Archive for category: Economy

Information and stories about economy.

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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

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Uganda’s Economic Growth in the Face of Global Challenges

Uganda’s Economic Strength in the Face of Global ChallengesUganda’s economic landscape has faced significant global challenges over the past few years, yet the country has demonstrated notable resilience and potential for sustained growth. Despite external pressures such as high commodity prices, global inflation and the repercussions of geopolitical events, Uganda has managed to maintain steady economic growth.

Economic Growth and Performance

In 2024, Uganda’s economy is expected to grow by 6.0%, a testament to its resilience and robust economic strategies. This growth projection follows a substantial 6.3% increase in real GDP in 2022, reflecting the country’s capacity to bounce back from economic downturns. The primary drivers of this growth have been the agriculture and services sectors. Agriculture, particularly food crops, has thrived due to favorable weather conditions and government initiatives aimed at boosting productivity and sustainability.

The services sector has also shown strong growth, especially in trade, repairs and health services. For example, as more Ugandans move to urban areas, there is an increasing need for retail services, which has led to the proliferation of shopping malls, supermarkets and smaller retail outlets. Improved transportation networks and better logistics support this growth, making it easier for businesses to distribute goods across the country. 

Inflation and Monetary Policy

Inflation in Uganda peaked in late 2022, driven by global supply chain disruptions and high commodity prices. However, it has since been on a declining path, due to the Bank of Uganda’s (BOU) monetary policy. The BOU has implemented measures aimed at stabilizing inflation around 5%, which include adjusting interest rates and using open market operations to control liquidity. The proactive approach aims to mitigate economic shocks and prevent unnecessary volatility in monetary policy reactions. 

External Financial Support and Debt Management

A significant challenge Uganda face is its reliance on external financing, particularly in light of global monetary tightening and rising borrowing costs. However, Uganda’s external debt profile is relatively favorable, as it is predominantly owed to multilateral creditors such as the World Bank, IMF and African Development Bank. These institutions offer concessional loans with lower interest rates and longer repayment periods, which reduces the risk associated with commercial loans. Increasing domestic revenue through improved tax collection is crucial for financing development projects and maintaining debt sustainability. Effective tax policies and administration could further enhance government revenue, reduce dependence on external debt and provide more resources for essential public services and infrastructure projects​.

Sectoral Contributions and Structural Challenges

Uganda’s economic growth has been uneven across different sectors. While agriculture and services have performed well, the industrial sector has struggled, particularly in construction. The construction sector has faced challenges such as high costs of materials, regulatory hurdles and insufficient infrastructure investment. Additionally, Uganda faces structural challenges like the impact of climate change, limited fiscal space and stagnant productivity. These ongoing challenges are compounded by high local lending rates, which stifle business growth and innovation. 

Investment and Development Initiatives

International organizations like the World Bank, International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) are actively supporting Uganda’s development across various sectors. These organizations invest in projects that aim to diversify the economy, support smallholder farmers and improve access to finance and jobs. For example, initiatives in the agricultural sector focus on enhancing productivity through modern farming techniques and access to markets. In the financial sector, efforts are being made to increase access to credit for small and medium-sized enterprises (SMEs), which are vital for job creation and economic diversification.

Strategic and Policy Recommendations

Enhancing coordination between fiscal and monetary authorities is essential for maintaining economic stability. For instance, aligning fiscal policies with monetary policy objectives could help control inflation and ensure sustainable public finances. Additionally, Uganda should focus on boosting productivity in established sectors like agriculture while exploring new growth avenues such as value-added production and export diversification. Investing in infrastructure, education and health services is critical to improve human capital and support long-term economic growth. Climate change adaptation and transition financing present opportunities that Uganda can potentially capitalize on to bolster its external balance position. 

Looking Ahead

Uganda’s steady economic growth, driven by agriculture and services sectors, reflects its resilience amid global challenges. Effective monetary policies have stabilized inflation, creating a favorable environment for recovery. External financial support and strategic investments in infrastructure and education aim to enhance Uganda’s economic stability and long-term growth prospects. Addressing structural challenges and boosting productivity remain crucial for sustaining this progress.

– Sofia Reynoso

Sofia is based in Tampa, FL, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr

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Ben & Jerry’s: Divesting from Israel

Divesting from IsraelBy divesting from Israel, Ben & Jerry’s did more than end the sale of ice cream in the occupied Palestinian territories. As the leading brand, Ben & Jerry’s is the face of the U.S. ice cream – a $19 billion U.S. market. Its divestment not only signals a significant economic impact but also a strong ethical stance in the human rights discourse at large. It bolsters Palestinian advocacy efforts and increases international pressure for policy reform.

“We believe it is inconsistent with our values for our product to be present within an internationally recognized illegal occupation,” wrote Ben & Jerry’s in a statement. Corporate divestments from Israel not only shift significant financial resources but also set precedents for other investors and reflect growing societal concerns about corporate responsibility in geopolitical conflicts.

What Is Divestment?

Divestment is the process of selling off assets for either financial, ethical or political reasons. In the context of the Israel-Hamas war, divestment refers to the withdrawal of investments from companies or entities operating in Israel or the occupied Palestinian territories.

Anyone who has watched the news in recent months has seen students at major universities calling for divestment. Protestors at Columbia University, for example, have a long list of divestment targets, demanding the college disclose and divest from companies like Amazon, Google and Airbnb.

Other major corporations, including Hudson’s Bay Company and UniCredit, have also announced divestments. To understand the significance of major corporate divesting from Israel, let’s consider Ben & Jerry’s as a case study.

Impacts of Ben & Jerry’s Divesting from Israel

Ben & Jerry’s divestment from the occupied Palestinian territories represents a strong ethical stance, influences public discourse, interacts with complex legal and political frameworks and applies economic pressure. This move highlights the potential for businesses to impact global human rights and policy issues through their investment decisions.

The Ben & Jerry’s divestment has placed economic pressure on Israel with an impact on both U.S. and Israeli economies and contributed to a broader social and political discourse around Israel’s occupation of Palestinian territories.

Economic Pressure on Israel

Ben & Jerry’s divestment from Israeli-occupied Palestinian territories puts economic pressure on Israel by challenging the legitimacy of its occupation and potentially promoting other companies or countries to reconsider their business ties.

The tangible economic pressure from divestment involves a combination of direct financial losses, disruptions in supply chains, impacts on local employment, stock market reactions, regulatory costs and changes in consumer behavior. Collectively, these pressures incentivize changes in policies and practices, aligning business operations with human rights considerations.

Impact on Israel and the US Markets

In Israel, the decision led to increased support for local ice cream brands and alternative suppliers. Local impacts include the reallocation of market share within Israel’s economy, particularly in the affected territories. In the U.S., depending on Ben & Jerry’s political affiliation, many consumers have supported and boycotted the company’s decision, leading to temporary influxes or declines in sales within certain demographics or regions.

The shifts in consumer preferences due to the controversy could have led to short-term changes in market share within the premium ice cream segment. In the past year, Ben & Jerry’s has lost nearly $1 billion in sales. This has allowed competitors like Häagen-Dazs, Baskin-Robbins and smaller artisanal brands to see an uptick in sales from consumers boycotting Ben & Jerry’s.

State-Level Regulations That Penalize Companies

The Israeli government lobbied states like North Carolina with anti-BDS (Boycott, Divestment, Sanctions) laws, which penalize companies that boycott Israel, potentially impacting business relations and financial interests. These state-level regulations prohibit state entities from contracting with or investing in companies that participate in boycotts against Israel or Israeli-controlled territories.

Broader Economic and Political Reactions

Human Rights Watch praised Ben & Jerry’s decision to stop selling ice cream in Israeli settlements in the occupied West Bank, urging the U.S. to follow suit in response to human rights abuses. The move by Ben & Jerry’s prompted reactions from various political and business entities. Israeli officials and pro-Israel groups in the U.S. pushed back strongly, labeling the move as economic terrorism and antisemitic. They warned of broader economic ramifications, including potential boycotts of Unilever products and strained business relations between U.S. entities and the company​.

​​In summary, Ben & Jerry’s divestment from the occupied Palestinian territories not only applies economic pressure but also reflects a strong moral position, influences public discourse and interacts with complex legal and political frameworks in the name of human rights advocacy.

– Sheridan Smith

Sheridan is based in Madrid, Spain and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr

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Investing in R&D for Diseases in Africa

Diseases in AfricaThe world has become a global village and events in one part of it affect everyone in many ways. Depending on the event, the effects can be good or bad. The African continent is of immense significance. Neglected diseases like HIV, tuberculosis, malaria and other tropical diseases are not just problems in Africa; they are global challenges. Africa currently accounts for 20% of the global disease burden and that means both the loss of 630 million lives and $2.4 trillion in economic value yearly.

The United States (U.S.), as a global leader, holds a key position in global health security. It can further strengthen this position by allocating investments in Africa, particularly in research and development (R&D) for these diseases. This strategic move will contribute to global health and boost the U.S. economy, creating new jobs and fostering innovation. Recent research published by the Global Health Technologies Coalition (GHTC) has proven that investment from the U.S. can impact not only global health but also boost the U.S. economy.

The US Investments in Health R&D in Africa

The U.S. investments are vital to supporting the development of new drugs for diseases like malaria, tuberculosis, HIV and Ebola, which are among the most pressing health challenges in Africa and globally. For instance, U.S. investment in the development of antiretroviral drugs has significantly reduced the mortality rate of HIV/AIDS in Africa, saving millions of lives. This is a testament to the potential impact of the U.S. investments in health R&D in Africa.

In the last two decades, the U.S. has invested $46 billion in R&D for neglected diseases like HIV, malaria, tuberculosis and other health issues. In 2022, this investment was 0.21% of its gross domestic product (GDP). The investment helped develop 12 products for tuberculosis and 11 for malaria. The development of Pretomanid has revolutionized tuberculosis treatment. It also works for drug-resistant cases, reducing the treatment duration from 18 months to 6 months. Using it for all drug-resistant cases can save up to $740 million annually.

Two drugs, Cabotegravir and Dapvirine, developed with U.S. investments, have the potential to revolutionize HIV prevention and treatment. Many other products against different diseases are in the pipeline, also developed with the country’s investment.

Boosting the US Economy

These investments have boosted the U.S. economy and benefited U.S. companies and people in more ways than one might think. Here are some key points describing how these investments have contributed to the growth of the U.S. economy:

  • Investments in R&D for diseases have created 600,000 jobs in the U.S. 
  • The investments resulted in an additional $104 billion in the U.S. economy.
  • The investments on the governmental level have enhanced private sector investments in R&D for global health as well and $1 will result in an additional $8 investment in the private sector. These figures imply that the U.S. economy will ultimately gain an investment advantage of $102 billion.

These investments will result in future products worth $255 billion, further boosting the U.S. economy.

Final Thoughts

The U.S. has financial power and moral authority globally. More investment in R&D for diseases can improve life expectancy in Africa, strengthen the economies of partner countries, boost the U.S. economy and protect Americans’ health. The world has become a global village and diseases can spread quickly, creating a potential danger for everyone. Cases of malaria and leprosy have emerged in the U.S. in the recent past.

R&D of treatments and prevention products can help control the emergence of diseases in the U.S. and globally secure the financial future of thousands of Americans through jobs and boost a strong U.S. economy. In our current circumstances, allocating resources toward R&D for diseases in Africa is crucial. This investment can revitalize the U.S. economy during these challenging times.

– Maria Waleed

Maria is based in Yokohama, Kanagawa, Japan and focuses on Good News and Global Health for The Borgen Project.

Photo: Pexels

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Improving Waste Management in Southeast Asia

Waste Management in Southeast AsiaThe growth of Southeast Asia in recent decades has been startling. This growth has improved the economies and living conditions in the region and has contributed to reduced poverty rates. However, the rapid expansion of industry and population size has resulted in huge waste production. Six of the top 10 countries with the highest polluting levels are in Southeast Asia. The countries have inadequate waste management systems and are not capable of handling large quantities of waste.

Waste Management in Southeast Asia

Currently, landfills are used, which are not sustainable due to the increasing amount of land mass needed daily. The region is the fastest-growing waste generator among the East Asian and Pacific regions. It has produced approximately a fifth of all waste produced globally. Southeast Asia is projected to produce an additional 300 million tonnes by 2030. The region is the main global center for waste imports after China banned unclean waste imports, adding to the overall tonnage of waste. By 2050, plastic waste is projected to be one-tenth of all waste produced, reaching 12,000 million tonnes.

The United Nations Environmental Assembly has identified pollution as the third great environmental crisis of our time. It stresses the need for improved waste management in the Association of Southeast Asian Nations (ASEAN). For ASEAN, investing in sustainable processes is a must if it is to continue growing and improving the livelihoods of its population. The sustainability industry is an area of huge interest to investors as it is in its early stages of development.

The Problem with Waste

Poor waste management causes a multitude of problems, including health risks, pollution, resource depletion, economic losses and environmental degradation. Harmful diseases are spread in areas of inadequate waste management, threatening public health. Economic losses occur as resources are used inefficiently to handle the waste. Subsequently, governments have to act reactively to mitigate the consequences. These consequences of ineffective waste management disproportionately impact people experiencing poverty, who live in the most polluted areas and who feel the effects of poor health and environmental degradation the most.

Finding Solutions with Technology

There is a need for ASEAN to implement more effective waste management strategies to address the consequences laid out above and to promote sustainable development. Innovation and technology are being used to tackle the waste management problem in ASEAN. The gap in the market has drawn sustainable start-ups and investors to the region. Here are three companies that are using technology to improve waste management in ASEAN:

Rezbin

Based in Iloilo in the Philippines, Rezbin won the 2024 ASEAN start-up award. It targets the habit of recycling, providing bins at certain locations where plastic can be donated. Rezbin uses technology to track plastic donations and reward individuals who do. Rezbin’s CEO has stated that it is researching other tech solutions for the waste disposable industry. They hope to move into different areas of the waste value chain in the future.

Octopus

Octopus is a circular economy start-up based in Indonesia. It is a reverse logistics platform that producers can use to track and collect used waste to prevent it from ending up in landfills. The company ensures waste can be collected efficiently, providing incentives for manufacturers to collect and recycle their waste. Octopus hires people who have previously tried to make a living picking plastics for recycling and provides them with a monthly salary. Octopus benefits the ecosystem and individual livelihoods simultaneously.

Magorium

Based in Singapore, Magorium uses technology to convert plastic waste into a material called NEWBitumen, which can be used to build and pave roads. This material can be made from all types of plastic, clean or unclean, reducing the masses of unclean plastic ending up in landfills and cutting out the need to clean all plastics. Magorium provides businesses with the ability to get rid of plastics sustainably without them ending up in landfills, incinerators or the ocean.

The Future

Investment in improving waste management in ASEAN can lead to better outcomes for the region’s economies. The cost of uncollected waste is approximately five times higher than it would be to implement a sustainable waste management system. Start-ups using sustainable technology can help economies implement sustainable waste management systems and create a competitive market focused on sustainable development and waste reduction.

Revenue made from more efficient systems can be reinvested in the local economy and into initiatives tackling poverty. Overall, improving ASEAN’s ability to tackle its waste issue can benefit the poorest of society, who suffer most from the consequences of poor waste management.

– Lauren Alkhalil

Lauren is based in London, UK and focuses on Technology and Solutions for The Borgen Project.

Photo: Flickr

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Poverty in Honduras

Poverty in HondurasHonduras, a country rich in culture and natural beauty, has long faced the challenge of poverty. More than half of its population lives below the poverty line, grappling with issues such as unemployment, inadequate health care and lack of education. Frequent natural disasters that disrupt lives and livelihoods further worsen these issues. Addressing these challenges requires a comprehensive approach that includes economic growth, various social programs and strong institutions.

Economic Growth and Structural Reforms

Economic growth is essential for reducing poverty. In 2023, Honduras saw GDP growth of about 3.5%, slightly down from 4% in 2022, mostly due to a drop in textile demand from the United States. This trend is expected to continue, with projections showing a 3.4% growth in 2024 and 3.3% in 2025. Despite the decline in exports, household consumption and investment have been supported by steady remittances and credit growth.

To boost economic growth, Honduras needs to improve productivity and competitiveness. This includes investing in infrastructure, making the business environment friendlier and supporting small and medium-sized enterprises (SMEs). For instance, the Rural Competitiveness Project (COMRURAL) by the World Bank has significantly improved the productivity and market links for small rural producers, benefiting more than 14,000 families and enhancing financial inclusion for small farmers, according to the World Bank.

Social Protection and Human Capital Development

Investing in human capital is crucial for long-term poverty reduction. Honduras has made progress in education and health, but challenges remain. According to its website, the World Bank’s Education Quality, Governance and Institutional Strengthening Project has expanded school coverage in disadvantaged areas, increasing access to preschool education and providing training and resources for volunteer teachers.

The World Food Programme (WFP) has been instrumental in improving nutrition and food security. In March, the WFP’s school feeding assistance reached 6,598 children with 38 metric tons of food, supported by private partners like Fundación Ficohsa. The WFP’s nutritional assistance program also provided essential food items to 650 vulnerable individuals, including young children and pregnant or breastfeeding women.

Natural Disasters and Governance

Honduras is highly vulnerable to natural disasters, which worsen poverty. The World Bank has supported the country in disaster risk management and enhancing resilience. After hurricanes Eta and Iota, World Bank-financed projects helped rehabilitate and reconstruct affected areas, benefiting about 300,000 people, according to its website.

Improving governance and institutional quality is key to reducing poverty. Transparency and accountability in public administration are critical. The World Bank has helped the Honduran government update its poverty measurement methodology and improve the capacity of the National Statistics Institute, allowing for better targeting of social protection programs, according to its website.

Inclusive Economic Development and Job Creation

Creating opportunities for vulnerable populations is crucial for fostering inclusive growth. The World Bank is actively supporting Honduras through loans, grants, technical assistance and knowledge sharing. This approach is focused on sustainable poverty reduction. Its Country Partnership Framework (CPF) aims to build a “green, inclusive and resilient economy” by improving human development, promoting economic growth and job creation and bolstering resilience to natural hazards, according to its website.

Currently, the World Bank has committed $905 million across 12 investment projects and one development policy operation in Honduras, including $35 million in grants from programs such as the Global Agricultural and Food Security Program (GAFSP).

Since the onset of the pandemic, the World Bank has assisted Honduras with initiatives such as a $20 million emergency COVID-19 response, a $119 million standby loan and investments in disaster preparedness and health services, according to its website.

Projects also focus on improving education quality, urban water supply, disaster resilience and reconstruction efforts following hurricanes Eta and Iota. Despite progress, ongoing challenges emphasize the need for continued efforts to ensure sustainable development in Honduras.

Challenges and Future Initiatives

Despite these efforts, significant challenges remain. The WFP faces a funding gap of $83.4 million over the next six months (April to September 2024). In March 2024, approximately 1.8 million Hondurans faced a food security crisis or employed above-crisis-level food-based coping strategies. This highlights the urgent need for targeted interventions to address food insecurity. Additionally, support is needed for the most vulnerable to hunger and malnutrition, according to the WFP Country Brief.

In response to these challenges, the WFP, in partnership with the Swedish International Development Cooperation Agency (SIDA), conducted a strategic field visit to Choluteca and La Paz departments. Following this visit, both organizations committed to a collaborative emergency response program scheduled for 2024.

Reducing poverty in Honduras requires an approach that includes economic growth, social protection, institutional reforms and resilience to changing weather patterns. The combined efforts of the Honduran government, international organizations like the International Monetary Fund (IMF) and World Bank and private partners have laid a foundation for sustainable poverty reduction. Continued focus on these areas will be essential in achieving long-term progress and improving the lives of the Honduran people.

– Francheska Duarte-Santos

Francheska is based Durham, NC, USA and focuses on Business and Technology for The Borgen Project.

Photo: Unsplash

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The Rapid Economic Development in Ethiopia

Economic Development in EthiopiaEthiopia is a low-income country in the Horn of Africa. It is one of the world’s oldest countries, but the territorial borders have changed multiple times during its existence. The country has a history of conflict and war.  In 2020, a civil war broke out in the country, which lasted for two years. Not long before this war started, the long-lasting conflict with Eritrea ended. Ethiopia also has a history of famine and poverty. However, in the last few years, the economic development in Ethiopia has been booming and the economy continues to grow.

About Poverty in Ethiopia

Ethiopia is one of the poorest states in Africa and the second-most populated country after Nigeria. According to the United Nations Development Programme (UNDP), approximately 68% of Ethiopia’s population was multidimensionally poor in 2021. Poverty has various adverse effects on the country, including the prevalence of serious diseases.

The population is highly susceptible to diseases such as malaria, HIV, tuberculosis and noncommunicable diseases (NCDs). In 2019, NCDs caused 43% of deaths in Ethiopia. Furthermore, its average gross domestic product (GDP) per capita is $1,028 as of 2022 and a significant portion of the population struggles to access an adequate food supply. This widespread food insecurity in Ethiopia is attributed to overall poverty, droughts and past conflicts, among other factors.

Economic Growth

Ethiopia is experiencing rapid economic growth, with an impressive 7.2% increase in the 2022/23 fiscal year. The country has made significant progress in reducing poverty. Between 1995 and 2015, the percentage of Ethiopians living below the international poverty line decreased from 69% to 27%. The list below showcases the main reasons why Ethiopia’s economic development is booming:

  1. In 2018, the Ethiopian government launched an Urban Institutional and Infrastructure Development program. The program’s goals are to promote structural and economic transformation through increased productivity, build resilience and inclusiveness, support institutional accountability and confront corruption. The program, which will end in July 2024, has improved the living conditions for at least 6.6 million Ethiopians living in the countryside.
  2. Agriculture is an essential driver of economic development in Ethiopia. The industry accounts for 40% of Ethiopia’s GDP and an estimated 75% of the country’s workforce finds itself in this field. The government has set a plan to replace wheat imports with local production. It has introduced farming techniques that allow wheat to be harvested twice a year. By 2022, Ethiopia had become completely self-sufficient in producing wheat for its inhabitants. In the same year, it made more than one million tons of surplus, which it exported. The wheat initiative has been a great success.
  3. Due to the rapidly growing population, the government is facing challenges in creating enough jobs. Small and medium-sized enterprises play a crucial role in the Ethiopian economy. Therefore, the government has begun to focus on supporting small and medium-sized businesses as part of its plan to create three million more jobs annually.
  4. Some of the elements mentioned are part of the government’s Homegrown Economic Reform Agenda. This is an economic reform that was launched in 2021 and focuses on:
    • Ensuring macroeconomic stability to sustain the rapidly growing economic growth.
    • Rebalancing the public and private sector’s role in the economy.
    • Unlocking new and existing potential.

Looking Forward

In January 2024, the leaders of Ethiopia and Somaliland signed a memorandum of understanding. Ethiopia, which is landlocked, will be allowed to use Somaliland’s port for commercial traffic. In return, Somaliland will get a share of Ethiopia Airlines. This deal has irritated Somalia, which considers Somaliland to be part of its territory. However, if or when this deal is set in motion, Ethiopia’s economic development will likely reach new heights.

– Sigrid Nyhammer

Sigrid is based in London, UK and focuses on Politics for The Borgen Project.

Photo: Unsplash