Archive for category: Economy

Information and stories about economy.

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Economic Growth in Nigeria

Economic Growth in NigeriaNigeria boasts a population of more than 200 million people who are religiously diverse and rapidly growing. The country houses the largest economy on the African continent. It depends heavily on oil production and oil exports, which comprise 80% of its national revenue. In 2015, the Nigerian economy grew at half the rate of the previous decade due to the global oil price recession. The government acknowledges the necessity of a comprehensive plan for sustainable economic growth in Nigeria.

President Buhari

Despite the Human Rights Watch’s claims of human rights abuses, fighting between the government and terrorist group, Boko Haram, as well corruption both within the government and the oil industry, Nigeria is a rapidly growing and dynamic nation. In 2015, a peaceful transfer of power from incumbent Goodluck Jonathan to Muhammadu Buhari took place after a competitive election. President Buhari is a former military head of state and has made vows to improve the living standards of Nigerians. Furthermore, he wants to fight corruption and boost the economy both through the oil industry and outside of it.

Diversifying and Boosting Nigeria’s Economy

A report put out by the International Finance Corporation and the World Bank found that private sector growth strategies could help Nigeria by attracting outside investment and creating more quality jobs for millions of its citizens. The report states that this strategy will require better policy frameworks and reforms to support sectors outside of the oil industry. Nigeria has pledged to lift 100 million Nigerians out of poverty by 2030, which is becoming increasingly challenging with the impacts of the COVID-19 pandemic. This report highlights a hopeful investment strategy that can help foster economic growth in Nigeria.

Nigeria experienced 11 straight quarters of GDP growth since its recession ended, but growth has stalled given the COVID-19 pandemic. President Buhari has set out to diversify the nation’s economic strategy and has focused on agriculture to achieve the poverty reduction goal. In addition to the agricultural industry, President Buhari has sought to revamp the cotton, tactile and garment industry. Furthermore, the nation has focused its efforts on increasing non-oil exports such as cocoa and sesame seeds. Revenue from these exports grew by $79.4 million and $153 million respectively. These examples serve to show the promise of diversifying and strengthening the Nigerian economy amid unstable times.

The Potential of Agriculture

President Buhari met with the Presidential Economic Advisory Council (PEAC) and stated that his administration is committed to implementing “rapid, sustained, sustainable and inclusive economic growth.” President Buhari focused again on agriculture-based strategies and the utilization of more land throughout the country. Nigeria currently only irrigates about 2% of its land, indicating significant room for agricultural development. Buhari says that raising agricultural productivity is vital to address the disparities between regions and “ensure macro-economic stability.”

The PEAC has pledged to help Nigeria with an approach to eradicating poverty that will be multi-dimensional, focusing on aspects such as access to housing, health, education and employment. President Buhari vowed his commitment to reducing poverty in Nigeria but collaboration from all levels will ensure a comprehensive and effective national response.

– Tatiana Nelson
Photo: Flickr

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The Benefits of the AfCFTA for the African Economy

the AfCFTATrading within the African Continental Free Trade Area (AfCFTA) finally took effect on January 1, 2021. The AfCFTA is the world’s largest trading area since the establishment of the World Trade Organization with 54 of the 55 countries of the African Union (AU). The AfCFTA was established by the African Continental Free Trade Agreement signed in March 2018 by 44 AU countries. Over time, other AU countries signed on as the official start of trading under the provisions of the agreement approached. The AfCTFA is projected to create opportunities and boost the African economy. By facilitating this intra-African trade area, the international community expects sustainable growth and increased economic development.

The Implementation and Benefits of the AfCFTA

  1. Creating a Single Market. The main objective is to create a single market for goods and services to increase trading among African nations. The AfCFTA is tasked to implement protocols to eliminate trade barriers and cooperate with member states on investment and competition policies, intellectual property rights, settlement of disputes and other trade-liberating strategies.
  1. Expected Economic Boost and Trade Diversity. UNECA estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The AfCFTA will cover a GDP of $2.5 trillion of the market. The trade initiative will also diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources. Historically, more than 75% of African exports outside of the continent consisted of extractive commodities whereas only 40% of intra-African trade were extractive.
  1. Collaborative Structure and Enforcement. All decisions of the AfCFTA institutions are reached by a simple majority vote. There are several key AfCFTA institutions. The AU Assembly provides oversight, guidance and interpretations of the Agreement. The Council of Ministers is designated by state parties and report to the Assembly. The Council makes the decisions that pertain to the Agreement. The Committee of Senior Trade Officials implements the decisions of the Council and monitors the development of the provisions of the AfCFTA. The Secretariat is established as an autonomous institution whose roles and responsibilities are determined by the Council.
  1. Eliminating Tariffs. State parties will progressively eliminate import duties and apply preferential tariffs to imports from other state parties. If state parties are a part of regional trade arrangements that have preferential tariffs already in place, state parties must maintain and improve on them.
  1. Settling Trade Disputes. Multilateral trading systems can bring about disputes when a state party implements a trade policy that another state party considers a breach of the Agreement. The AfCFTA has the Dispute Settlement Mechanism in place for such occasions which offers mediated consultations between disputing parties. The mechanism is only available to state parties, not private enterprises.
  1. Protecting Women Traders. According to UNECA and the African Trade Policy Centre, women are estimated to account for around 70% of informal cross-border traders. Informal trading can make women vulnerable to harassment and violence. With the reduced tariffs, it will be more affordable for women to trade through formal channels where women traders will not have to put themselves in dangerous situations.
  1. Growing Small and Medium-Sized Businesses. The elimination of import duties also opens up trading activities to small businesses in the regional markets. Small and medium-sized businesses make up 80% of the region’s businesses. Increased trading also facilitates small business products to be traded as inputs for larger enterprises in the region.
  1. Encouraging Industrialization. The AfCFTA fosters competitive manufacturing. With a successful implementation of this new trade initiative, there is potential for Africa’s manufacturing sector to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
  1. Contributing to Sustainable Growth. The United Nations 2030 Agenda for Sustainable Development includes goals that the AfCFTA contributes to. For example, Goal 8 of the Agenda is decent work and economic growth and Goal 9 is the promotion of industry. The AfCFTA initiative also contributes to Goal 17 of the Agenda as it reduces the continent’s reliance on external resources, encouraging independent financing and development.

AfCFTA: A Trade Milestone for Reducing Poverty in Africa

The establishment of the AfCFTA marks a key milestone for Africa’s continental trade system. The size of the trade area presents promising economic development and sustainable growth that reaches all market sectors and participants. Additionally, the timing of the initiative launch is expected to contribute to the alleviation of the pandemic’s economic damages.

– Malala Raharisoa Lin
Photo: Flickr

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The New Digital Payment System in Pakistan

Digital Payment System in Pakistan
Pakistan has a primarily cash-based economy that thriving illegal markets and low government revenue plagues. A new digital payment system in Pakistan could change this. The State Bank of Pakistan (SBP) and the Pakistani government worked in collaboration with the Bill and Melinda Gates Foundation to launch this brand new digital cash transfer system. Additional support came from the United Nations, the World Bank and the United Kingdom.

This new digital payment system called Raast or “direct way” can instantly transfer money between two entities. Although the idea is not new and there are several other financial transaction systems on the market, Raast is the first one that received sponsorship from the Pakistani government, linking financial institutions and government entities. The government’s main goals are to make money transfers more transparent and thereby reduce corruption, increase government revenue and create a more inclusive economy.

Increased Transparency, Tax Revenue and a Less Corrupt Economy

A payment system such as Raast records every transaction in real-time and establishes a log of payments. This allows users to keep track of their transfers, and since the information is visible to all involved parties, users can report complaints or mistakes much more easily. When the Pakistani government and its citizens use Raast, it makes it possible for citizens to receive their pensions, salaries or other payments from the government much more quickly. The increased efficiency and transparency also supports small businesses and other micro-enterprises. Instead of paying cash or sending checks through the mail, they can instantly pay suppliers and distributors. This makes running a business more efficient, reliable, accessible and less prone to corruption.

The new digital payment system in Pakistan also makes it easier for the government to collect taxes by using the technology to track how much people owe and when they made payments. In 2019, the World Bank reported that Pakistan’s government collected half of what, theoretically, it should have been able to take based on its economy. Tax evasion is widespread, but it is also complicated and timely to file taxes in Pakistan. The World Bank found that there are many individuals and companies that would like to file taxes, but do not because of the time and money the process requires.

A More Inclusive Economy

In 2018, the Global Findex reported that only 7% of women age 15 and older had a bank account, and of the most economically disadvantaged 40% (men and women), 14.2% had an account. Particularly during the pandemic, it has been difficult for these underserved groups to receive government support without a bank account. Raast has the potential to serve vulnerable groups because it does not require people to travel to a physical bank, and is cheaper and easier for individuals to set up than a traditional bank account. In a report about payment systems, the World Bank stated that “secure, affordable, and accessible payment systems and services help expand financial inclusion, foster development and support financial stability.” However, without proper implementation, an endeavor such as this digital payment system in Pakistan could fall short of its goal.

In a statement at the launch, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA) Queen Máxima, discussed how important it is for all banks and service providers to adopt the new technology and to encourage individuals to use it instead of cash. If enough people and institutions use the program, it will reach its accessibility potential and spur economic growth. As Queen Máxima stated in her keynote address, the hope for this new digital payment system in Pakistan is above all to create a more digital and accessible economy.

 – Caitlin Harjes
Photo: Flickr

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Creating Female Entrepreneurs in Afghanistan

Female entrepreneurs in AfghanistanIt is no secret that women’s rights in Afghanistan have been suffering due to decades of war and Taliban rule in the country. Afghan women have endured the denial of employment, education, health care and basic freedoms for years and faced violent punishment by the Taliban for attempting to find work or go to school. Years after Taliban rule, women are picking up the pieces of a broken society that drove them and many other Afghans into severe poverty. Organizations such as the Women’s Economic Empowerment Rural Development Project (WEERDP) and the Afghanistan Reconstruction Trust Fund (ARTF), both funded and backed by the World Bank, set up savings and loan associations in different communities to allow Afghan women to start their own businesses. Female entrepreneurs in Afghanistan have the potential to help the economy and reduce poverty within the country.

Women’s Empowerment Projects of the World Bank

International aid to Afghanistan is essential for empowering Afghan women and bringing communities out of poverty. The World Bank has a variety of programs dedicated to poverty eradication. It implemented the Afghanistan Rural Enterprise Development Project to support Village Savings and Loan Associations (VSLA). VLSAs operate as a community bank that gives out micro-loans to women to create employment opportunities to sustain economic growth. Examples of businesses started by women are hair salons, tailor shops and bakeries.

While the Afghanistan Rural Enterprise Development Program came to a close in 2018, WEERDP replaced it and continues to receive backing from the World Bank and the International Development Association (IDA) to ensure steady funding.

VSLAs receive funding from the World Bank and the IDA to ensure sustainable financial institutions are available in Afghanistan, with the hope that the VSLAs will partner with larger commercial banks in the future.

Benefits of Female Entrepreneurs in Afghanistan

There are roughly 275,684 Afghan women beneficiaries of the WEERDP. Many of them have had access to financial services for the first time with the program. Many others are taking loans, learning how to repay these loans and beginning to save for the future. These are valuable life skills for women who could not enter the workforce or gain an education in the past.

With the increase of women-run businesses in Afghanistan’s rural communities, VSLAs can begin to partner with larger banks to begin serving bigger loans to women after seeing the success of the businesses that began with micro-loans. The support of financial institutions is important to give women the confidence to become entrepreneurs, especially in a country where the percentage of women in the workforce is statistically low. Skills like leadership, management and problem-solving are derived from starting a business and female entrepreneurs can spread these skills throughout communities to strengthen the role of women in the economy.

These women can even pass down the skills through generations. Building a structure with programs like the WEERDP is vital for long-term economic growth and success because it can open doors for creativity and innovation for an economy that would benefit.

The Future of Female Entrepreneurs in Afghanistan

Increasing the number of women entrepreneurs with savvy financial skills can benefit the communities of Afghanistan in many ways. Successful women can begin to venture out into local politics and health care fields to build on their skills while sharing their talents with the community. Women have important input on what types of businesses their communities need and can reduce poverty in specialized ways.

Afghan women make up roughly half of the nation’s population, so their representation is necessary to drive economic and societal progress. The visibility of women in the business sector can allow for gender equality to improve in Afghanistan over time, improving the development of the nation as a whole.

– Julia Ditmar
Photo: Flickr

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Reforms for Saving the Venezuelan Economy

Saving the Venezuelan EconomyA combination of poor leadership and crippling sanctions have created a nation-wide economic crisis in Venezuela. The Center for Strategic and International Studies found that even before U.S. sanctions were placed on Venezuela, the country was already enduring hyperinflation, had seen food imports fall by 71% and more than two million Venezuelans had fled the country. Nevertheless, sanctions only exacerbated the crisis as Torino Economics found U.S. sanctions on Venezuela were associated with an annual loss of $16.9 billion in oil revenue. As a result, the Atlantic Council reports that more than 80% of Venezuelan households are food insecure and 3.7 million individuals are malnourished. Consequently, refugees filed more asylum claims globally in 2018 than any other country has. The number of Venezuelan migrants and refugees is expected to reach eight million in 2020, surpassing Syrian migration by more than three million. Reforms in the county are being implemented with the aim of saving the Venezuelan economy.

Saving the Venezuelan Economy

While this economic collapse still ravishes the country, there is certainly hope for the future. Due to both internal and external pressures, the president of Venezuela, Nicolás Maduro, has begun to encourage policies of economic liberalization and privatization that are indicating an economic rebound.

Toward the end of 2019, Argus Media reported the Venezuelan government was beginning to ease economic controls. Specifically, the Maduro government erased most price controls, loosened capital controls, tightened controls on commercial bank loan operations, and most importantly, began to accept informal dollarization. Immediately these policies curbed the levels of hyperinflation that had caused the food crisis across the country. Advisers estimate inflation to be at only 5,500%, a significant improvement compared to the International Monetary Fund forecasts that predicted inflation levels of more than 10 million percent. This is largely in part to the importation of dollars into the Venezuelan economy, pushing out the uselessly-inflated Bolivars. Indeed, a Bloomberg study found Venezuela’s economy is increasingly dollarized, as 54% of all sales in Venezuela by the end of last year were in dollars. Most importantly, food and medicine imports have rebounded, now reaching 15% of the population.

Privatization of the Oil Industry

In addition to the Maduro government relaxing economic controls, the economic rebound in Venezuela has occurred due to increased privatization of the oil industry. Despite being under the control of the military for years, Venezuela’s state-owned oil company has trended toward letting private firms handle operations, aiding in fixing the mismanagement perpetrated by the military’s control of the industry. For the first time in decades, the private sector accounted for more than 25% of GDP in 2019 and likely more by the end of 2020. Consequently, the Panam Post reported that oil production increased by more than 200,000 barrels, a 20% increase following privatization.

Initiatives to Help Venezuelans in Poverty

The South American Initiative, through its medical clinic, provides medical care and medicine to Venezuelans in need, with a special focus on mothers and children. To provide these essential services, it relies on donations that people provide on the GlobalGiving platform.

Fundacion Oportunidad y Futuro addresses hunger and malnutrition with regards to children in Venezuela. It is running in an initiative to provide meals to 800 school-aged children in Venezuela. It also operates through donations via the GlobalGiving platform.

The Future of Venezuela

While there is hope to be found in these reforms, Venezuela has far from recovered. The National Survey of Living Conditions indicates that more Venezuelans are in poverty in 2020 than in 2018, with food security decreasing another 7% over the past two years. The average income of Venezuela remains low at just over 70 U.S. cents a day. These reforms are the foundational steps needed to begin to reverse the economic trend that has relegated millions of Venezuelans to extreme poverty. If the economy is ever to correct itself, liberalization and privatization will be the jumping-off point for an economically thriving Venezuela in the future.

– Kendall Carll
Photo: Flickr

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Clean Waters: The Ocean Cleanup Organization

The Ocean Cleanup OrganizationSeven years ago, The Ocean Cleanup organization launched as a Dutch nonprofit dedicated to eliminating the Great Pacific Garbage Patch using autonomous, solar-powered cleaning systems. Now, as part of a new initiative, the organization is rolling out barges in major rivers as an upstream solution to global, prolific marine debris.

Marine Plastic Pollution

At least eight tons of marine plastic enter the oceans each year, where a majority floats on the surface before breaking down into non-biodegradable microplastics. Around 80% of marine debris flows through rivers before reaching the ocean. Because a handful of countries are responsible for a majority of marine debris, cleaning just 10 major polluting rivers of waste would stop a significant amount of debris from ever reaching the ocean.

The Ocean Cleanup Organization

Based in the Netherlands and led by a 26-year-old entrepreneur, Boyan Slat, The Ocean Cleanup organization has plans that include fitting the world’s 1,000 most polluting rivers with waste removal systems over the next five years. The organization’s research indicates that 1,000 specific rivers are responsible for 80% of the pollution.

The Interceptor Concept

Solar powers the waste removal systems, and they are scalable and largely autonomous. Each one uses barriers to direct waste along the river to a floating “interceptor” barge, which loads waste with a conveyor belt into containers that local municipalities can then dispose of. Individual interceptors can collect 50,000 kilograms of waste each day, though “in optimal conditions up to double this amount can be achieved.”

The interceptor concept, designed in 2015, was first utilized in the Cengkareng Drain, Indonesia, where it has remained. The Ocean Cleanup has since partnered with local governments to deploy three more interceptors in Malaysia, Jamaica and the Dominican Republic. By placing each one downstream from the last major source point in a river, they manage to fill all containers every few days, though they sometimes fill up in only a few hours.

Impact of Microplastics

Marine plastics’ widespread and harmful effects on marine life are well-documented, with hundreds of species ingesting, suffocating and entangling themselves in plastics. The global impact of aquatic microplastics, by contrast, is an emerging field of study. Appearing in tap water, beer and salt, they have appeared in water samples taken from every ocean. In 2019, the World Health Organization called for more research into microplastics and a drastic reduction in plastic pollution.

An environmental health report published in 2018 stressed the risk of consuming microplastics in seafood. “Because microplastics are associated with chemicals from manufacturing that sorb from the surrounding environment,” the report finds, “there is concern regarding physical and chemical toxicity.”

Consequences of Marine Plastic Pollution

While microplastics are under-researched, larger marine waste has concrete impacts on water-adjacent communities because marine plastics kill wildlife and disrupt local ecosystems, harming livelihoods and impeding tourism. More pressing, severely polluted waterways exacerbate poverty and poverty-related issues, especially among young children. According to experts at UNICEF, children living in South Asian slums frequently play in rivers and shores contaminated with waste, excrement and agricultural runoff. Since many lack access to clean water and sanitation facilities, this makes poor water-adjacent communities hotbeds for preventable illnesses.

The Ocean Cleanup found that marine plastic is responsible for between $6 billion and $19 billion of economic costs annually. These costs “stem from its impact on tourism, fisheries and aquaculture, and (governmental) cleanups,” and do not even account for the disability-adjusted life years (DALYs) lost because of its public health impact.

Hopes for the Future

The Ocean Cleanup organization hopes to significantly reduce plastic pollution in oceans. Once fully implemented, the waste removal systems aim to reduce the Great Pacific Garbage Patch by 50% every five years. The organization’s latest endeavor is a line of sunglasses made from plastic removed from the Great Pacific Garbage Patch. With all proceeds going toward expanding cleanup efforts, this is the most stylish way an ordinary person can contribute to a greater cause.

– Skye Jacobs
Photo: Flickr

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Phones to Combat Poverty Wave In India

Phones Are Providing a New Relief From the Poverty Wave In IndiaThe recent technological revolution booming in the developed world is showing positive results. To that end, many people are urging the distribution of these technologies to developing countries like India. Rural villages in the country have largely not been part of the mobile phone trend. Even certain urban areas remain hidden from these new technologies. Several nonprofit organizations and recent government movements have vowed to fight this reality, looking to increase the availability of cell phones and cell phone data in India. Here are three ways India is using phones to combat poverty.

Increasing Education Opportunities

Many rural villages in India focus on agriculture as their primary form of livelihood. Most farmers only earn around $2 per day. In 2010, a nonprofit organization based in San Francisco, mPowering, partnered with a charity working in Orissa, India to distribute mobile phones to village residents. mPowering relied on cell phone towers in the area to give farmers and other rural families more functionality. The nonprofit’s initiative, conducted in the Indian village of Juanga, saw a 19% increase in its school attendance for children. In addition, more women were able to gain access to important health care needs through a so-called point system loaded onto communal phones. People can then redeem these points for commodities like food and clothing. As a result, the Juanga experiment found a 67% decrease in reported diseases.

Government Intervention for Economic Stimulation

The Indian government has developed a scheme to hand out phones to children and impoverished families because more than 10% of Indian families cannot afford to purchase a cell phone. During the COVID-19 pandemic, the country is distributing phones to children learning online. In the Punjab region, 75 million children should receive a handset. These initiatives are a direct response to the rising fear that more than 24 million children worldwide could lose access to proper education.

According to a UN report, if online school without other alternatives continues, this very fear might become a reality. The Indian government’s push to include children in its mobile phone plan is just one step to introduce mobile devices to the general population. It has also developed a $6.65 billion scheme to increase the production of electronic goods within the country. The move has helped increase the number of phone manufacturers in India, which rose from two to more than 200 in just a few years.

A Variety of Options for a Variety of Users

Estimates show that more than 900 million Indian citizens do not own a smartphone or have access to the internet. However, recent economic growth has turned India into a leading market for cheap phone data options. As a result of this spark in data growth, companies developed a variety of cell phones and cell phone software to reach a wider demographic. There are currently more than 100 smartphone brands that dominate the Indian cell phone market, with Chinese manufacturers holding more than 75% of the space. Recently, companies like Apple have begun to market lower-end budget phones to expand their outreach in India as well. Growing demand and relatively low tariff rates have allowed mobile phone markets to gain millions of users in mere months. The launch and future cultivation of 3G and 4G networks are only expediting initiatives that use phones to combat poverty.

The expanding economy in India is allowing newer technologies to reach a wider range of consumers. The target audience in the country has slowly shifted from urban individuals to inhabitants of impoverished rural regions. As India’s economic prosperity grows, using phones to combat poverty ensures that people receive more education, are better off and experience inclusion.

– Mihir Gokhale
Photo: Flickr

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Online Gaming in India Boosting the Economy

Online Gaming in India
India is a country in Southeast Asia that has a population of more than 1.2 billion people. It is the second most populated country in the world after China. India’s land consists of only 2.4% of the world’s landmass. However, the nation also supports 14% of the world’s population. As a result of overpopulation, India experiences large food shortages. Thus, 194.4 million people are malnourished and live on only $2 per day. Fortunately, India’s large population has increased online game development. Online gaming in India could be worth $1.1 billion by 2021. Furthermore, the online gaming market has created more job opportunities and gives impoverished people an avenue to connect with the world.

Online Gaming in India Attracts Investors

More than 75% of India’s population is under 45 years of age. Additionally, about 60% of India’s online gamers are aged 18 to 24. Thus, India has the second-largest online gaming market in the world and the country has 560 million game users. As the accessibility of mobile phones improves, the game user base increases as well. Also, cell phones are affordable and developing more revenue than gaming consoles. Therefore, developers are increasing their focus on the mobile gaming industry.

Only 25 gaming developers were working in India in 2010. However, this number increased to 275 gaming developers by 2019. Additionally, foreign and domestic gaming businesses continue to invest in India’s gaming market. As a result, more job opportunities come out of this industry. Rockstar Games is an American company that bought Dhruva Interactive, an Indian gaming development company. This created about 500 jobs for people in India. In addition, Youzu Interactive is a Chinese gaming company that invests $10 million to aid in developing local games. Baazi Games is a domestic gaming company that has invested $5 million to help gaming start-ups develop more mobile games. Moreover, two e-commerce firms, PayTM and AGTech Holdings launched a sports gaming platform called Gamepind. Together the companies invested more than $16 million.

Mobile Gaming Connects People

As online gaming in India has increased in popularity, the price of mobile phones has decreased. In fact, about 1 GB of data costed an average of $0.26 in 2019 whereas, the global average is $8.53. This has greatly increased the accessibility of cell phones and the gaming market in India. Jio is an Indian phone company that contributes to cell phone affordability. The company encourages other companies to lower prices by offering free calls and more affordable data plans.

About 48% of online gamers in India start playing to interact with friends. Additionally, more than 75% of online gamers stated they continued to play online games to relieve stress and continue social interaction. For many people, online gaming is an opportunity to engage in new virtual opportunities. There were more than 2.4 billion global mobile gamers in 2020. This newly emerging field offers endless possibilities. Virtual opportunities will continue to improve India’s economy in the future.

– Rae Brozovich
Photo: Flickr

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How Mexican Avocados Are Reducing Poverty

mexican avocadosMexico is the second-largest nation in Latin America with over 130 million residents. Mexico exports an abundance of fruits and vegetables but its number one export crop is avocados. Not too long ago, avocados were not the number one crop being exported from Mexico. Today, the economic impact of Mexican avocados has helped many people escape poverty.

Poverty in Mexico

According to the World Bank, in 2018 almost 42% of Mexicans lived in poverty, with the rural population being the most impacted. Moreover, around 62% of Mexican children make it to high school and only 45% graduate. To reduce poverty, Mexico has increased its social spending to help those in need. The Mexican government has implemented programs such as cash transfers, farmland subsidies, scholarships and subsidized medicine. These programs are put into place in the hope of reducing poverty in Mexico.

The Mexican state of Michoacan is one of the poorest in the country. A whole 46% of people in the state lived in poverty in 2018.  However, Michoacan is rich in agriculture. In fact, around 20% of the land is used for agriculture and the industry employs 34% of the population. Moreover, Michoacan’s most popular crop is the avocado.

The Avocado Industry Boom

Michoacan is the top producer of avocados not only for Mexico but for the entire world. Increased demand for avocados has created an economic boom in the country. Mexican avocados make up 82% of all U.S. avocado sales. Furthermore, Mexican avocados have created more than 30,000 U.S. jobs and have an economic output of $6.5 billion. Even during the COVID-19 pandemic, avocado sales were flourishing.

The United States had banned the import of Mexican avocados in 1914 due to fears of insect infestation. In 1994, The North American Free Trade Agreement (NAFTA)  implemented between Mexico, Canada and the United States resulted in the ban being lifted. The agreement led to the free flow of Mexican avocados into the U.S. The company Avocados From Mexico (AFM) has sold 2.1 pounds of avocados in 2020 and expects 2.3 pounds to be sold in 2021. Mexican avocados have had such a great economic impact that they are called “green gold” by the locals.

Impact of Mexican Avocados

The increased demand for Mexican avocados has led to less migration of Mexicans into the United States. The competitive wages avocado farming has produced has meant many more Mexicans are willing to stay in their home country. The popularity of avocados has led to the creation of thousands of jobs in Mexico. Due to this fact, families do not feel the need to migrate to the United States for employment.

The demand for Mexican avocados has led to employment opportunities, less migration and closer economic ties to the United States. The Mexican avocado industry is playing a part in reducing global poverty.

– Andy Calderon Lanza
Photo: Flickr

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Malaysia’s East Coast Rail Link

East Coast Rail Link
Malaysia has developed steadily over the last 60 years, and the International Monetary Fund (IMF) now classifies it as an “upper-middle-income” country. However, this development has been uneven as it has favored the western half of the peninsula while leaving the east struggling to keep up. Part of the reason for this uneven development is the lack of high-tech transportation infrastructure to connect the underdeveloped east with the developed west efficiently. The East Coast Rail Link (ECRL) is a high-speed railway that the Malaysian government proposed to satisfy this need.

Malaysian Development

The peninsular Southeast Asian nation, Malaysia, was a British colony until it gained independence in 1957. Naturally, as a newly independent nation, it lacked development. In 1961, its GDP per capita was a measly $235 with a -3.83% growth and its debt as a percentage of GDP was 79.54%.

Nonetheless, since achieving its independence, Malaysia has developed steadily. Between 1970 and 2010, the GDP per capita grew by an average of 2.8% per year. Likewise, on the human development index, Malaysia jumped from 0.643 in 1990 to 0.802 in 2017 and its poverty rate decreased from 32.2% in 1984 to 2.7% in 2015.

Malaysia has achieved these astounding numbers through diversifying its economy beyond commodities and agriculture towards a manufacturing and service-based economy. Malaysia is now a leading exporter in electrical appliances, electronic parts and components and one of the world’s most open economies. As a result, Malaysia is now an upper-middle-income country.

Uneven Development: West V.S. East

Nevertheless, with all of its developmental success, it has been geographically uneven with the western portion of the peninsula receiving the lion’s share of economic development. On the other hand, the eastern region lacks development.

The data illustrates the discrepancies between the west and the east. For instance, the eastern states of peninsular Malaysia, namely Kelantan, Pahang and Terengganu, contribute a combined total of 8.4% to Malaysian economic growth. In contrast, Malaysia’s western financial hub, Kuala Lumpur, contributes 16.1% by itself. Meanwhile, Kuala Lumpur has a GDP per capita of 121,293 RM, which is in stark contrast to Terengganu, Kelantan and Pahang, 30,216 RM, 13,668 RM and 35,554 RM, respectively.

This spatial inequality has its roots in Malaysia’s colonial past and its topographical distinctions. The British first exploited areas on the west coast for raw resources. However, over time, the West Coast developed into trading centers with key regional ports leaving the east without the benefits of British industrial experience.

What further complicated righting this historical discrepancy is an extensive mountain range running through the middle of the nation, preventing connectivity between the developed states in the west and the underdeveloped states in the east. Therefore, economic centers and the opportunities they present, such as the federal territory of Kuala Lumpur and Selangor, have experienced a disconnect from the economically embryonic areas of Kelantan, Pahang and Terengganu.

The East Coast Rail Link (ECRL)

To the credit of the government, it has embarked on an ambitious initiative to correct these iniquities: The East Coast Rail Link (ECRL) project. The ECRL is an $11 billion Chinese-backed High-Speed-Rail project that sets out to connect the East Coast and the West Coast by connecting Kuala Lumpur to the three eastern states Terengganu, Kelantan and Pahang. The ECRL project will have 20 stations (14 of those passengers, five combined freight and passenger and one with a dedication to freight trains only) and will have 40 tunnels from Kota Bahura to Port Klang. The government expects the ECRL to reach completion by 2026, assuming that neither the COVID-19 pandemic nor Malaysia’s tumultuous politics delay it too much.

The Benefits of ECRL

The ECRL is critical for eastern development because it gives inhabitants access to better economic opportunities like jobs or services such as healthcare and education by connecting it with the more developed Kuala Lumpur region. This connectedness will give workers the flexibility to pursue economic and socioeconomic opportunities outside their home region and create growth centers closer to home.

However, what is innovative about the project is that it will connect the two regions very efficiently. It will achieve this efficiency mainly by reducing the time and cost of travel significantly. For example, Prime Minister Najib promised that the journey from the important ITT in Gombak, Selangor, to Kota Baru, Kelantan, will reduce from its current eight to 12 hours down to around four.

In effect, this more efficient transportation network reduces the cost of traveling and gives rural area inhabitants better flexibility in working outside of their home towns and more significant economic opportunities previously reserved for those nearer to the western financial centers. The economic benefits of this are illustrated by the government’s prediction that in Terengganu, Kelantan and Pahang, the GDP would grow by 1.5% the current growth rate.

Granted, the ECRL does little to effect change in the states off of the peninsula, namely Sarawak and Sabah, which desperately need it. Yet, for the severely underdeveloped East Coast, the ECRL project will reduce both poverty and economic cost through the influx of jobs that come with these projects, the newfound flexibility of workers to maneuver outside their rural areas and the reduction of travel costs, both financially and regarding time. As Lingzi writes, for the “less developed states on the east coast…the ECRL looks like an economic lifeline.”

– Vincenzo Caporale
Photo: Flickr