Archive for category: Economy

Information and stories about economy.

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The Progress of Georgia’s Economic Policies

Georgia's economic policiesGeorgia’s poverty and unemployment rates hit 13.3% and 18.5% respectively in 2020. A vast number of factors have contributed to these statistics. The Borgen Project spoke with Toby Davis, the former division chief for the Caucasus and Central Asia Office for the Analysis for Russia and Eurasia, to explore the economic landscape of Georgia and the factors impacting Georgia’s economic policies.

Unemployment and Poverty in Georgia

Davis explains that 70% of polled citizens will declare unemployment. However, when taking away pensioners, students and people who are not currently looking for work, only about a third of the 70% are actually unemployed. For example, many subsistence farmers register as unemployed because they are not currently working for a recognized business and thus do not consider their trade as a job.

Davis explains that “Unfortunately, this tilts the balance of the statistics, resulting in government decisions that may not always be the best for those who are genuinely unemployed and struggling to find work.” Despite a sometimes inaccurate reflection of statistics, Georgia is nevertheless working to improve the level of poverty and unemployment within the country with solutions that can bring Georgia’s citizens out of their current state of poverty.

Causes of Georgia’s Economic State

Two main factors impact Georgia’s economic state. First, Davis states that Georgia’s economic problems stem from the establishment of the Georgian Dream-Democratic Georgia party in 2012. Billionaire politician, Bidzina Ivanishvili, established Georgia’s previous state of government, changing the motives of politicians within the country.

Teona Zurabashvili, policy analyst at the Georgian Institute of Politics (GIP), explains that when the Georgian Dream came into power, it “squandered the political capital” it accumulated and supporters “never received the social justice they were promised.” She explains that the political climate reflected “an unfocused economic program, clannish rule in the judiciary system, rampant nepotism in the civil service, decreased direct foreign investments, a devaluation of the national currency and clear signs of state capture.”

Due to poor governance, poverty in Georgia has largely gone unaddressed. Davis reaffirms that because of political interests and weak governance, many of Georgia’s economic policies do not help the economy reach its fullest potential.

The second major contributor to Georgia’s economic state is the imbalance between exports and imports. Currently, Georgia spends more than it sells and produces, with export levels barely making one-third of the number of imports. The statistics show that the total exports are around 3.3 million, whereas its imports are at approximately 9.1 million. In 2016, Georgia imported most of its oil and natural gas to satisfy the energy demand in Georgia. With a transition to renewable energy, Georgia may be able to reduce these imports.

Past Plans and Current Projects

The Economic Development and Poverty Reduction Programme was a past proposal to fix Georgia’s poverty. It was approved in 2003 but was never implemented. Although the plan had funding from the World Bank and the IMF, Georgia’s government lacked interest and never followed through with it. Davis seconds this point, stating that, “there are individual party projects trying to fix [poverty rates], but nothing ever reaches the grand government scale. The projects improve it in increments, but there are a lot of questions as to why it isn’t improving faster.”

The Namakhvani HPP project aims to help Georgia gain “energy independence” through hydropower. The project’s goal is to satisfy 20% of the energy demand in Georgia, increasing domestic annual generation by 15%. A large portion of Georgia’s spending goes toward importing oil and fuel for energy demands. Therefore, Namakhvani HPP would reduce these expenditures. Wealth from this project would allow Georgia to gain energy independence and focus on implementing poverty reduction programs.

Reviving the Deep Sea Port Project

Another option regarding Georgia’s economic policies is the revival of the canceled deep sea port construction that would have taken place on the coast of the Black Sea. The project has the potential to generate cargo trade with China and Central Asia, with the potential to bring in significant revenue. The project was canceled due to a lack of funding. Thus, if the project were able to garner the international support and funding it needs, the project could positively impact the import and export sector.

The government of Georgia needs to prioritize developing the economy and reducing poverty, which should be reflected in Georgia’s economic policies. With politics aside, Georgia has the potential to thrive.

– Seren Dere
Photo: Flickr

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Finland’s Foreign Aid is Small but Potent

Finland's Foreign Aid
Rankings and dollar signs are typically what one can use to compare a country’s contributions to foreign aid against the next. However, what is not present in those comparisons and dollar signs is the context and structure behind the contributions of these countries. The Development Assistance Committee (DAC) ranked Finland number 19 out of 30 countries because it provides only $1.08 billion in aid. This ranking is consistent across the board showing Finland as one of the lowest contributors of foreign aid, however, Finland’s foreign aid contributions include quality standards that every country should mimic to get the most out of their contributions.

Finland’s Goal Regarding Foreign Aid

Finland’s long-term overarching goal is not simply to help countries in need but also to free those countries from their dependency on aid and provide each country it contributes to with the ability to flourish. This goal puts Finland in a position to use the idea of quality over quantity when it decides its foreign aid budget and what country will benefit the most from Finland’s foreign aid contributions. Finland’s foreign aid policies follow a strict set of criteria that helps to guide and direct small but potent decisions. The Ministry of the Foreign Affairs of Finland has spelled out the four driving components to criteria for foreign aid contributions within Finland’s Development policy.

4 Driving Forces Behind Finland’s Foreign Aid

  1. Strengthening the Status and Rights of Women and Girls: Finland intends to improve the rights of women and girls across the globe and promote gender equality. In fact, Finland is one of the largest contributors to UN Women, after giving the organization 10 million euros in 2016.
  2. Strengthening the Economic Base in Developing Countries and Creating Jobs: Without a strong economy, a country may have limited jobs, so it is crucial for Finland to actively participate in the rebuilding or strengthening of that economy. Finland seeks out partnerships and opportunities to promote the creation of jobs and strengthen the countries’ trade environments. In a three-year span of time, between 2016 and 2019, Finland contributed over $500 million in investments and loans to support sustainable development. Finland’s investment in Somalia went solely toward economic infrastructure and electricity distribution as well as the private sector. This contribution should provide valuable stepping stones to help Somalia rebuild and sustain the resources available to it.
  3. Education, Well-Functioning Societies and Democracy: Finland stands by its rule of law to provide a safe and peaceful environment, sustainable resources and public services to its population. Moreover, it extends those values to other countries. In fact, 57% of Finland’s foreign aid goes to fragile states in order to promote stability and security.
  4. Environmental Challenges and Natural Resources: Finland also aims to offer reliable access to safe and clean water and better water and land resources. It also intends to promote better farming conditions, forest management and decreased risk of hygiene-related diseases. It has implemented sanitation projects in Nepal, Vietnam, Ethiopia, Kenya and more.

Examples of Finland’s Foreign Aid Projects

Finland’s foreign aid contributions have centered around rural development, food security and land tenure in Africa and Asia. Again, while Finland’s contributions may not evenly compare to other countries’ contributions, they directly align with its overarching goal of creating opportunities for countries to build and sustain their own resources. As a result, those countries might be able to enter a position to sustain themselves.

Another great example of Finland’s contributions is its investment in water supply and sanitation programs. Access to clean water and food is a worldwide issue and Finland is aiming to alleviate those issues in Ethiopia, Kenya and Nepal. Ethiopia and Nepal were among the top five recipients of Finland’s foreign aid in 2015. Finland has dedicated itself to providing support to countries that have the highest need for funds. In Vietnam, Finland contributed to the urban water supply and sewage system, helping those countries achieve self-sufficiency and providing them with consistent access to the sources they need.

These programs and resources are only effective if they can occur over the long term. This is why Finland’s foreign aid contributions focus on programs that support rule of law and political systems. For example, Finland gave Afghanistan $3.2 million between 2016 and 2019 to broaden “civic engagement” and help foster an environment where the people participate more closely with the decision-making process of Afghanistan’s government.

Concluding Thoughts

Individually, each criterion above may seem like an impossible mountain to climb, but for Finland, these are simply the small but potent foundational steps necessary to create and sustain an efficient, profitable and sustainable economy. Finland’s foreign aid contributions may seem like only a small blip on the radar compared to the contributions that the United States and other larger countries are making, but it is blazing a trail to ensure that the funds, no matter how big or small they are, can make a powerful contribution to countries in need.

– Janell Besa
Photo: Flickr

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How Tech Startups Help Pakistan and its Economy

Tech Startups Help PakistanPakistani tech startups are growing at an unprecedented rate. Every year, the country has an output of more than 20,000 graduates who are trained in the field of information technology (IT). Since 2010, there have been 700 tech startups and around 70% of the startups are still operational as of 2020. The Pakistani economy reaps the benefits of the booming industry. One example that shows the importance this sector can have for the Pakistani economy is WhatsApp. WhatsApp founders Jan Koum and Brian Acton developed WhatsApp and Facebook bought it for $19 billion. The price of the acquisition exceeds the defense budget of Pakistan almost three times over. Tech startups help Pakistan by encouraging economic growth.

The Success of Tech Startups

Many successful tech startups are helping Pakistan because the startups have developed useful apps. For example, the Patari app is a streaming provider for music lovers and was able to obtain $200,000 worth of seed funding in 2017. Eatoye is another app that has had much success in Pakistan. Eatoye provides food delivery, catching the interest of the food portal FoodPanda, which acquired the app. Similar apps have been particularly successful in Pakistan’s domestic market. However, tech startups have found success in the international market as well. Tech startups that focus on IT have succeeded in exporting software. These software exports have made a total of $700 million, but Pakistani IT experts believe that the number is much higher. When taking into account the amount of freelance work, software exports could bring in as much as $2.5 billion.

Tech Startups in Pakistan

Pakistan has several tech startups that currently provide valuable services to its people. Zameen.com was founded in 2006 and is extremely well-funded and informative. Zameen.com allows people to make financial decisions regarding properties in major Pakistani cities. This includes investing, buying, selling or renting. The valuation of the startup is around $80 million, showcasing its popularity. Another startup called Airlift has been extremely useful for commuters. Airlift allows commuters to book luxurious buses to get to their destinations, which is extremely useful for many middle-class Pakistani workers. These examples are just two of many tech startups that are helping Pakistan.

Pakistan Reaps the Rewards

Tech startups can be beneficial to the economy of a nation for many reasons. One way is through the creation of goods and services at a high growth output rate, which older companies usually cannot match. Additionally, tech startups often tap into new markets or can reform old ones. However, startups are most beneficial to the economy because they contribute to the creation of jobs in a country. Startups create more opportunities for employment since they can add to job creation at a rate of 25% or more.

Pakistan’s unemployment rate was expected to rise to 6.65 million Pakistani people between 2020 and 2021. Tech startups help Pakistan by improving the economy of the nation and by aiding in job creation to accommodate a growing number of people without jobs. The beneficiaries of an improved economy will be the people of Pakistan.

– Jacob E. Lee
Photo: Flickr

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The Opening of Cuba’s Private Sector

Cuba's Private Sector
A couple of days after the closing of the Cuban border, 16,000 private workers, upon sensing danger, requested the labor ministry suspend their licenses so they could avoid paying taxes. That number rose to 119,000, 19% of the private workforce, in a few more days and threatened to annihilate the Cuban economy. The implementation of the global travel restrictions had a devasting impact on the country’s tourism sector, which is the second-largest revenue generator for the island nation. As a result, selective private businesses took a massive hit and the government lost a crucial foundation for foreign exchange. By December 2020, Cuban tourism had fallen by 16.5%, followed by an 11% drop in the country’s GDP. Worried by the lingering economic collapse, the government began opening Cuba’s private sector, providing Cubans with self-employment opportunities and allowing them to operate businesses in added sectors.

What Did the Government Do?

Previously, the communist-led government allowed Cubans to participate in merely 127 officially approved private sector activities. Some of the legalized activities included working as a barber, working in gastronomy or transportation or renting rooms to tourists. To expand the private sector, the government eliminated the previous list of 127 activities. Instead, it created a new list of 124 jobs prohibited in the private sector. The rest of the 2,000 legal activities, which the government recognized, will be open to Cubans. In the past, state-owned businesses have always dominated the Cuban economy. However, the private sector has managed to make a mark over recent years. Presently, 635,000 people occupy the private sector, which is roughly 14% of the Cuban workforce. The introduction of the long-awaited economic reform might increase diversification in the private sector and could spur economic growth for Cuba.

The Effects on Cuba and its People

The economic reform will allow Cubans to partake in additional economic activities. It will help eradicate bureaucracy in the governmental arrangements, as the Cubans will no longer have to manipulate their business documentations to fall under the list of legalized activities. Now, they only have to confirm that they are not running any business from the list of prohibited activities.

Further, the liberalization of the private sector will bring about a change in the career patterns of Cubans. Previously, apart from the underpaid state-run jobs, the only other viable option for Cubans were low-skilled jobs. Now, Cubans will have countless other opportunities in technical fields like engineering and economics. Still, professional fields like medicine, law and teaching could open to state employees only. Additionally, the opening of the private sector will increase employment opportunities, which will rapidly develop the private sector. Private business owners currently make up 13% of Cuba’s workforce. This number will spike due to the relaxation of the private sector.

The Future of Cuba’s Economy

Ricardo Torres, a pro-reform economist at the University of Havana’s Center for the Study of the Cuban Economy, stated that the opening up of Cuba’s private sector will diversify jobs and boost the GDP. This, in turn, triggered a shift in economic arrangements in Cuba. But the chances of the private sector dominating the economy soon are bleak, mainly due to the political settings of Cuba. Therefore, expectations have determined that state-owned businesses will direct the economy. Rather than rushing into free-market forces, the Cuban government must seek inspiration from other countries and establish a solid institutional framework. Several European states, the U.S., Japan and other East Asian countries have proved that by focusing on macro and microeconomic policies and planning and investing in citizens, an economic upliftment should be possible.

Cuba’s Relationship with the US

The economy was booming under the Barack Obama Administration. Things, however, took a turn when former President Donald Trump overturned Obama’s agreement to ease travel restrictions on Cuba. Donald Trump also ended the U.S. cruise travel to Cuba, disallowed many Cuban Americans to send remittances back home, pressured a U.S.-run hotel out of Cuba, forced countries not to hire Cuban doctors and nurses during the pandemic and re-enlisted Cuba on the list of countries that sponsor state terrorism. Cuban businesses suffered a great deal due to this. The labor reform could not have been timelier for the Cuban government as it could present a sturdy case for amendments in the U.S. policy.

One of Obama’s main objectives was to expand the private sector in Cuba. Therefore, on the back of the opening of the private sector and the appointment of Joe Biden as President, the Cuban government can look to persuade the U.S. to consider a policy reform. Although Cuban had to wait a long time for labor reform, it is crucial to mend unemployment rates, boost the GDP and restore Cuba’s unsteady economy through Cuba’s private sector.

– Prathamesh Mantri
Photo: Flickr

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The Benefits of Mobile Government

Mobile Government
Worldwide, more people have access to mobile phones than to proper sanitation. As crazy as it sounds, mobile phone access can be advantageous. The International Telecommunication Union estimates that out of the 7 billion people on earth, around 6.5 billion have access to a mobile phone. As of 2018, 100% of the population in low- and middle-income countries had access to mobile phones, whereas 55% of the population in low-income countries owned a mobile phone. The pervasiveness of mobile technology can help build expansive government networks. Mobile Government (mGov) could provide citizens and businesses with extended benefits and stir up overall economic growth.

Since the COVID-19 pandemic began, several countries with pre-established digital governments have launched public services that people can access via mobile phones. The introduction of these online services could be a blessing for developing countries, where the communication between the government and the residents is almost nonexistent.

What is a Mobile Government (mGov)?

Mobile Government is a government-led platform that uses mobile technology to increase active participation in government operations while offering several government services and applications that individuals can access electronically. It provides quick and easy access to integrated data and location-based services and helps to empower citizens. Here are different ways Mobile Government can make a positive impact.

Increased Financial Inclusion

As per World Bank reports, by 2018, the number of people holding bank accounts shrank from 2.5 billion to 1.2 billion in just seven years. As a result, less than 50% of the adult population did not have a link to traditional banking systems. Therefore, to increase the financial inclusion of the citizens, governments all across the globe are undertaking initiatives to encourage and support the development of financial technologies.

In India, Jio, an Indian telecommunications company, in collaboration with the government, stirred a socio-economic revolution by providing subsidized 4G service to more than 200 million subscribers in under two years. Likewise, the mobile currency has transformed the Kenyan economy. More than three-fourths of the population have gained access to mobile wallets (M-Pesa) and can participate in financial transactions.

Similarly, online services can be useful in distributing money among the poor since only a small fraction have operational bank accounts. About 1.2 billion users across 95 countries use mobile money. Many countries use mobile payment services to provide monetary assistance through Government-to-person (G2P) payment systems.

In Bangladesh, the government is providing 5 million families with economic support by transferring money online, ensuring that families have a stable recovery from the COVID-19 pandemic. The usage of mobile has helped reduce corruption dramatically, improve access to financial services and boost participation in economic activities.

Better Access to Essential Services

Mobiles have made access to health, education, agriculture and other services trouble-free for the general public. In the same way, mobile phones are going toward addressing serious health problems. Increased communication can bring awareness about safe drinking water, birth control, maternal health and malnutrition amongst many others.

Globally, 774 million people are unable to read or write. Out of that group, 123 million are youth. One can frequently trace illiteracy to a lack of books. Studies have revealed a positive correlation between high illiteracy rates and a shortage of books. The majority of people in sub-Saharan African do not have access to books and the schools in the region rarely do anything about it. As a solution, several developing countries have replaced physical texts with online books, allowing a larger proportion to access books. For instance, educators in schools in countries like Zimbabwe, Uganda, Nigeria and Pakistan read stories to the children from mobile phones.

Mobile phones can also combat dengue fever in Pakistan. Sanitary workers use smartphones to send geo-tagged images of swamps to the central health experts. Afterward, health experts monitor the images.

The agriculture sector in Ethiopia and Uganda also utilizes mobile phones in a significant way. It employs mobile phones to deliver early alerts on droughts, food shortages, pests and weather-related calamities.

Enables Social Accountability

The governments in developing countries are using mobile technology to promote the use of SMS texts to enhance social accountability among the citizens. A study that took place in 46 African countries unearthed a correlation between high mobile penetration and low corruption rates.

In several developing countries, citizens receive encouragement to notify their governments of any matters that require addressing. In Pakistan, the Director-General of the Passport Office sends a message to the visitors inquiring about any bribery encounters or any other issues.

Mobile Government can be a powerful tool, useful in extending access to existing services, developing further innovative, inclusive services and increasing citizen participation in all realms of the public sector. Mobiles can dynamically foster civic engagement, facilitate transparent democracy, reform the outdated educational systems and create advanced healthcare infrastructure in developing countries. The use of mobile technology can tackle the growing digital divide between low-income and high-income countries. Hopefully, this will uplift the economies and literacy rates in developing countries.

– Prathamesh Mantri
Photo: Flickr

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What Exactly Is Happening in the Northern Triangle? 

The Northern Triangle
Latin America is in a vicious circle of crime, poverty and corruption. High crime rates thwart economic opportunities and crime rates push people into poverty, all cumulating into corrupt leaders who use the pain for their power and self-interest. Nevertheless, nowhere is crime more prevalent than in the Northern Triangle.

The Northern Triangle is region in Central America that includes Guatemala, Honduras and El Salvador. It has experienced the worst problems such as poor economic growth, rampant gang violence and political corruption. This three-prong nightmare has fueled an estimated 265,000 people toward the Southern U.S. Border and will continue to grow into the foreseeable future. While some do attempt to find safety in Europe and elsewhere in South America, others take the risk and traverse their way to the U.S-Mexico border, where they risk entering the country illegally. Others surrender to U.S. border patrol and seek asylum. However, it is unlikely that they will receive asylum. On average, only 13% of individuals receive asylum and experience integration into the United States.

Gang Corruption

In 2017, a survey asked the people in El Salvador, “who runs the country?” About 42% of respondents said “Delincuencia/Maras.” For non-Spanish speakers, this translates to gangs, like MS-13.

These answers have visible ramifications that strike at the core of the government. Governments in the Northern Triangle are weak, and the people know this; the gangs know this. People understand the country’s power lies in gangs’ hands, not in the government’s.

For example, in 2012, the Salvadorian government agreed to sign a truce with the criminal organizations to address skyrocketing homicide rates. The profoundly unpopular legislation did lower the homicide rate but the people still had to continue to pay gangs. Tactics like homicide and racketeering are not the only ways these organizations flex their might.

Throughout the Northern Triangle, gangs rely on drug and human trafficking, money laundering, kidnapping and theft to export their criminal enterprise well beyond the Northern Triangle. Issues in the Northern Triangle are not just an inter-state problem but also a problem for the entire Western Hemisphere.

Governance Problem

Northern Triangle nations have made some progress when it comes to corruption. But the total damage that such corruption caused is still in the billions: $13 billion to be precise.

In 2006, Guatemala successfully combated corruption when it appealed to the U.N., which established the International Commission Against Impunity in Guatemala (CICIG). This independent body investigates the infiltration of criminal groups within state institutions. Such an organization resulted in the conviction of hundreds of officials and reduced the homicide rate.

In El Salvador, in 2019, the country created its own independent body called Commission against Corruption and Impunity in El Salvador (CITIES), which could yield the same results as CICIG. Over in Honduras, the hopes of establishing such independent oversight do not seem to be gaining the same traction. After the resignation of President Lobo Sosa in 2013, an investigation into the Honduran Institute of Social Security revealed a scandal that cost the people over $200 million. It also implicated President Orlando Hernández, who admitted to unknowingly using some of the money to fund his presidential campaign.

Unlike Guatemala and El Salvador, the Honduras legislature rejected a proposal to create its own CICI. Instead, it created Support the Fight against Corruption and Impunity in Honduras (MACCIH). Although intended to fight corruption, it does not have the same autonomy as CICIG and CITIES. MACCIH is not autonomous and cannot investigate Honduran Public Ministry. Instead, it relies heavily on its relationship with the Attorney General and Congress, which could shield the people committing corruption. This inability to pass support for CICIH instead of settling for MACCIH might be signaling that the $200 million white-collar crime is the beginning of a giant iceberg.

A Path Forward

In Washington DC, support exists for CICIH and CITIES. Congresswoman Norma Torres and others released a statement in 2019 supporting these institutions. Reinstating the CICIG and implementing the same structure in CICIH and CITIES would stop corruption. This would allow the state to use its monopoly on violence to fight crime and allow positive economic growth. In April 2021, the State Department announced $740,740 in available funding for “competition for organizations interested in submitting applications for projects that empower civil society to combat corruption and protect human rights.”

– Diego Romero
Photo: Flickr

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India’s Foreign Aid Explained

India's Foreign Aid
The Republic of India receives millions of dollars each year in foreign aid. This money goes toward ending poverty and improving living standards. However, as India develops and modernizes, the government has started to lend a helping hand to poorer nations across the world. Many see India’s foreign aid as both a tool for diplomacy and an act of good faith. As in the words of India’s Development Partnership, its approach to foreign aid is, “shaped by India’s struggle for independence and solidarity with other colonized and developing countries and the inspiring leadership of Mahatma Gandhi…” The nation is transitioning from a recipient to a donor, as the nation often gives more in foreign aid than it receives.

By The Numbers

The Indian Government allocated $1.32 billion for foreign aid in its 2019-2020 budget year (around 0.3% of the budget). This amount follows a trend of India drastically stepping up its foreign aid over the past decade. The budget went from around $500 million in 2010 to a peak of $1.5 billion in 2015. Despite a three-year slump in funding, the central government is now stepping back up to the plate. The main focus of India’s foreign aid centers around the development and modernization of its recipients.

Most of India’s foreign aid goes to countries in Asia and Africa, as it seeks to improve relations with its neighbors and assert its global presence. The nations India is providing aid to include Myanmar ($56 million), Bangladesh ($24.5 million) and Bhutan ($392.7 million). Aid that these nations receive has the goal of promoting regional stability and creating higher living standards. The Indian Government has also taken more interest in Indian Ocean countries such as Mauritius ($161 million), Sri Lanka ($35 million) and The Maldives (~$81 million) to increase Indian presence in the Indian Ocean.

How India’s Foreign Aid Helps

India’s foreign aid goes to a variety of projects such as infrastructure, agriculture and energy. The nation has invested billions in infrastructure projects in nations like Nepal and Afghanistan, such as hydroelectric plants, dams and schools. Famously, India and Afghanistan finished the Salma Dam, renamed the Afghan-India Friendship Dam. The Dam cost India around $300 million and provides hydroelectric power and irrigated farmland to the surrounding area. Additionally, India gave millions in foreign aid to Caribbean nations to improve their renewable/clean energy sectors that combat pollution and environmental challenges.

India is also heavily active in humanitarian efforts and disaster relief, frequently giving out loans, medical supplies and other types of assistance. The Brookings Institute has even called the nation “The Neighborhood First Responder,” helping with disaster relief in Sri Lanka, Afghanistan and Myanmar. Humanitarian aid has gone to nations like Fiji after Cyclone Winston hit the nation in 2016. Recently, India has helped combat the COVID-19 pandemic through monetary aid, donating food and distributing vaccines. Brazil, which faces a vaccine shortage, received 2 million doses from the Indian government.

Indian-US Relations

India is a prime example of how U.S. Foreign Aid benefits all sides. Nations like the United States have invested heavily in India and continue to help the government combat problems that plague the nation. As a result, India and the U.S. are now close allies and often cooperate on shared goals such as combating environmental challenges and ending extreme poverty. The two nations also cooperate with each other in international organizations like the U.N. and IMF. Both nation’s economies benefit from a strong India, with bilateral trade totaling around $149 billion. A diverse array of U.S. businesses operate in India, from energy and infrastructure business to ones involving technology and entertainment.

– Malcolm Schulz
Photo: Flickr

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The Philippines’ Improved Economy

 

The Philippines' Improved Economy
The Philippines is a developing nation located in the East Asian Pacific region. Although the nation is still developing, the Philippines economy is improving exponentially. According to the World Bank Group, the country is experiencing increased urbanization and the middle class of the country is growing. Businesses have experienced notably positive performance in the past few years. Real estate, finance and the insurance industry are all areas where the economy is having exceptional growth. However, the COVID-19 pandemic has slowed the economic growth of the Philippines. If the Philippines contains the virus on both a domestic and global level then the economy of the Philippines will rebound in late 2021 or 2022. The Philippines’ improved economy occurred in several ways.

Investing in Agriculture

Agriculture accounted for about 25% of the Philippines’ GDP in the 1980s. However, only 9.3% of the agriculture industry contributed to the economy in 2018. Yet, the agriculture sector employs about 25% of the Philippines’s workforce. Some important agricultural goods from the Philippines include coconuts, rice, corn and pineapples. In recent years, the agricultural sector’s low rate of growth has contributed to poverty and unemployment.

As a result, the government has begun supporting the Philippine Department of Agriculture’s programs. Some of its programs include improving food security within the nation. The World Bank’s Philippine Rural Development Project is providing external support to the agricultural sector. This project aims to improve infrastructure that is vital to agricultural production. Furthermore, improving agriculture is vital to the economy.

Improving Industry

The industry sector has been another contributing piece to the Philippines’s improved economy. Currently, this sector has currently been able to employ 18.4% of Philippine workers. Additionally, the Filipino government is attempting to increase the amount of foreign direct investment. It also plans on achieving this goal by working to improve the infrastructure of the nation. This will then attract the attention of possible investors. Manufacturing is another important industry in the Philippines. The Philippines is home to a variety of metallic resources. The mining industry itself has already brought different mining companies to the Philippines to conduct business. Mining businesses working in the Philippines include BHP and Sutimo Metal Mining Co LTD.

The Growing Service Sector

The growth of the service sector is another contributor to the Philippines’ improved economy. Around 60% of the Philippines’ GDP comes from this sector. In addition, the service sector also employs about 56.7% of people in the Philippines’ workforce. One vital part of the service sector includes business process outsourcing (BPO). The Philippines has an extremely large BPO market due to the United States aid.

The Philippines’ improved economy is noticeable in several ways. First, the income-per-capita saw an increase of 17% from 2016-2018. Additionally, the unemployment rate has decreased as a result of foreign direct investment into the country. The Philippines has become the 13th largest economy in Asia. Despite the challenges, organizations like EY and the World Bank note that the Philippines has the potential to have a flourishing economy.

– Jacob E. Lee
Photo: Wikipedia Commons

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5 Ways COVID-19 is Affecting Education Inequality in Japan

Education Inequality in Japan
The COVID-19 pandemic is wreaking havoc on the lives of students all over the globe, and the disruption of daily routines and local economies is aggravating the global education crisis that already threatens many countries. COVID-19 is impacting education inequality in Japan in unprecedented ways.

5 Effects of COVID-19 on Education Inequality in Japan

  1. Disadvantaged Students: When schools locked down in Japan during the pandemic, disadvantaged students struggled to acquire food and the various social services that their schools normally provided. Schools assist young children with everything from nutrition and health to socialization and stimulation. While COVID-19 has placed a burden on all students, it has disproportionately affected those who rely on schools for meals and in-person learning. To help support Japanese students’ learning at home, the Ministry of Education, Culture, Sports, Science and Technology, also known as MEXT, has set up a learning support portal, which offers various tips for learning each subject at home, new learning materials and videos, all for free.
  2. Higher Education: Due to the exorbitant costs of higher education in Japan, less than one-fifth of low-income students can afford university studies, and this situation has only worsened with COVID-19. Therefore, MEXT is providing university students with emergency economic support during the pandemic. The program provides Japanese students with cash handouts worth 200,000 yen, so that those who are facing difficulties, like reductions in their household incomes or part-time work opportunities, can still continue their schooling. The program covers anyone attending a university or other educational institution in Japan.
  3. Online Learning Challenges: One in 20 Japanese children lack the amenities necessary for sufficient online learning, such as a quiet workspace, computer access or new textbooks. Japan is significantly behind other Organization for Economic Cooperation and Development (OECD) countries in its ability to incorporate information communication technology into school curriculums. Despite being such a technologically advanced country, only 40% of 15-year-old Japanese students are enrolled in schools where their principals report sufficient availability of adequate computer software.
  4. The Digital Divide: A MEXT survey from April 2020 showcased how difficult it has been for Japanese public schools to adapt to the new normal. The digital divide between Japan’s urban and rural areas and across socioeconomic lines has complicated this transition to online learning. One step that has emerged to address these challenges involves a partnership with Japan’s top three mobile phone companies which have eliminated some additional charges for their users aged 25 and under.
  5. Child Poverty and Education: Prior to the pandemic, Japan already had issues with child poverty and education inequality. The Nippon Foundation estimated the economic impact of leaving this poverty unaddressed, even before the pandemic exacerbated the issue. Its survey began with the assumption that economic gaps cause children to have disparities in education, resulting in vast differences in future income. Two scenarios compared what would happen if Japan left the situation unaddressed as opposed to what would happen after implementing new measures to reduce disparities in education. If Japan were to take measures to correct the situation, the number of college graduates would increase, resulting in more people growing their lifetime earnings. However, if it does not address economic gaps among children, the situation will not change. Taking measures towards addressing economic gaps and education among Japanese children would also cause Japanese citizens to eventually pay more taxes and social security premiums, which would reduce the government’s fiscal burden after the pandemic.

Looking Ahead

It is possible for Japan to take a leadership role in coordinating strategies to reduce educational inequality. With proper assistance and studies from organizations like The Nippon Foundation, Japan’s mission toward education equality may end up back on track.

– Elisabeth Petry
Photo: Flickr

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The Success of Hungary’s Improving Economy

Hungary’s Improving EconomyThe Central European country of Hungary is a fairly small nation that has had high rates of poverty in the past. In 2007, 29.4% of Hungarians were at risk of poverty and that number rose to 34.8% in 2013. Despite these high poverty risk rates, the country has had success in reduction. The poverty risk rate reduced down to 18.9% in 2019. Hungary’s improving economy is fueled by new policies and support from other nations.

Increasing Consumer Spending

Part of the reason Hungary has struggled to develop a productive economy dates back to the 1990s after the fall of the Soviet Union. Hungary implemented many reforms such as the privatization of businesses that were once state-owned. Hungary began to cut funding to social programs as well. Despite living conditions deteriorating, Hungary was able to improve these conditions with its policy implementations and growing exports. Since then, Hungary has adopted a multitude of policies to help improve its economy.

Before the 2018 election, the country tried to increase its amount of consumer spending by implementing an increase in the minimum wage. Hungary’s government also reduced income tax by 1%. The Hungarian government implemented these strategies to encourage Hungarian citizens to put money back into the economy and keep Hungarian businesses operating.

European Commission Support

When COVID-19 swept the globe, many nations had to implement lockdown measures to protect their citizens and stop the spread of the virus. Because of Hungary’s struggling economy, the nation required financial assistance from the European Commission. In 2020, support came in the form of €1 billion. The monetary assistance aimed to provide Hungarian companies the help they needed to survive during COVID-19.  The assistance applied to all companies —  micro, small, medium and large. Certain businesses have a cap on how much of this aid they can access. Monetary support of up to €100,000 is available to businesses working in the agricultural production sector whereas up to €120,000 is available to businesses working in the fishery and aquaculture sector. The assistance excludes companies that were already in economic hardship on December 31, 2019. The monetary assistance ensures that Hungary’s improving economy does not lose progress due to COVID-19.

The Future

Due to policies that were implemented by Hungary’s government and support from the European Commission, Hungary’s improving economy has not been as harshly damaged. However, despite this assistance, the GDP of Hungary has still suffered just as other global GDPs have suffered. But, the future of Hungary’s economy is not as bleak as it may seem. It is expected that the GDP of the nation will grow by 3.5% in 2021, and by 2022, the economy is expected to return to the level it was at prior to COVID-19. While Hungary’s economy is far from perfect, it has no doubt made substantial improvements in recent years.

– Jacob E. Lee
Photo: Flickr