Archive for category: Economy

Information and stories about economy.

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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

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Central Asian Geopolitics: The Kyrgyz Republic

Central Asian Geopolitics
In the heart of Central Asia lies the Kyrgyz Republic. Many consider the country an island of democracy in the region and it sports a comparatively open and competitive economy. It can be surprising then that the average Kyrgyz family earns under $1,000 a year. Its importance in Central Asian geopolitics, combined with economic reforms, has helped make it the top recipient of development assistance in the region. With a presidential election scheduled for January 2021, the new government will have to answer serious questions about which global power it aligns itself to and whether or not that alignment will bring about progress in lifting roughly 23% of the country’s population out of poverty.

Kyrgyzstan emerged from the Soviet Union’s fall with a far different government than its fellow former Soviet states. While dictatorships and tightly-controlled economies rule its neighbors, Kyrgyzstan enjoyed economic and political reforms. This led to an influx of international supporters. Development aid became the crutch upon which Kyrgyzstan’s economy leaned. The diversity of donors has given the country the unique ability to align itself with countries that best suit their interests. The problem has been that the guiding interests have been too often those of the top politicians rather than the population. Much of the blame has gone to former President Kurmanbek Bakiyev. Bakiyev took over in 2005 and spent five years perfecting a system of crony capitalism that left nearly 34% of the Kyrgyz people under the poverty line, while deeply enriching himself, his family and his friends.

Help in Crisis

Ten years later, the country is still working to shake the lasting economic and political flaws of the Bakiyev Administration. During October 2020, the political landscape was changing on a seemingly daily basis. The leadership future for the country remains uncertain but will require an ability to maintain channels of aid from a wide array of actors. Much of Kyrgyzstan’s help comes from international organizations like the World Bank. Currently, it works to help Kyrgyzstan combat the pandemic with the Emergency COVID-19 Project.

The Kyrgyz Republic received $160.15 million with the bulk of the money focused on helping with recovery from the economic impacts of the pandemic. Specifically, the emergency aid has funded the creation of new hospitals, renovation of 24 existing hospitals, provisions of mechanical ventilators, defibrillators and an assortment of Intensive Care Unit equipment. These aim to not only provide aid during the current pandemic but also laying the groundwork for future health crises. This is, of course, just one example of a meaningful step towards helping the Kyrgyz people. Typically, the majority of that help has come from countries like Russia, China and the United States.

The Great Game

These world powers have been vying for economic and political leverage over Kyrgyzstan since its birth as a nation. Of those powers, Russia has historically been Kyrgyzstan’s preferred suitor. However, in 2001, the U.S. built its most important transit base for the Afghanistan War at Manas airbase, just outside of the capital, Bishkek. This was a landmark move because Kyrgyzstan became the only country in the world to host a Russian and U.S. military base simultaneously. In 2006, foreign aid started pouring in from the U.S. The uneasy relationship between the three nations nearly boiled over in 2009. That year, Bakiyev announced plans to close the U.S. airbase where roughly 98% of coalition forces were passing in transit to Afghanistan. Later that same year, Bakiyev signed a law allowing for the continued use of the Manas airbase after the U.S. agreed to triple the annual rent paid.

Bishkek and Beijing

Relations between the U.S. and the Kyrgyz Republic continued to decline. By 2019, U.S. foreign aid to the Kyrgyz Republic had dropped 37%. Russia’s economic influence also appeared to be waning as China gradually took on the role of the principal donor. While the Kyrgyz population largely dislikes its eastern neighbor, the governments of China and Kyrgyzstan have an increasingly cozy relationship; one built increasingly upon economic dependence. Roughly 32% of the country’s imports come from China including the majority of its oil. That marks a larger percentage than any other country in Central Asia. This statistic is only a window into the economic melding between the two countries.

As of 2017, Kyrgyzstan’s debt to China made up 42.3% of its GDP. Additionally, 26.2% of its Foreign Direct Investment came from China. Kyrgyzstan’s participation in Chinese President Xi Jinping’s Belt and Road Initiative (BRI) largely spurred this. The initiative is a multi-trillion-dollar plan for global infrastructure and trade routes spanning three continents. Kyrgyzstan has become one of the countries most indebted to China since the project’s start in 2013.

The Buckle in the Belt

Dependency on China has only grown. Despite there being serious rifts between the populations of the two nations, for China, this comes down to central Asian geopolitics. Kyrgyzstan controls the Tien Shan mountain range which surrounds the best overland connection between Europe and Asia. As China invests billions of dollars in a global effort to rebuild its land belt of trade, Kyrgyzstan rises as a crucial point of entry between vast mountains. Maintaining a favorable and dependent relationship is therefore essential for Beijing.

The Kyrgyz People

While the world superpowers use the Kyrgyz Republic as a chess piece in the great game of central Asian geopolitics, there is one group that seems left out: the roughly 6 million people living in Kyrgyzstan, 23% of whom still live below the poverty line. Whoever gains control of the government in January 2021 will have to decide how to handle the powerful suitors vying for influence over the country in a way that benefits the Kyrgyz people rather than simply the allies of a particular party or company.

– Scott Mistler-Ferguson
Photo: Flickr

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Child Poverty in Taiwan is Almost Eliminated

Child Poverty in Taiwan 
Taiwan is an island off the coast of China. Globally, it has received praise for its exceptionally low household poverty rate, which is under 1%. While child poverty in Taiwan is rare, further reducing it is a priority for the Taiwanese government.

Measurement Methodology

Taiwan uses an absolute threshold to calculate the poverty rate. The country uses estimated monthly living expenses calculated in each province for its measurement. For example, residents in Taipei, a highly urbanized city, must earn over $337 for them to be over the poverty line. On the other hand, residents only need to earn above $171 monthly on the small island of Kinmen County. Such geographically-adjusted measures help ensure that Taiwanese families in expensive areas can afford basic necessities, including food, clothing and shelter.

Successful Tactics

Economic downturns do not render Taiwan helpless, such as the one in 2013. Instead, the Taiwanese government quickly raised welfare spending to help people who lost their jobs when factories relocated to China. Additionally, Taiwanese banks gave out microloans with extremely low-interest rates to help families start businesses. To this day, organizations outside of the government also participate in the fight against child poverty in Taiwan.

The Taiwan Fund for Children and Families (TFCF) is an NGO dedicated to eradicating child poverty in Taiwan. This fund sponsored 48,601 children in Taiwan, and 66, 417 children abroad. TFCF began helping children in Taiwan in 1964 by building orphanages. It has since introduced Family Helper Programs and other programs to deliver donations to families in need of assistance. Similarly, TFCF has provided thousands of families with cash, supplies, emergency relief, vocational training and house repairs or reconstruction. Already, the TFCF appears to have helped successfully alleviate child poverty in Taiwan.

The global community can learn from Taiwan’s anti-poverty programs, which have almost completely weeded out child poverty in Taiwan. A recent study found that only 6% of Taiwanese children living in poverty — an already smaller group comparatively — experienced persistent poverty compared to 13.8% in the U.K. and 15.9% in Canada.

Room for Improvement

Child poverty in Taiwan is incredibly low due to effective country policies. However, there are a few areas where the state could improve. One problem is that many citizens make just above the poverty rate and are struggling to get by. Some of these families could earn more if they found lower-paying jobs and went on welfare.

Another problem is that a lot of immigrant families, particularly Southeast Asian immigrant families, primarily find low-skilled jobs and experience persistent discrimination. Similarly, many Aboriginal Taiwanese are also victims of racism, which can make it difficult to find jobs. This led to an approximated 60% poverty rate for Indigenous peoples in Taiwan. Every country, Taiwan included, could improve its anti-poverty strategy. Fortunately, the Taiwanese government is actively trying to help many of the groups that experience high levels of poverty.

Taiwan is one of the few countries in the world that retains a low poverty rate, particularly such a low child poverty rate. Taiwan can implement further improvements, but the country is a model for the international community in eradicating poverty.

– Madelynn Einhorn
Photo: Flickr