Archive for category: Economy

Information and stories about economy.

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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

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BPO Industry Lifts Philippine Population from Poverty

BPO Industry Lifts Philippine Population from PovertyIn recent years, the Philippines has experienced an economic resurgence, a significant shift from its prolonged economic struggles post-World War II. Historically, since the 1960s, a series of political regimes contributed to bleak economic prospects. Economic disparity widened significantly, with the rich getting richer and the poor facing increasing desperation. This disparity stemmed largely from an agrarian economy in which farmers, who did not own their lands, had to pay exorbitant rents to landowners. The introduction of the Business Process Outsourcing (BPO) industry has played a crucial role in altering this economic landscape.

The Feudal Legacy

The Philippines, often labeled a democracy, functioned more like a feudalistic society where the landed gentry controlled the economy and its tenants. This structure left the majority of the population either farming or working menial jobs, with minimal economic prospects and limited to earning only minimum wage. However, the early 2000s marked a significant shift when the Philippines opened its borders to international companies seeking a more affordable workforce.

The BPO Industry’s Impact

A significant challenge in the Philippines has been the scarcity of stable jobs, with many Filipinos reporting unstable job statuses or complete unemployment. However, the advent of the BPO industry has markedly reduced the unemployment rate. This industry has not only provided jobless individuals with new employment opportunities but also enhanced the purchasing power of the overall population.

International Career Opportunities

Before the proliferation of BPO companies in the Philippines, opportunities for Filipinos to work for international firms were limited, often requiring them to become overseas foreign workers to earn higher wages. BPO companies have changed this dynamic by providing Filipinos the opportunity to earn international wages without leaving the country. Additionally, these companies offer career paths with global firms, allowing employees to advance professionally within their home country.

Economic Revitalization

According to the World Bank, traditionally, only the upper and middle classes could afford a college education, limiting access to more lucrative jobs to a small segment of society. However, the emergence of BPO companies has transformed employment opportunities. The Philippines, known for its high percentage of English speakers, has become an ideal location for BPO operations. These companies typically do not require college degrees, instead prioritizing proficiency in English and basic computer skills. This shift has allowed a broader segment of the population, already literate and motivated, to secure employment, support their families and contribute effectively to their employers, thus expanding economic opportunities beyond the traditionally educated elite.

Before the BPO boom, a substantial portion of the population possessed minimal buying power, with many families reliant on a single source of low income. The introduction of BPO jobs provided higher wages, enhancing the economic strength of individual households. This increase in income allowed families to spend, invest and save more, stimulating demand for products and services and invigorating the national economy.

Looking Ahead

The rise of the BPO industry looks set to alter the economic landscape in the Philippines, providing stable employment opportunities and lifting many out of poverty. This shift could not only improve wages but also facilitate broader access to international careers without requiring emigration. The continued growth of the BPO sector offers a path toward sustained economic development, enhancing the quality of life for countless Filipinos and strengthening the nation’s overall economic resilience.

– Neil Misola

Neil is based in Kitchener, Ontario, Canada and focuses on Global Health and Politics for The Borgen Project.

Photo: Pexels

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Poor Labor Conditions in Uganda: How Are Citizens Affected?

Labor Conditions in UgandaAs Uganda continues to expand its manufacturing industries, such as food processing, textile production and metal fabrication, there’s a higher demand for laborers across the nation. Currently, Uganda has one of the largest labor forces in sub-Saharan Africa, totaling 6.9 million workers in 1993. However, with 42% of citizens of Uganda less than the age of 14, the government has found it difficult to provide proper training, education and labor conditions. As a result, Uganda continues to be an undeveloped country with high levels of “vulnerable employment,” leading to inadequate salaries, low productivity and unsafe labor conditions.

Low Minimum Wages

Uganda’s poor working conditions are a huge reason why the country remains undeveloped. From low wages to extensive working hours to unsafe working environments, Uganda’s workforce is a potential threat to the health and safety of citizens. In 2017, Uganda upped its minimum wage from UGX 6,000 (About $1.60) per month to UGX 130,000 (About $35.08) per month.

While this has been a win for Ugandan citizens, this minimum wage almost exclusively applies to formal vocations. Other sectors of work, such as manufacturing, laboring and processing, remain vulnerable and uncovered. The cost of living continues to increase in Uganda, leaving those uncovered by minimum wage at a loss of proper shelter, nutrition and working conditions.

Lack of Training

Uganda has a significant youth population in sub-Saharan Africa. However, due to the lack of proper vocational training, nearly 13% of the youth are unemployed. This is one of the main factors contributing to Uganda’s high poverty and unemployment rates. Lack of training in Uganda especially affects young women.

A high school dropout, Evelyn Nakabuye, who lives on the outskirts of Kampala, survived years of joblessness due to the lack of proper training. She lived in a small house with her four children and her mother. However, in 2018, Nakabuye enrolled in a training program known as TEXFAD, which teaches carpet design in weaving. After just six months in the academy,

Nakabuye is now self-sufficient enough to own her own home and take care of her children. “This fund has really helped me,” Nakabuye said. “And it has changed my life.”

Low-Labor Productivity

Due to inadequate salaries and improper training, many Ugandans are at risk of low-labor productivity. Low labor productivity makes it difficult to generate morale among employees, profitability and high performance. The International Trade Union Confederation (ITUC) states that 70% of Ugandan employees work without a legal or written contract, despite it being a legal requirement for the employer to provide an employment contract for each employee. This is just one of the ways in which companies in Uganda sabotage the collective voices of workers in order to profit themselves.

Solutions

By introducing more reasonable salaries, training programs and working conditions, Uganda can begin to emerge from global poverty and economic crisis. Uganda’s Skills Development Project, for example, delivers high-quality training programs in Agriculture, construction and manufacturing.

As one of the rapidly growing economies in sub-Saharan Africa, Uganda is investing in proper training, funding and salaries to keep pace with the rest of the world. By ensuring that employees have safe, comfortable working conditions, proper education and adequate earnings, Uganda can work itself out of global poverty and thrive as a nation.

– London Collins Puc

London is based in West Palm Beach, FL, USA and focuses on Global Health for The Borgen Project.

Photo: Unsplash

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Lebanon’s Hash: The $1 Billion Industry to Lift Its Rural Poor

Lebanon’s Hash“Our hash is the best,” said former President of the Lebanese Republic, Michel Sleiman, despite the country’s illegal status on the cultivation, trading and usage of hash. Although meant as a joke, it still points to the popularity of the drug and its transformation into a necessity. In a study done by the European Monitoring Center for Drugs and Drug Addiction (EMCDDA), 53% of cannabis users confessed to an increase in hash consumption following the 2020 Beirut explosion, citing relief from anxiety as one of their primary motivations.

Lebanon’s Hash Industry

Lebanon has been cultivating and exporting hash for 100 years. Despite being the fourth smallest country in the region, Lebanon ranks among the top four largest hash producers in the Middle East, raking in millions of dollars annually. The amount of profit that hashish produces on an annual basis in Lebanon is difficult to pin down since the production of the drug is still illegal and, therefore, remains heavily undocumented.

In 2020, however, following a devastating economic crisis, the Lebanese government and the McKinsey consulting company produced a financial plan titled “Lebanon Economic Vision.” The document proposes that the legalization of hash for medical and recreational use could increase drug exports from $828 million to $1.79 billion by 2025. This revolutionary idea could mean an unprecedented cash flow into Lebanon’s long-neglected agricultural sector.

Where the Money Flows

Most of Lebanon’s illegal hashish farming occurs in the Bekaa Valley, a stretch of farming land that is 70 miles long and 16 miles wide. Many farmers have switched to growing hash after the economic crisis in 2019, which kept Lebanon’s inflation in triple digits for years. Many farmers have switched to growing hashish because it is cheap. Cultivating one-tenth of a hectare of a hash farm costs $150, while other crops, such as wheat, can cost up to $3,000.

Legalizing Lebanon’s Hash

In light of this trend, there has been growing pressure on the Lebanese government to legalize hash for domestic use and export. As of today, 55% of Lebanese youth are for the recreational use of hash and up to 75% of them are for its medical use. The growing popularity of Lebanon’s hash has also been apparent in parliament.

In 2020, the government passed legislation that allows for the farming of local medicinal cannabis (less than 1% tetrahydrocannabinol). However, the methods of injection into the market, the regulation and taxation of the market remain undefined and therefore make the drug illegal still.

Final Remark

With an ongoing war in the South and a financial crisis that a weak central government prolongs, the legalization of hash can be seen either as a temporary impossibility or a possible lifeline for the country.

– Carl Massad

Carl is based in Sarba, Jounieh, Lebanon and focuses on Politics for The Borgen Project.

Photo: Pexels

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How the Youth of Moldova Are its Future

Youth of MoldovaIn 2023, reports indicated a decline in the involvement of youth in decision-making and public policy implementation in Moldova. By early 2024, statistics revealed that Moldova’s population was 3.3 million, with young people making up over a quarter of this figure. Further analysis reveals that 72% of community youth programs fail to meet the population’s needs effectively, particularly those of the most vulnerable citizens. This situation highlights a significant gap between the objectives of youth programs and the actual needs of young Moldovans.

Economic Challenges and Depopulation

Moldova is facing significant depopulation, primarily due to the high emigration rates among young people. This trend presents a critical challenge to the economy, potentially limiting national development and restricting access to essential services. As one of Europe’s poorest countries, economic downturns disproportionately affect families with children, exacerbating the risk of poverty. Although there have been overall improvements in recent years, Moldova continues to experience high poverty rates, with child poverty being a major concern.

Youth and Social Policy

In 2020, Moldova recorded a child poverty rate of 26%. Households with multiple children, as well as those headed by a self-employed, unemployed or single-working parent, are particularly vulnerable to poverty. Current social policies fail to meet the needs of children living in poverty. Despite this policy gap, 72.7% of households with children reported satisfactory living conditions in recent years.

Educational and Employment Challenges

In Moldova, the youth population contends with significant challenges in education, employment, health and civic participation. Although 39% of 25 to 29-year-olds hold high-ranking degrees, the quality of education often fails to meet satisfactory standards. Many Moldovans remain disengaged from education and employment opportunities, complicating efforts to empower this generation with suitable jobs. Despite a general decline in poverty rates in recent years, the country faces hurdles in achieving economic growth, compounded by high emigration rates that particularly affect young citizens. Currently, 29% of Moldova’s youth are unemployed, a rate that exceeds many other countries and fosters social exclusion among this demographic. Prioritizing youth development is essential for Moldova’s national progress.

Various factors contribute to youth unemployment beyond economic challenges. Individual circumstances often require young people to assume caregiving responsibilities, leading them to become homemakers rather than active job seekers. Additionally, many young Moldovans plan to emigrate in search of better job opportunities that match their skills and qualifications. This trend is particularly pronounced among the most vulnerable segments of the youth population. Those from impoverished families, orphaned children or residents of rural areas face significant barriers to accessing education, further limiting their employment prospects.

The Youth Participation Program Initiative

Following youth-led protests in 2009, which demanded fairer governmental procedures and inclusion in policymaking, the Eurasia Foundation initiated the Youth Participation Program (YPP) in Moldova. This program aimed to channel the passion of the youth toward enhancing their country’s economy. To build momentum, the Eurasia Foundation collaborated with Moldova’s Ministry of Youth and Sports, organizing a series of youth debates across the country in partnership with Ministry representatives. These debates highlighted the perspectives of young people on policy reforms. The culmination of these efforts was the National Youth Forum, providing a platform for young Moldovans to discuss the 2009 to 2013 Youth Strategy directly with government officials.

Youth Sector Development Strategy

In 2023, the Moldovan government approved the “Youth 2030” Development Strategy, which targets three main objectives to bolster the nation’s youth. This strategy is designed to expand access to youth programs and enhance the participation of young Moldovans in voicing their ideas for the country’s future. Despite the absence of a specific public policy dedicated to the social inclusion of young people, the Youth 2030 strategy represents a comprehensive effort to unify various institutions that influence youth development and empower young citizens in Moldova.

Looking Ahead

Moldova’s initiatives to engage and support its youth are intended to contribute to the nation’s future development. The “Youth 2030” Development Strategy seeks to address significant gaps in youth participation and to improve access to essential programs. Addressing the root causes of emigration and enhancing opportunities for young people could be vital in fostering a more prosperous and stable society. By prioritizing youth inclusion and development, Moldova can potentially build a stronger, more resilient future.

– Brogan Dickson

Brogan is based in Edinburgh, Scotland and focuses on Good News and Global Health for The Borgen Project.

Photo: Flickr

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Guatemala’s Economic Growth and Equality

Guatemala’s Economic GrowthIn the past three decades, Guatemala has experienced a steady economic growth trajectory, yet this progress has not translated into significant reductions in poverty or inequality. Since the signing of the 1996 peace accords, which ended a 36-year civil war, the Guatemalan economy has grown at an average annual rate of 3.5%. This period of economic expansion saw the gross domestic product (GDP) growth rates of 4.1% in 2022 and 3.6% in 2023​.

However, these figures mask a deeper issue: the benefits of this growth have not been evenly distributed across the population. Urban areas, particularly Guatemala City, have seen substantial investment and development, while rural and indigenous communities continue to lag. This disparity highlights the challenge of achieving inclusive growth that benefits all segments of society.

Key Drivers of Economic Growth

Guatemala’s economy is largely driven by the private sector, which contributes approximately 85% of the country’s GDP. The services sector is the largest, accounting for 68% of GDP. This includes a wide range of activities such as banking, tourism, retail and telecommunications. The manufacturing sector, contributing 14%, is also a vital component, with industries such as food processing, textiles and pharmaceuticals playing significant roles​​.

Agriculture, though comprising only 10% of GDP, remains a critical sector, employing a substantial portion of the population and producing key exports like coffee, sugar and bananas. Additionally, remittances from Guatemalans living abroad, particularly in the United States (U.S.), are a crucial economic lifeline, contributing significantly to household incomes and foreign exchange reserves​.

Persistent Poverty and Inequality

Despite Guatemala’s economic growth and stability, poverty and inequality remain pervasive issues. As of 2023, approximately 55.1% of Guatemala’s population lives in poverty, with indigenous and rural communities bearing the brunt of this economic hardship​​. These communities often have limited access to education, health care and employment opportunities, perpetuating a cycle of poverty.

The informal sector is a substantial part of the economy, accounting for 49% of GDP and employing 71.1% of the workforce​. This sector is characterized by low wages, job insecurity and lack of social protections, which further exacerbate economic disparities. The country faces significant human capital challenges, with high rates of child malnutrition and limited access to basic services such as clean water, sanitation and electricity​.

Efforts and Challenges

Various initiatives have been undertaken to address these socioeconomic challenges. The U.S. Agency for International Development (USAID) has been active in Guatemala, implementing programs aimed at improving financial management, fostering innovation and supporting entrepreneurship. These programs are designed to create a more conducive environment for business growth and to empower local entrepreneurs.

However, the effectiveness of these initiatives is often undermined by systemic issues such as corruption and governance weaknesses. Corruption remains a significant problem, affecting public trust and the efficient allocation of resources.

Potential for Future Growth

Guatemala has considerable potential for future growth, thanks to its rich natural resources, cultural heritage and strategic geographical location. The country is rich in minerals such as gold, silver and nickel, which present opportunities for the mining sector. Its cultural heritage and natural beauty make it an attractive destination for tourism, which can be a significant source for Guatemala’s economic growth. 

– Sofia Reynoso

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

Photo: Pexels

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Tackling Poverty in the Cook Islands Post-Pandemic

Poverty in the Cook IslandsThe Cook Islands, an idyllic South Pacific archipelago, faced significant socioeconomic and poverty challenges after the COVID-19 pandemic. Traditionally reliant on tourism, global travel restrictions severely disrupted the nation’s primary industry, leading to widespread economic hardship.

Economic Disruption and Job Losses

The COVID-19 pandemic dealt a devastating blow to the Cook Islands’ economy. Tourism, which contributed approximately 70% of the nation’s gross domestic product (GDP) in 2018, abruptly halted as global travel restrictions were imposed to curb the spread of the virus. This led to a dramatic decline in national income, with the GDP recession estimated at 26% in 2021.

The immediate consequence was widespread job losses, particularly in the hospitality and service sectors. Many businesses were forced to close their doors permanently due to the lack of revenue. This economic shock rippled through the community, significantly increasing poverty in the Cook Islands.

Government Response and Social Welfare

In response to the crisis, the national government implemented a series of financial aid packages and social welfare programs to reduce poverty in the Cook Islands. The COVID-19 Active Response and Economic Support (CARES) Program, backed by the Asian Infrastructure Investment Bank (AIIB), provided much-needed financial assistance.

These initiatives supplied grants and loans for businesses to help them stay afloat. The programs also supported households with food programs and educational opportunities for children. These measures were crucial in preventing a complete economic collapse and maintaining social stability during the height of the pandemic.

Recovery and Diversification of Economy

  1. Fisheries and Agriculture: Investments are being made to enhance sustainable fishing practices and improve agricultural productivity. These efforts aim to provide alternative sources of income and ensure food security. For instance, the government has introduced high-yield crop varieties and modernized fishing fleets with support from international partners like the Australian Government through its Department of Foreign Affairs and Trade (DFAT).
  2. Digital Economy: Expanding digital infrastructure has become a priority in integrating the Cook Islands into the global digital economy. Projects funded by organizations like the Asian Development Bank (ADB) aim to improve internet access, foster new business opportunities and support remote work. This digital expansion is crucial for economic diversification and for creating new avenues of income.
  3. Renewable Energy: The Cook Islands government has set ambitious targets to transition to renewable energy, aiming for 100% renewable energy in the near future. Significant progress has been made with solar and wind energy projects contributing to the national grid. These projects reduce dependency on imported fuels while creating green jobs and attracting investment in clean technologies.

Looking Forward

The COVID-19 pandemic highlighted the vulnerabilities of the Cook Islands economy. However, it also presented an opportunity to rethink and diversify economic strategies. By focusing on other sectors of the economy, poverty in the Cook Islands can be replaced by prosperity. The collective efforts of the government, international organizations and the community will be instrumental in driving this transformation and ensuring that the nation emerges stronger post-pandemic.

– Asiya Siddiqui

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

Photo: Unsplash

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Remittance in Lebanon

Remittance as a Poverty Reduction Mechanism in Lebanon In Lebanon, international worker remittance has been playing an increasingly important role in the economy since the 2019 financial crisis. The International Monetary Fund (IMF) defines remittance as household income from foreign economies arising mainly from migration to those economies. In 2022, international remittances from migrants made up 37.8% of Lebanon’s GDP, surpassing the share of exports in the country’s GDP. In addition, the figure represents the highest remittance to GDP ratio in the Middle East and North Africa region. 

Remittance in Lebanon

The high volume of emigration in Lebanon plays a central role in the size of remittances the country’s citizens receive. While the country has a population of 5.49 million population as of 2022, an estimated 880,000 Lebanon migrants or more than 16% of the population, resided outside the country. Other Arabian countries, North America and Europe are the top destinations for migrants. Before and during the 2008 global recession, remittance composed more than 25% of the country’s GDP, but its share decreased steadily in the decade between 2008 to 2018 until the 2019 financial crisis emerged in Lebanon.  

Since the year 2019, Lebanon’s economy has been grappling with a deep financial crisis that was exacerbated by the COVID-19 pandemic and the Port of Beirut explosion in 2020. The country’s GDP plummeted from around $52 billion in 2019 to an estimated $23.1 billion in 2021, leading to a rapid decline in income and basic services in the country. According to the World Bank estimates, the poverty rate of the country more than tripled since 2012, with 44% of the country’s population living below the poverty line as of 2022. 

A Buffer During Crisis

Against the backdrop of the enduring economic crisis, international remittance acts as a crucial buffer against poverty for families in Lebanon and a hedge against the complete collapse of the economy and social order. In 2022, an estimated 15% of households rely on remittance for income, up from the pre-crisis 10%. A survey by the UNDP also revealed that 29% of households started receiving remittances from their family members abroad as a response to the impacts of the financial crisis. The majority of the remittances were used to pay for food, electricity and medical expenditures, highlighting the importance of the remittance for Lebanese households to maintain their living standards.   

Remittances have become more important in alleviating poverty in the country after the financial crisis. In 2022, receiving remittances reduced a household’s possibility of being poor by five percentage points and the results were significantly robust. In comparison, in the year 2012, the percentage was four points and the statistical correlation was weak. 

Development Aid

From a long-run perspective, before the financial crisis in Lebanon, remittance played an important role in facilitating poverty reduction and economic development. The research found that remittance correlates positively with schooling attendance in Lebanon, indirectly contributing to the development of human capital and the long-run development of the economy. In addition, there is also evidence that the inflow of remittance contributes to the development of the financial market and long-run economic growth. A 2019 study further estimated that every 1% increase in remittance increases economic growth by 2%.

Looking Ahead

International remittances have become a vital lifeline for Lebanon, significantly contributing to the economy and providing essential support for families amid ongoing economic challenges. With remittances comprising a substantial portion of Lebanon’s GDP, their role in alleviating poverty and sustaining living standards remains critical. As Lebanon continues to recover from its financial crisis, the ongoing flow of remittances could be essential for economic stability and future development.

– Wangruoxi Liang

Wangruoxi is based in Ann Arbor, MI, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Unsplash

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CIRCLE Alliance: Increasing Circular Plastic Economies

CIRCLE AllianceJune 6, 2024, marked the launch of the new CIRCLE Alliance collaboration. The public company Unilever, the United States Agency for International Development (USAID) and the private organization Ernst and Young (EY) have all partnered to create the CIRCLE Alliance. These organizations are working with entrepreneurs and small businesses that are already established in the plastic waste sector.

They aim to find solutions to scale the work already being done through their $21 million investment. Through this and by focusing on increasing circular plastics economies, CIRCLE will work to reduce the use and waste of plastic products. CIRCLE’s initial plan is to launch projects in four key countries: India, Indonesia, Vietnam and the Philippines. Within these countries, CIRCLE will focus efforts on those who already perform most of the collection and disposal of waste – women.

Plastic in CIRCLE’s Key Countries

  • India produces the most plastic waste in the world, behind the United States (U.S.) and the European Union (EU), with 26,000 tons generated daily. It is also the leader in polymer production, the substance used to create plastic.
  • Indonesia generates just more than 21,000 tons of plastic waste daily. Most of the waste comes from rural locations without proper waste management systems. Most of the waste ends up in waterways, floating down rivers. Only 17% of the waste that makes it into rivers either washes up or is removed.
  • Vietnam’s recent economic growth contributes to the plastic waste problem. The nation produces almost 8,500 tons of plastic waste daily and if it continues on its current path, this amount is projected to double by 2030.
  • The Philippines produces just less than 8,000 tons of plastic waste daily and the country’s coastlines are suffering. Much of the country’s economy is based on coastal work—fishing, tourism and shipping. With 20% of all plastic waste finding its way to the ocean, these industries are being impacted. 

What Are Circular Plastic Economies?

In circular plastic economies, plastic waste is reduced by finding solutions to recycle and reuse plastic products that are currently being thrown away. Plastic, a material used globally, is estimated to double in production in the next 20 years. We are creating and producing new plastics daily and therein lies the problem. The world currently creates more plastic than is recycled for reuse. Currently, 84% of all plastic created is disposed of in landfills, fires or the ocean.

Globally, plastics are mostly operating in a “linear take-make-waste model,” a term coined by the Ellen MacArthur Foundation, a leader in circular economy creation and research. With the introduction of circular plastic economies, the economic value of production is recouped. Additionally, the material does not find its way into the environment.

CIRCLE Alliance’s Investment in Entrepreneurs

CIRCLE Alliance has already shown its dedication to the cause and displayed how circular plastic economies promote poverty reduction. In the Philippines, for example, lives Riza Santoyo. Her inspiring story starts with a self-funded waste-collecting business in her small town. She used the resources available to her to collect waste, making about $2 a day. CIRCLE Alliance’s investment in equipment for Santoyo allowed her to increase not only her efficiency and productivity in waste collection but also her income. The efforts that the CIRCLE Alliance is making in these key countries are at the intersection of sustainability and poverty reduction.

Expand Producer Responsibility

Another initiative to increase circular plastic economies is to expand producers’ and companies’ responsibility for the aftermath of their products. To combat the myth that single-use plastic is the most cost-effective method, USAID, EY and Unilever are working to promote systems of use called Extended Producer Responsibility (EPR Systems). These systems flip the responsibility of waste removal from the consumer to the producer. It forces the producer to evaluate the true cost of their single-use product. This has encouraged companies to make their plastic recyclable and to think of solutions outside of plastic for their products.

– Carlee Unger

Carlee is based in Pembroke, NC, USA and focuses on Global Health and Politics for The Borgen Project.

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