investment projects in the developing world. One of the ways they discovered that they could accomplish this is through randomized control testing. Commonly used in the medical field and made legitimate in the social sciences by the trio, this type of testing involves randomly selecting communities as beneficiaries of experimental projects. Randomly selecting the beneficiaries removes selection bias, providing more accurate and legitimate results.

Randomized Control Testing in India and Kenya

Duflo and Banerjee used randomized control testing experiments in schools in India in an effort to improve the quality of education. The authors discovered that simply getting students to school was not sufficient in improving test scores. Previous research also noted that additional resources, even additional teachers, had minimal impact on students’ performance.

The laureates discovered instead that providing support for an interventionist to work with students behind on their educational skills and making computer-assisted learning available so that all students could have additional math practice improved their scores. In the first year, the average test scores increased by 0.14 standard deviations and in the second year, they increased by 0.28 standard deviations. In the second year, the children initially in the bottom third improved by over 0.4 standard deviations. Those sent for remedial education with the interventionist saw 0.6 standard deviations increase and the computer-assisted learning improved math scores by 0.35 standard deviations in the first year and 0.47 in the second year for all students equally. These results provide clear and definite numbers on the success of the program and show that those who experienced the most benefits were the students in the greatest need of assistance.

Kremer completed a similar study in Kenya. Again, the research found that additional resources did little to improve the learning abilities of the weaker students and that much of the school policies and practices were helpful to the advancement of the already high achieving students. Another of Kremer’s studies in Kenya further showed the impact small interventions can have on student retention. His research found that by bringing deworming medication directly into the classroom, school absenteeism rates decreased by 25 percent, leading to higher secondary school attendance, higher wages and a higher standard of living.

Impact vs. Performance Evaluations

The key to Kremer, Duflo and Banerjee’s success was not the result of pumping out positive statistics. Their success, and reason for winning the Nobel Prize, came from the rigorous scientific approach they took with their studies by using randomized control testing that led to not only positive results but also to meaningful impact where they were working and beyond. For instance, after the success in Kenya with the deworming, the U.S. Agency for International Development (USAID) agreed to finance Kenyan scientists to travel to India to help expand the program. Soon, 150 million children were receiving treatments of deworming medication each year.

This example shows the lasting impact of the work of the laureates. When the fields of economics and politics use more rigorous and randomized studies, it becomes clearer what programs work and which do not, creating greater efficiency and enabling successful projects to expand. The work of the three professors has already led to the leaders of USAID to question the utility of performance evaluations over impact evaluations. In other words, the agency has started to see a shift from success defined as the generated output of the programs to success as the net gain or impact as a direct result of the programs.

Altogether, the work of Kremer, Duflo and Banerjee has raised the bar for economic and social research in the future. Their work has set new expectations that will force researchers to create more detailed and accurate studies that will continue to guide policy.

– Scott Boyce
Photo: Flickr

World Problems To Write About
Across the world, many disasters have left poor legacies for many to deal with. Currently, organizations such as UNICEF and the United Nations Foundation are making efforts to eliminate global problems like climate change and global poverty. With this being said, many individuals are not aware of the full extent of these issues. It is time for journalists and writers to focus on today’s most prevalent issues to educate the public to take action. Here are five world problems to write about.

5 World Problems to Write About

  1. Climate Crisis: Right now, many news publications have been reporting on one of today’s most known issues: climate change. Affecting millions of individuals around the world,  the current climate crisis is a problem that many activists and scientists are trying to solve. Some people like Greta Thunberg have made it their mission to educate the public on what is going on and how to involve themselves. First, it is important to write about this issue because it has drastic consequences on human lives. For example, studies show that climate change will displace about 200 million people by 2050, leaving them with no home. Second, climate change also has repercussions on the planet itself. Sea levels have risen approximately eight inches in the past century, and the Earth’s surface temperature has risen almost 1.62 degrees Fahrenheit as well.
  2. Food Security: Quite a lot of today’s agriculture relies heavily on quick and easy access to water; however, access to natural resources such as water has grown limited due to its exploitation for other purposes. The lack of food security has contributed to the sharp increases in world hunger as people are not meeting their dietary needs. According to the United Nations, approximately 925 million people around the world go hungry either because they cannot afford food or because it is just too scarce. People need education about food security from the news, as many personal choices, such as wasting food, contribute to the problem.
  3. Lack of Education: Another important issue to write about is the lack of education that is so persistent in many low-income areas. Currently, more than 759 million adults are illiterate and do not properly understand the consequences of lacking education. Not only does it limit the number of job opportunities available in the future, but it also has drastic effects on future generations. Many organizations such as the Association for Childhood Education International have identified the source of the issue and are determined to alienate it in the coming years. By empowering children and adults to pursue an education, it hopes to shed light on its importance and help individuals grow.
  4. Gender Inequality: As the world progresses, it is important for society to acknowledge the age-old issue of gender inequality. Consequences such as wage discrepancies and stereotypical gender roles have limited many women across the world from achieving their full potential. According to the World Economic Forum, it will take almost 108 years to fully solve this issue; however, it is important that people write about gender inequality more often and educate the public to speed up that time. By understanding the full scope of the problem, men and women everywhere will have the empowerment to take action and fight for equality.
  5. Global Poverty: Finally, one of the largest world problems around the world is global poverty, affecting almost half of the world’s population. Global poverty, in general, has economic and social consequences. Not only can it be very dangerous for one’s health, but it also has dire effects on the environment and physical landscape. To add, poverty can negatively affect economic growth by limiting the amount of money available to invest and increasing crime rates. The Borgen Project has been a key player in writing on this issue, raising money and spreading awareness globally. It has also been very active in legislature, advocating for certain bills to alleviate global poverty. Writing on this issue can increase its urgency and push for more individuals to involve themselves.

It is important for writers and journalists across the world to report on these world problems that are most prevalent in today’s society. The world problems to write about above are some of the most urgent problems to address, affecting many politically, economically and socially. By reporting on these topics more frequently, people have the education and empowerment to take action. After all, action can only happen after awareness.

– Srihita Adabala
Photo: Flickr

Human Capital Investment in Somalia

Somalia 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 warcoupled 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

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