Archive for category: Economy

Information and stories about economy.

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The Approach of the Catalan Integral Cooperative to the Economy

Catalan Integral CooperativeThe Catalan Integral Cooperative (CIC) is a network of more than 600 interlinked but autonomous cooperatives and projects located in Catalonia, the easternmost region of mainland Spain. Despite being relatively unheard of, CIC boasts its own currency, legal infrastructure, food pantries, investment bank and more. Even more intriguing, it has the audacious mission of transforming the way we think about the global economy.

Background of the Catalan Integral Cooperative

While the 2008 financial crisis was global in scope, it hit Spain particularly hard: the unemployment rate skyrocketed from 8.2% in 2007 to 26.1% by 2013, while youth unemployment was above 55% by 2013. With a declining gross domestic product (GDP) and a ballooning national debt, the Spanish government instituted austerity measures in 2010. Actions included rolling back the welfare system and making hiring and firing easier for employers. Civil unrest swept the nation and Catalonia in particular.

The CIC was born in this milieu with the aim of creating an alternative economy based on the principles of direct democracy, transparency and cooperative ownership. While CIC dissolved as an organized entity in 2015, many of its autonomous components survive to this day. Here are three of its most fascinating components.

  • The Catalan Supply Center (CAC): Started in 2012, the CAC constitutes one of CIC’s most successful undertakings. It consists of 20 self-managed pantries and about 70 small local producers, whose actions are coordinated via committee. Through logistical and transportation support, CAC’s main objective is to help small farmers get their products to markets and connect them with buyers. Thus with one project, CIC is working to both promote food security and boost small farmers’ incomes in the region.
  • The Eco: The “eco” is the local currency used by CIC, in parallel with the Euro. In contrast to regular fiat currencies, the eco is not backed by any state. This leaves its value entirely dependent on its holders’ beliefs. The eco can be traded with other members of CIC’s various autonomous organizations for goods and services. In a testament to its success, CIC’s “eco-network” had more than 2,600 members as of April 2017.
  • Casx: CIC’s investment bank—Casx, pronounced “cash” in Catalonian—is also highly unorthodox. For instance, the bank charges zero interest on loans. This entitles depositors to participate in deliberations on which projects to fund and makes all accounts fully visible to one another. Despite these limitations, deposits totaled more than $250,000 from 2012-2015.

Concluding Remarks

The CIC may have collapsed as an organization almost a decade ago, however, its legacy of furthering the public good endures by way of its numerous still-active offshoots and sub-organizations. Cooperative projects like CAC, the eco and Casx have sheltered living standards. Furthermore, they have boosted purchasing power in the region while granting valuable insight into both the promise and pitfalls of a post-capitalist economy.

– Kipling Newman

Kipling is based in Denver, CO, USA and focuses on Good News and Global Health for The Borgen Project.

Photo: Wikimedia Commons

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Project Mano: Ethiopia Uses Bitcoin to Fight Poverty

Project ManoIn Ethiopia, 40% of the population still doesn’t have access to electricity, contributing to high unemployment, particularly among young adults. Without proper technological skills and access to electricity, people are less likely to find jobs. Nearly 4% of the country’s population is unemployed across both rural and urban areas. Ethiopia’s new initiative, Project Mano, aims to address these challenges by utilizing Bitcoin. The project focuses on Bitcoin mining facilities and substations to strengthen the country’s economy.

Project Mano

Project Mano aims to integrate intensive bitcoin mining into Ethiopia’s economy, powered by the country’s renewable energy resources, including the Grand Ethiopian Renaissance Dam (GERD), the largest dam in Africa. Led by the Russian bitcoin mining company Bitcluster, the project will support Ethiopia’s environmental goals of clean energy while also boosting technological infrastructure and growing the nation’s economy. If GERD is repurposed for bitcoin mining, it could generate billions of dollars annually for Ethiopia. At full capacity, the dam could power 200,000 similar machines, potentially yielding more than $2 billion per year.

Project Mano will establish a mining facility in Addis Ababa, strategically located near the GERD. Ethiopia’s climate is also a significant advantage for the facility’s construction. With temperatures ranging from 9°C to 24°C throughout the year, the country provides ideal conditions for bitcoin mining, as facilities are less likely to overheat or freeze. Additionally, Addis Ababa’s Bole International Airport, the largest on the continent, offers direct flights to most global capitals, making it a key transport hub and helping reduce the cost of importing equipment and materials.

The Benefits

Project Mano will offer significant benefits to Ethiopia’s population in the fight against poverty. Inflation remains high and the crises in Ukraine and Gaza have increased pressure on import prices. With 55% of the population unbanked, money circulation is limited, forcing the government to print more money and worsening inflation. One of Project Mano’s initiatives is to adopt Bitcoin as legal tender, allowing it to be used for purchases, employee salaries and taxes. Since bitcoin maintains its value, this could help reduce poverty by stabilizing Ethiopia’s economy and promoting fiscal security.

Furthermore, using the GERD for bitcoin mining will provide 24/7 electricity access, helping Ethiopia combat poverty. The “electrification” of rural areas will lead to the establishment of bitcoin mining substations, allowing remote communities to gain access to electricity while creating new tech-related job opportunities. This increase in employment will boost Ethiopia’s economy and significantly reduce the number of people struggling with food poverty.

Summary

Project Mano proposes bitcoin mining as a solution for securing a stable economy. It plans to establish a facility in Addis Ababa powered by Africa’s largest hydroelectric project and other renewable energy sources. The project aligns with Ethiopia’s renewable energy goals while having the potential to generate billions of dollars for the economy. By expanding technological infrastructure, bitcoin mining will create more employment opportunities, address the high unemployment rate among young adults and help alleviate food poverty. Additionally, the Bitcoin facilities present significant opportunities for foreign investment and access to foreign currency, improving the quality of life for average Ethiopians and stabilizing the economy on a larger scale.

– Chelsey Saya McLeod

Chelsey is based in Southampton, Hampshire, UK and focuses on Good News, Technology and Solutions for The Borgen Project.

Photo: Pexels

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6 Things to Know about Vietnam’s Economic Development

Vietnam’s Economic DevelopmentVietnam’s economy is steadily growing, with remarkable development following decades of economic reform and strategic investments. Once an underdeveloped nation, Vietnam has significantly reduced poverty. This economic growth is driven by reforms, industrialization, infrastructure development and improved access to education and health care.

Doi Moi

Vietnam implemented the Doi Moi reforms in 1986, transitioning from a strictly communist economy toward a more open market with socialist influences. Before these reforms, the country was considered “underdeveloped.” The Doi Moi reforms modernized Vietnam’s trade economy, setting the foundation for its subsequent economic boom.

Industrialization and Infrastructure Development

Industrialization in Vietnam began in the early ’90s and continues today, driving economic development as the country transitions from a primarily agricultural economy to a more diversified and advanced industrialized one. Vietnam now manufactures products such as cars, electronics and textiles. Between 2020 and now, the country’s manufacturing, construction, services and industrial sectors grew from 81.1% to 85.2%.

Investment in public infrastructure has been one of the fundamental driving forces behind Vietnam’s economic development in recent decades. The country has mainly focused on roads, airports and seaports. Private and public investment in infrastructure has accounted for as much as 5.7% of the gross domestic product (GDP) in recent years. This is the second highest in all of Asia, following China.

Better Access to Education

Since gaining independence in 1945, Vietnam has prioritized education and reduced illiteracy rates. Today, the country places even greater emphasis on improving education. In 2002, the government allocated 3.9% of its GDP to education, which increased to 6.3% by 2014. Vietnam has enhanced access to education by ensuring universal preschool education through public spending and engaging communities and the private sector. The country has also improved learning outcomes, with Vietnamese students outperforming the average students in Organisation for Economic Cooperation and Development (OECD) countries.

In 2012, Vietnamese youth ranked 8th in science, 17th in mathematics and 19th in reading out of 65 countries. The Vietnamese government also prioritizes equity in education, contributing to these high learning outcomes. The central government allocates more funding per capita to geographically disadvantaged provinces and teachers in these areas are paid more than those working in cities. Vietnam’s progress in education has been a critical factor in its ranking of 48 out of 157 countries on the Human Capital Index.

Better Access to Health Care

Along with the economic growth, the health of the Vietnamese people has improved between 1990 and 2020. Life expectancy grew from 69 to 75. The aged than 5 child mortality rate decreased from 30 to 21 per 1000 live births. While the health care system has improved significantly in the past decades, Vietnam stands before an inevitable challenge: it has one of the fastest-growing aging populations in Asia.

Looking Forward

Vietnam’s transition from a centrally planned to a market economy has transformed it from one of the poorest countries in the world into a lower-middle-income nation. Since the Doi Moi reforms, GDP per capita has increased sixfold. Economic growth is projected to reach 5.5% by the end of 2024. Vietnam aims to become a high-income country by 2045, requiring an average annual growth rate of about 6% per capita to achieve this goal.

Vietnam has experienced significant development over the past few decades, with investments in health and human skills playing a central role in this progress and delivering substantial economic benefits. Despite this development, the country faces significant social issues. Vietnam is dealing with an aging population, persistent inequalities in the education sector and ongoing economic effects from the pandemic. Like many other countries, Vietnam’s economy faced a downturn in 2023 due to post-pandemic challenges. However, Vietnam’s economic development is now on the rise again.

– Sigrid Nyhammer

Sigrid is based in Bergen, Norway and focuses on Good News and Politics for The Borgen Project.

Photo: Pexels

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$20 Billion in Funding to Boost Ethiopia’s economic recovery

Ethiopia's economic recoveryEthiopia, Africa’s second most populous country, has faced significant economic challenges recently, including a total debt of $28 million, a foreign currency shortage and the default of its $33 million Eurobond in 2023. In response to these pressures, the National Bank of Ethiopia (NBE) made a decisive move on July 29, 2024, by floating its currency to secure much-needed funding. This shift allows for free trade in the foreign exchange market, which the NBE believes will increase the country’s integration with the global economy.

The International Monetary Fund (IMF) and the World Bank have pledged $20 billion in funding in the next four years to support Ethiopia’s economic recovery and growth. This financial assistance aims to boost the financial sector, enhance investment and trade opportunities and advance the overall economy. The plan also focuses on reforming critical areas such as education, renewable energy, urban development and job creation, laying the groundwork for a more sustainable and prosperous future.

Why Does Ethiopia Need Funding?

The effects of the pandemic were felt worldwide and Ethiopia’s agriculture industry, the most significant contributor to the country’s gross domestic product (GDP), was no exception. Accounting for approximately 75% of the workforce and 80% of exports, the sector faced immense pressure as COVID-19 restrictions disrupted the food supply chain, limiting business operations and employment. These disruptions led to decreased crop production, particularly in rural communities, resulting in reduced household incomes, higher food prices and increased financial instability.

Additionally, tensions between Ethiopian and Eritrean forces escalated into the Tigray War from 2020 to 2022. Although a cease-fire agreement was eventually reached, the aftermath of the conflict left widespread devastation across Ethiopia, displacing many people and damaging critical infrastructure. The situation became particularly dire in the Amhara region, with communities deprived of access to food, water and health care. As a result, the area was declared an emergency zone in August 2023.

Relentless natural disasters have also severely impacted Ethiopia in recent years. In November 2023, heavy rainfall caused floods in parts of the Somali region. This year, floods struck several areas, including Afar, Central Ethiopia and Oromia in May and much of the Horn of Africa in June, leading to widespread damage and further displacement. Last month, two catastrophic landslides buried villages in the Gofa zone, marking the deadliest such events in the country’s history. Recovery efforts are ongoing, with humanitarian aid programs working tirelessly to rebuild and restore these devastated areas.

Ethiopia’s Economic Recovery

Since the announcement of the floating currency, Ethiopia’s birr has faced a sharp decline in value, immediately triggering a rise in inflation and widespread concern. In response, the government lifted import bans on more than 30 products that had been restricted since 2022. While this move could enhance Ethiopia’s competitiveness in the global market, the long-term benefits are yet to be seen.

Prime Minister Abiy Ahmed emphasized the importance of this shift, stating that it is “critical to relieving foreign exchange shortages, removing constraints to private sector investment and growth and aligning the prices of imported and exported goods and services with market realities.” The restructuring is expected to keep Ethiopia on track to becoming a middle-income country within the next several years.

Final Note

The $20 billion funding from the IMF and World Bank will help stabilize Ethiopia’s economic recovery by restructuring debt, boosting key sectors and supporting recovery from natural disasters and conflict. This aid is crucial for enhancing global competitiveness and advancing the country toward middle-income status.

– Tanita Love

Tanita is based in Chicago, IL, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Unsplash

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Having An Impact: NGOs In Tunisia

NGOs In TunisiaTunisia, the northernmost African country, is classified as a developing country by the International Monetary Fund (IMF). It boasts a unique culture, characterized by a blend of European and Middle Eastern influences and reveals promising prospects for economic well-being. However, it faces several significant barriers to development. These include a rising debt burden, worsened by the COVID-19 pandemic, which has hindered Tunisia’s ability to borrow from foreign organizations and an alarming youth unemployment rate of 40%. Tunisia is actively working to rectify these ongoing issues and the efforts of nongovernmental organizations (NGOs) play a crucial role in alleviating the common roadblocks faced by developing countries, providing essential assistance globally.

FISTA

The First Step Together Association (FISTA), is one of the NGOs operating in Tunisia, with a primary focus on at-risk youth, in particular those with cognitive impairments and learning disabilities. Since its humble beginnings in 1989, as a reed-built school housing nine children, FISTA has gradually expanded its operations to cover and support the needs of adolescents impacted by learning disabilities outside of just North Lebanon. The work of FISTA is crucial. Youth with learning disabilities are all too often disregarded even in nations not classified as developing countries. 

Another initiative from FISTA, in partnership with UNICEF, is its internship program. This pre-vocational program specifically targets increasing diversity and inclusion in the workforce and empowers those with disabilities or other factors impacting their success to find their footing. The initiative funded a program that engaged eight young individuals in two-month training programs for various trades, including haircutting, mechanical work and restaurant work. Empowering those with disabilities to secure sustainable income is vital in reducing Tunisia’s youth unemployment rate of 40%.

Assen

The Association de Soutien aux Enfants (Children’s Support Association, also known as ASSEN) is an NGO based in Tunisia that supports women and children in the country, particularly by aiding low-income women who aspire to become entrepreneurs. ASSEN focuses on what it calls “micro-projects.” For example, by funding small-scale projects such as building new breeding broilers, ASSEN significantly impacts the economy, aiding a group that might otherwise remain underrepresented. Targeting initiatives like these effectively assists the economy by creating more jobs and enabling those without resources to achieve personal goals and contribute economically.

Islamic Relief Worldwide

Islamic Relief Worldwide (IRW) is an NGO operating primarily in Muslim countries, including a chapter based in Tunisia. Its operations are notably diverse, with programs to assist Tunisian youth through educational initiatives similar to those of FISTA and others focused on supporting the country’s sustainability needs. IRW assists Tunisia in achieving its developmental goals by empowering farmers with the tools and technical knowledge necessary to thrive in the country’s sometimes challenging climate.

In a specific instance, IRW responded to a call for assistance in the Kebili province of Tunisia, a region challenging for farmers due to its climate. When heavy sandstorms in 2017 damaged farmers’ equipment and jeopardized their productivity, IRW intervened. With the organization’s help, 276 farmers received new greenhouses to replace those lost. In a follow-up to this program, 66 farmers received new resources and vocational training to further aid their operations. Supporting Tunisia’s farmers aligns directly with the country’s broader interests and the impact of programs like this from Islamic Relief Worldwide continues to be felt at the moment.

Islamic Relief and Schools

Another example of IRW impacting Tunisia involves its efforts to improve the health and safety of schools in the region. A common challenge faced by Tunisian schools is the lack of access to basic washing facilities, which contributes to poor hygienic standards and the inadvertent spread of diseases such as hepatitis and COVID-19. Additionally, poor infrastructure planning has resulted in many unisex bathrooms, increasing the risk of sexual violence and abuse for many youths. To address these issues, Islamic Relief conducted sessions to stress the importance of hygiene and installed necessary hygiene facilities in schools, benefiting an estimated 75,000 students. Addressing hygiene issues has been a significant game changer, as approximately 100,000 students previously dropped out due to the lack of proper hygienic facilities in schools.

Looking Ahead

NGOs play a pivotal role in addressing Tunisia’s developmental challenges, particularly in areas such as youth unemployment, education and agricultural sustainability. Organizations like FISTA, ASSEN and Islamic Relief Worldwide are implementing targeted initiatives that provide essential support to vulnerable populations, including at-risk youth and low-income women. Through vocational training, micro-projects and improvements in education and agricultural infrastructure, these NGOs in Tunisia contribute significantly to Tunisia’s efforts to overcome its economic hurdles and enhance overall well-being.

– Malik Vega

Malik is based in Miami, FL, USA and focuses on Good News for The Borgen Project.

Photo: Flickr

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Singapore’s Social Safety Net: A Blueprint for Reducing Poverty

Singapore’s Social Safety NetSingapore, often hailed as an economic miracle, boasts a diverse economy that has propelled the nation to high-income status. Additionally, the country’s financial landscape is distinguished by a blend of globally leading industries, including manufacturing, services and emerging sectors. Manufacturing, a cornerstone of Singapore’s economy, spans electronics, chemicals and biomedical sciences. Furthermore, it contributes significantly to gross domestic product (GDP) and employment.

Meanwhile, the services sector encompasses finance, insurance, tourism and, more recently, data hosting and digital services. The sector has made Singapore a hub for innovation and business. This diversity is a critical factor in Singapore’s resilience. Additionally, it has enabled the country to weather global economic fluctuations and adapt to new trends, such as digital transformation and green technologies. The government’s strategic investments in education, research and infrastructure have further bolstered the economy’s adaptability, ensuring sustainable growth and job creation.

Singapore’s Social Safety Net

Singapore’s approach to social welfare is built on a unique social compact designed to provide opportunities for all citizens, regardless of background. This compact is underpinned by five pillars: asset building, education, health care, housing and employment. These pillars form a robust safety net that protects vulnerable groups, promoting social mobility and financial security.

  • Education: Education is a cornerstone of Singapore’s social policy. Indeed, it reflects the belief that education is a key driver of economic mobility. The government invests heavily in education at all levels, ensuring access to quality schooling and lifelong learning opportunities. Initiatives like SkillsFuture encourage citizens to upgrade their skills continuously, keeping pace with the evolving job market. This emphasis on education equips Singaporeans with the knowledge and skills necessary to thrive in a competitive global economy.
  • Health Care: Singapore’s health care system is renowned for its efficiency and accessibility. The government employs a multi-tiered approach to health care financing, combining personal responsibility with state support. This approach ensures all citizens have access to basic health care services. Programs like MediShield Life and the Community Health Assist Scheme (CHAS) help alleviate the financial burden of medical expenses, particularly for the elderly and lower-income groups. Furthermore, this guarantees that no Singaporean is denied health care due to monetary constraints, contributing to a healthy and productive population.
  • Housing: Homeownership is another key pillar of Singapore’s social safety net. The government’s public housing program, managed by the Housing & Development Board (HDB), provides affordable residences for most Singaporeans. Subsidies and grants allow lower- and middle-income families to own homes. This policy improves living standards and serves as asset-building, helping citizens accumulate wealth over time.
  • Employment: The government has implemented various programs to support lower-wage workers, ensuring they can achieve a decent standard of living. The Workfare Income Supplement (WIS) scheme, introduced in 2007, provides cash and Central Provident Fund (CPF) contributions to supplement the incomes of lower-wage workers. The Progressive Wage Model (PWM), launched in 2012, sets minimum wage levels for specific industries and outlines career progression pathways. These initiatives are part of a broader effort to reduce income inequality and promote social inclusion.

The Many Helping Hands Approach

In addition to government-led initiatives, the Many Helping Hands (MHH) approach supports Singapore’s social safety net. This community-based framework involves government bodies, donors, grantmakers, enablers, volunteers and Voluntary Welfare Organizations (VWOs).

The MHH system ensures that social assistance reaches the most vulnerable members of society, providing comprehensive support beyond just financial aid. One notable program under this framework is ComCare, which was launched in 2005. ComCare consolidates various welfare projects to offer more streamlined and effective support for those in need. It provides financial assistance, medical support and social services, catering to the diverse needs of low-income families, elderly citizens and individuals facing health care challenges.

Looking Forward

Singapore’s success in achieving a high-income and financially secure population is largely due to its diverse economy and comprehensive social safety net. Additionally, the government’s forward-looking policies in education, health care, housing and employment, combined with community-based support through the MHH approach, have created a resilient and inclusive society. This model aims for all citizens to lead fulfilling lives, regardless of socioeconomic background. As Singapore continues to evolve alongside global challenges, its commitment to social equity remains a guiding principle for sustained prosperity and social harmony.

– Asiya Siddiqui

Asiya  is based in Fremont, CA, USA and focuses on Business and Good News for The Borgen Project.

Photo: Flickr

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How Microfinance in India Transforms the Lives of Rural Women

<span style=India is a rich, diverse nation in Southern Asia, within what is known as the “Indian subcontinent.” It has long boasted extremes of all sorts, with Antilia – the residence of India’s richest family – located on Billionaire’s Row adjacent to the Dharavi Slum, which houses more than one million people. This extreme poverty is nothing short of ubiquitous.

Microfinance in India

Microfinance in India, which surfaced in 1974, refers to financial services aimed specifically at low-income individuals who do not meet traditional banking services requirements. The microfinance institutions offer small business loans at reduced interest rates to finance entrepreneurial initiatives for low-income individuals. In India, microfinance has proven instrumental to more than 160 million impoverished households as of 2023.

The Impact of Microfinance in India

Rajpoot was a homemaker in Narela, Madhya Pradesh, in rural India. She had fallen into loan shark schemes, borrowing twice to cover emergency medical expenses and her son’s college tuition. However, loan sharks are notorious for their high interest rates, which only prove troublesome for low-income borrowers. Rajpoot could not repay the 5% daily interest on her last loan in 2019, forcing her to give away a family heirloom as compensation.

However, in 2020, her life changed when she registered for a low-cost loan program with a group of women from her village. She used the funds to start a dairy herd business. Today, she proudly owns seven cows and one buffalo. She comfortably repays the $19 monthly installment to the microfinance company, Spandana Spoorthy Financial Ltd, while also affording her expenses, freeing her from crippling poverty.

The success story of Rajpoot highlights the impact of microfinance in India. Her story comes in addition to prominent microfinance banks, such as the National Bank for Agriculture and Rural Development (NABARD), which have empowered more than 160 million impoverished Indian households as of 2023.

The Importance of Microfinance in India

In India, where about 80% of women are financially illiterate, loan sharks often charge high daily interest rates. This practice drives more people into extreme poverty as they are forced to borrow from one lender to repay another. Microfinance provides an alternative to predatory lending, offering fair and manageable loan terms. By empowering women with access to financial resources and education, microfinance helps break the cycle of debt and fosters economic independence and stability.

Final Remark

Microfinance in India plays a critical role in bridging the nation’s economic extremes. Encouraging this practice involves supporting the banks directly engaged in microfinance. It increases marketing prospects in villages where microfinance would yield the greatest benefits in alleviating poverty. These measures would ensure that the initiative is maximized and that as much of the population as possible is aware of this initiative. Additionally, the initiative can help brighten the nation’s future by empowering illiterate women as legitimate income earners.

– Disheta Anand

Disheta is based in Dubai, United Arab Emirates and focuses on Business and Politics for The Borgen Project.

Photo: Pexels

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The Path to Poverty Reduction in South Korea

Poverty Reduction in South KoreaSouth Korea has adopted a long-term, comprehensive, multifaceted approach to reducing poverty, integrating government initiatives, technological innovations and international cooperation. These strategies have resulted in significant improvements in the country’s economy, education and infrastructure, making South Korea “the 12th largest economy in the world.” Here is information about poverty reduction in South Korea.

Economic Growth and Poverty

Since the end of the Korean War, South Korea’s economy has expanded, turning it from a low-income nation into a major player in the world economy. According to the World Bank, South Korea’s real gross domestic product (GDP) increased by an average of 5.7% each year between 1980 and 2023. Moreover, its gross national income (GNI) per capita swiftly advanced from $67 in the early 1950s to $33,745 in 2023.

South Korea faces challenges in addressing relative poverty, especially among senior citizens. The Human Rights Measurement Initiative (HRMI) ranks the country among the bottom three OECD countries in terms of relative poverty rates. For people aged 65 and older, South Korea has the highest relative poverty rate in the OECD.

Human Rights and Social Outcomes

On the other hand, the HRMI gives South Korea a positive score in ensuring basic rights such as food and health for its people. The right to food is 97.3% of what should be possible with South Korea’s GDP per capita, indicating that the majority of the population has adequate access to food, according to the HRMI.

However, the organization also notes that the right to work is less adequately addressed, with South Korea scoring only 74.4% of its potential in ensuring employment. This disparity is due to the high rate of relative poverty and the significant gap between regular and non-regular workers.

Government Policies and Welfare Programs

In recent decades, poverty reduction in South Korea has become more prevalent largely due to various government policies on enhancing social welfare and labor reforms. Social spending has increased significantly, quadrupling as a percentage of GDP from 1990 to 2015. The current administration has continued this trend by raising the minimum wage and expanding welfare budgets, according to the HRMI.

However, South Korea’s social spending still remains relatively low compared to other countries in the OECD. According to the HRMI, social spending in 2020 was only 10.4% of GDP, far below the OECD average of 21.6%.

According to the Ministry of Economy and Finance, the South Korean government has implemented various initiatives to stabilize the economy through fiscal policies, regulatory reforms and measures to manage inflation and stabilize prices. These policies create an environment that is conducive to business growth and job creation.

Expansion of Social Safety Nets

South Korea’s efforts to expand its welfare programs since the late 20th century have continued to this day. These enhanced safety nets aim to provide comprehensive economic support and safeguards to vulnerable populations. In particular, many of these programs focus on providing tailored health care, pension benefits and direct financial aid to senior citizens and rural residents, promoting equitable growth and development.

However, despite the expansion of these safety nets, relative poverty among vulnerable populations in South Korea remains an issue to this day. For example, the 2022 OECD Economic Survey of Korea reports that the average pension paid by the National Pension Service was only the equivalent of a third of the country’s minimum wage. Such factors have contributed to the ongoing high rate of relative poverty found by the HRMI in South Koreans aged 65 and older.

The international dimension of South Korea’s poverty reduction strategy applies active participation in global economic forums and hosting significant events like the World Bank’s 21st International Development Association (IDA) replenishment meeting. In only six decades, with the help of the IDA and World Bank, South Korea has transformed from an IDA recipient to a contributor that is now positioned to support the development of other countries.

The Future

South Korea’s journey from a war-torn nation to an economic giant is a testament to its resilience and effective policy-making. The government’s integrative approach to reducing poverty within the country through innovative policy-making, technological advancements and international cooperation has demonstrated rapid success.

However, there is still room for further improvement. The ongoing refinement and expansion of South Korea’s social spending, labor reforms and targeted poverty alleviation programs are still essential to ensuring sustainable poverty reduction in South Korea and improving the social outcomes for all its people.

– Sophia Lee

Sophia is based in Media, PA, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr

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Roots of Underdevelopment: Fragility and Rule of Law in Kosovo

Fragility and Rule of Law in KosovoWith a growing population of young, working age people, Kosovo’s potential for economic development is evident. In spite of this, it continues to be ranked one of the poorest countries in Europe, the poverty rate in 2023 standing at 21.7%. By understanding how poverty and troubles with fragility and the rule of law in Kosovo are interconnected, the roots of underdevelopment in this new nation can be illuminated.

Where: The Origins of Fragility

The present difficulties with fragility and the rule of law in Kosovo have deep ties to its historically tumultuous path to sovereignty. Kosovo originally existed as a province in the former Yugoslavia, however, demands for Kosovan self-determination increased after the final breakup of Yugoslavia in 1992. Kosovo gained independence in 2008, though this process proved to be difficult. The Kosovo War exemplifies this troubled journey, a context in which the ethnic cleansing of Kosovar Albanians sparked international outrage.

Demographically, Kosovo is predominantly ethnic Albanian (93%), although there is a minority of Kosovar Serbs that reside in the country, particularly in the North where Serbia maintains de facto rule. Kosovo, then, is still an area of significant political and cultural importance to Serbia. While the civil conflict between ethnic Serbs and ethnic Albanians peaked during the Kosovo War, the legacy of this ethnic tension post-1999 remains, continuing to threaten stability in Kosovo.

What: The Present Manifestations of Fragility

In 2022, violent protests began to emerge as the national government cracked down on ethnic Serbs who failed to adopt Kosovo license plates. Following this civil unrest, there was a mass withdrawal of ethnic Serbs from national institutions as a second form of protest, according to the 2024 Research Briefing from the House of Commons.

The events of April 2023 are a similar case: ethnic Serbs boycotted the local elections in the Northern municipalities. These events are related to the demand that ethnic Serbs were not represented sufficiently in government, which the poll data further reflects, showing that the majority of Kosovans recognise that the nation is governed in the interest of some groups, but not all.

In a similar way to many post-conflict countries, political and social fragility also manifests itself in an undermined rule of law. In post-conflict and fragile states, there tends to be a significant state “capacity gap” making the enforcement of law difficult. This capacity gap occurs at the judicial level in Kosovo, with U.N. military peacekeepers having to establish Civilian-Military Centres to deal with crime reports, according to USAID.

Government corruption and organized crime continue to plague the nation, taking advantage of these gaps in institutional and judicial capacity. The prevalence of bribery is an exemplary case of how the rule of law in Kosovo is weak at the state level, along with the proliferation of the drug trafficking and human smuggling industry.

Hindering Development

Generally, evidence shows that fragility causes poverty to become more deeply entrenched. As Carolina Sánchez-Páramo, Global Director for the World Bank’s Poverty and Equity Global Practice, states: “Unless we tackle the drivers of fragility and conflict, we won’t be able to win the fight against extreme poverty.” In line with this rhetoric, then, the potential for increasingly heightened ethnic conflict in Kosovo puts poverty alleviation initiatives at risk of failure or stagnation.

Furthermore, whilst organized crime has proliferated, other industries have failed, according to Per Concordiam Magazine. The 2023 polls show that the lack of jobs in Kosovo is a major concern, second only to the cost of living and this unemployment is exacerbated amongst the Kosovan youth leaving much of their younger, working-age population little to no sustainable income, according to the Center for Insights in Survey Research.

In turn, reliance on organized crime for income makes little room for sustainable industry development or legal employment opportunities, whilst also significantly reducing fiscal tax revenues. On average, countries in the Balkans lose between 20% and 30% of their annual revenues to this sort of activity, Per Concordiam Magazine. These revenues could be useful for the development of public infrastructure, health care and education services and other public spending projects.

Long-Term Solutions

Despite the evident difficulties with fragility and the rule of law in Kosovo, there is certainly a possibility for sustainable development, guided by international initiatives looking to support private industry development and regional integration.

The European Bank for Reconstruction and Development (EBRD) recognizes the complexities of Kosovo’s situation, acknowledging the intricacies of its relationship with Serbia, its multi-ethnic population and the flaws in the state’s institutional capabilities. Through a five-year investment and policy strategy that promotes deeper regional integration, The EBRD aims to stimulate the domestic private sector by opening up the Kosovan industry to new markets.

The EBRD’s previous 2016-2021 strategy was successful in a multitude of fields by financing the country’s first two large-scale renewable energy projects, Baigora wind farm and KITKA wind; rehabilitating Kosovo’s Rail Route 10, helping to improve connectivity with North Macedonia and Serbia; and setting up Women in Business specific lending schemes.

The road to sustainable economic development in Kosovo has, so far, been difficult, hindered notably by a fragile socio-political context, underdeveloped state institutions and extensive crime networks. But the untapped potential of Kosovo’s youthful population remains, and so does the international initiatives looking to support Kosovo economically.

– Tilly Phillips

Tilly is based in Surrey, UK and focuses on Good News and Politics for The Borgen Project.

Photo: Flickr

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Social Enterprises in Colombia

Social Enterprises in ColumbiaColombia is witnessing a transformative wave of social enterprises addressing pressing social issues while generating employment and reducing poverty. These innovative businesses are tackling critical challenges such as waste management, economic inclusion and sustainable agriculture, all while creating jobs and improving the quality of life for many Colombians. 

Tackling Waste with Innovation

Conceptos Plásticos is a leading example of innovation in waste management and housing solutions. This enterprise transforms plastic waste into building materials for affordable housing. In 2018, Colombia produced approximately 14 million tons of municipal waste daily and only 17% is recycled. Conceptos Plásticos reduces plastic pollution, creates jobs and provides sustainable housing solutions for low-income families. The company has already built more than 1,500 homes using recycled plastic. By converting plastic waste into a valuable resource, Conceptos Plásticos significantly impacts both environmental sustainability and social welfare.

Promoting Economic Inclusion

Fundación Capital is another notable enterprise making strides in Colombia. This organization focuses on economic inclusion by offering financial education and digital tools to low-income individuals. In Colombia, approximately 30% of the population lives below the poverty line. Fundación Capital’s initiatives help individuals manage their finances and improve their livelihoods. The organization has reached more than six million people across Latin America with its programs. By empowering people with the knowledge and tools to achieve financial stability, Fundación Capital plays a crucial role in reducing poverty and promoting economic growth. The initiative highlights the importance of financial literacy in achieving long-term economic sustainability.

Advancing Sustainable Agriculture

SiembraViva, a Colombian social enterprise, addresses environmental sustainability and agricultural innovation. Agriculture accounts for about 6.3% of Colombia’s GDP, with many small farmers struggling to maintain sustainable practices. SiembraViva supports small farmers by providing technology and promoting sustainable farming practices. These ongoing efforts improve crop yields and reduce the environmental impact of agriculture. The enterprise has supported more than 1,000 farmers, reducing waste from 30% to 5% and guaranteeing farmers an income. By focusing on sustainable methods, SiembraViva helps ensure that farming practices contribute to long-term ecological health.

The Broader Impact

These social enterprises in Colombia illustrate the powerful role of entrepreneurship in driving social good. By tackling critical issues such as waste management, economic inclusion and sustainable agriculture, these social enterprises are creating jobs and improving the quality of life for many Colombians. Colombia’s unemployment rate, which stood at 11.3% in 2024, underscores the need for job creation initiatives. The innovative solutions provided by Conceptos Plásticos, Fundación Capital and SiembraViva demonstrate the potential of social enterprises to transform economies and uplift communities. As Colombia continues to support and nurture these initiatives, the positive impact on society is expected to grow, contributing to a more sustainable and inclusive future.

– Chelsea Rasool

Chelsea is based in Stirling, Scotland and focuses on Technology and Solutions for The Borgen Project.

Photo: Flickr