Archive for category: Economy

Information and stories about economy.

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10 Facts about Living Conditions in Madagascar

10 Facts about Living Conditions in Madagascar

Madagascar is one of the poorest countries in the world, still affected today by the aftermath of colonization and political violence. A history of conflicts has left most of its populace impoverished. These 10 facts about living conditions in Madagascar show some of the larger issues the country is facing, as well as what the future holds for the island.

10 Facts About Living Conditions in Madagascar

    1. More than two-thirds of the population in Madagascar lives below the poverty line, with most living on less than $1.90 a day. Three-quarters of the population live in rural areas, and only 13 percent of the population has access to electricity. The country has one of the lowest Human Capital Indexes in the world at 0.37.
    2. In 2009, Andry Rajoelina led a coup that overthrew the elected president at the time. Ever since then, the political system has been accused of corruption. The judicial system in the country is both slow and weak, and this hampers other systems of the government as well as the business sector.
    3. Madagascar is no stranger to natural disasters, and the island experiences three or four devastating cyclones each year. Cyclones cause massive structural and property damage. Madagascar is one of the countries most at risk of natural disasters in Africa. In 2016, a drought caused food shortages that caused widespread starvation, and this still affects the citizens today.
    4. Problems that plague children in poorer nations are unfortunately just as present in Madagascar. The country has the world’s fourth-highest rate of malnutrition, with 50 percent of children growing up stunted or undergrown. Education is in just as poor a situation. In 2012, approximately 1.4 million children dropped out of school because of political unrest in the region, and the numbers have struggled to rise since. Now, Madagascar has the fifth-lowest education rate in the world.
    5. Eighty percent of the population of Madagascar is employed in the agricultural field. Despite improvements to the economy in some areas, this sector has grown smaller by 0.8 percent every year since 2014. Most farmers are unable to use modern technologies, and weather shocks make farming difficult. However, Madagascar has an excellent climate for growing certain crops like clove and vanilla. Vanilla exports have increased significantly since 2017.
    6. Madagascar is the fifth-largest island in the world. It has a landmass of 587,000 square kilometers and 25.5 million inhabitants. The island is also rich in natural resources, including graphite, coal, quartz and salt.
    7. Madagascar has one of the largest numbers of endemic species on the planet with more than 250,000 on the island. But since the 19th century, the rainforests in Madagascar have been depleted by 80 percent. Eighteen million people in Madagascar depend on natural resources: 80 percent of the population uses the forests from everything from food to medicinal remedies. Conservationism aside, the deforestation in Madagascar represents a threat to the way of life of the people who live there.
    8. In more recent years, Madagascar’s economy has been slowly improving. The economy grew by 5.2 percent in 2018 and has seen similar growth these last five years. Inflation was at 8.3 percent in 2017 but went down to 7.3 percent the next year.
    9. The situation for Madagascar may seem bleak, but aid is currently being provided to multiple of its sectors. Some 12,704 schools have received grants in order to purchase new equipment, and 5.1 million students were also provided with much-needed study materials. Recently, 600 schools helped bring meals to 103,608 children, helping to combat the widespread malnutrition in the country.
    10. Between 2015 and 2017, multiple reforms designed to help the business climate have been implemented, and they have shown results in creating new entrepreneurs. Second Integrated Growth Poles and Corridors Project (PIC2) serves to reduce barriers around investing and business creation. So far, 400,000 businesses and business owners have benefitted from this, and there was an 85 percent increase in the number of new businesses in 2017.

– Owen Zinkweg
Photo: Flickr

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5 Facts About Poverty in Comoros

Poverty in Comoros
Comoros is a group of three volcanic islands located between Africa and Madagascar with a population of just above 800,000. Mount Karthala, which is located on the island of Ngazidja and the bigger of the two active volcanoes in Comoros, has frequent eruptions. The last largest eruption took place in 2005 and caused thousands of citizens to flee. Here are five facts about poverty in Comoros.

5 Facts About Poverty in Comoros

  1. Limited Economic and Trade Opportunities – Comoros relies heavily on its exported goods. The three main crops that are important to the country’s economy are vanilla, cloves and ylang-ylang, all of which people use for perfume essence and essential oils. Most of the earnings from these crops go towards natural disasters that occur regularly, primarily fires and severe weather.
  2. Rapid Population Growth – The population has steadily been growing since the 1970s. There are approximately four births to every one death. According to the World Population Review, the average adult woman has about 4.7 babies. The population should continue rising at an even pace.
  3. High Dropout Rates – Comoros has access to two different types of schools; the primary and secondary school system that France established and the traditional Islamic school system. Despite access to an education program, the dropout rate is continuing to steadily rise. Causes of this rate are teacher strikes from lack of proper pay, student strikes from the continuous school shutdowns and political instability. Students who do finish school and obtain a higher education typically do so in another country and do not return after.
  4. Inadequate Health Care Access – Comoros lacks a public health care system. Despite this, the country has been able to keep many of its illness rates low, including HIV and tuberculosis. Many believe that access to clean water that is available to more than 90% of the country contributed to this. The highest cause of death in Comoros is malnutrition which caused nearly 45.1% of deaths between 2007 and 2017.
  5. Lack of Natural Resources – Deforestation is causing the natural forests to decrease due to the lack of re-growing trees. With the increase in population, agricultural lands have less time to regenerate and food sources are declining as a result. These factors and changing weather patterns are affecting natural resources in Comoros at a rapid pace leaving the country in a vulnerable state. Heavy rains and a decline in forest protection are causing floods and landslides, which cause more damage to already weakening agricultural fields. It also causes soil erosion to silt the coral reefs and disturbs the marine life ecosystem and the livelihood of fishing due to fish being Comoros’ main source of protein.

Solutions

In studying poverty in Comoros, not everything is bad. An NGO called Dahari stemmed from the Engagement for Sustainable Development (ECDD) in 2013 and has since been working in the Comoros islands to provide sustainable agriculture and technology to farmers and increase environmental protection. It provides aid towards controlling the environmental factors, shaping landscapes for future generations and increasing the economy. The organization also uses ecotourism to help manage marine life and natural terrestrial resources. Dahari works closely with local communities to achieve peaceful collaboration and help adapt locals to the new technologies and ways they can increase their agricultural development.

The Comoros government continues to work towards its country’s improvement. Despite its efforts, these five facts about poverty in Comoros show that the rapid rise in population and ecosystem decline that changing weather patterns caused continues to affect the country’s efforts to climb out of poverty. With much-needed help, Comoros can work towards rising out of poverty and work towards becoming a resilient and prosperous country.

– Chelsea Wolfe
Photo: Flickr

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Five Facts About Development in Tajikistan

development in Tajikistan

Tajikistan is a country located on the frontiers between Europe and Asia. This largely unheard of, mountainous country has a population of more than 8.6 million with an average GDP per capita of around $3,200, placing it near the bottom of the global ranking. However, over the past few years, the GDP of Tajikistan has grown between 6 and 7 percent. This article will address five facts about development in Tajikistan, including the challenging areas and opportunities that the country faces.

Five Facts About Development in Tajikistan

  1. Geography: Tajikistan’s geography is impugning its development since more than 90 percent of the country is mountainous. If fact, much of the land lies above 3,000 meters in altitude. Subsequently, the population is largely rural and widely dispersed, complicating infrastructural developments. However, as a result of this landscape, the majority of Tajikistan’s electricity production comes from hydroelectric power. The system is still largely inefficient though, especially in winter months. Users reporting shortages up to 70 percent of the time in winter months. Recent efforts have sought to address the gaps in provisions. In March 2019, the World Bank agreed to finance the rehabilitation of the Nurek Hydropower Plant, which generates 70 percent of the country’s energy demand. The rehabilitation should increase the plant’s winter generation by 33 million kWh, allowing it to meet winter energy demands and become a net exporter of energy in summer periods.
  2.  Government Policy: According to the U.S. State Department, Tajikistan is a country of ‘high risk’ but ‘high reward’ investment. Despite its consistent low ranking on the Freedom House Index, which measures civil and political rights, continual economic reforms have increased its Economic Freedom and promoted more investment. These reforms helped Tajikistan officially join the WTO at the end of 2013 after the changes made in property and investor rights. The 2019 ‘Doing Business’ World Bank report stated that Tajikistan had increased its rank overall by taking steps to participate more in the regional economy. Through the Simplified Customs Corridor agreement, Tajikistan has improved customs clearance with Uzbekistan. Based on the international classification, the poverty rate is projected to fall to 12.5 percent by 2020.
  3. Labor Migration: Due to the lack of employment opportunities, Tajikistan has a negative net migration rate, meaning that there are more people leaving the country than entering it. Most of the migrants are working-age men going to work in Russia. In 2015, worker’s remittances accounted for around 29 percent of Tajikistan’s GDP. But, this dependency means that Tajikistan’s fiscal health dropped from 95.8 percent to 60.3 percent in the period from 2016 to 2017 as a result of Russia’s economic downturn. To increase the opportunities for the workforce, the International Labour Organization has launched a pilot project aimed at strengthening National Skills Development systems as part of the ‘G20 Training Strategy’. Although it only has 1,460 participants so far, the updated frameworks could help increase Tajikistan’s current low productivity.
  4. Gender Disparities: In Tajikistan, women face a number of barriers to succeed economically, gain access to education, find employment or receive healthcare. They receive fewer years of schooling than their male counterparts and earn approximately 60 percent of what men do. However, with a migrating male workforce, female participation in the economy could be beneficial for economic development in Tajikistan. With help from funding from U.N. Women, the Tajikistan National Business Association for Women runs a number of training programs to improve employment opportunities for women. From 2015 to 2018, 3,200 women received training in business and 2,200 women received training in vocational areas. The organization also runs a bi-annual women-only entrepreneurship competition, which received more than 700 applications in both 2016 and 2018.
  5. Border Problems: Tajikistan shares a 750-mile long border with Afghanistan, one of the world’s largest opium producers. Consequently, illegal drug trafficking in Tajikistan is estimated to be worth around 30 percent of the GDP. However, the Project for Livelihood Improvement in Tajik-Afghan Cross-border Areas (LITACA) is one of a number of projects seeking to enhance cross-border cooperation between Tajikistan and Afghanistan, especially for women entrepreneurs. The Government of Japan finances this initiative, and the UNDP Tajikistan implements it in order to add stability and security to the region and ease border tensions. This program introduced around 25 socio-economic projects between 2014 and 2017, boosting economic growth to 45,000 people on both sides of the border. The project improved direct access to “schools, hospitals, irrigation, drinking water, energy supply, roads and bridges” for more than 388,000 people.

Tajikistan faces a number of barriers to its economic development. However, these five facts about development in Tajikistan show that important work is being done. There are many opportunities for growth. Economic reforms and continued investment could change the lives of the hundreds of thousands affected by poverty.

– Holly Barsham
Photo: Unsplash

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Exploitation of Filipino Overseas Domestic Workers

Overseas Domestic Workers
In the 16th century, Ferdinand Magellan claimed the islands of the Philippines as the property of Spain. For hundreds of years, colonizers exploited the people of the Philippines. Though the Philippines became an independent nation in 1946, the effects of long-term colonial rule are still clearly present. Today, many Filipino people, and in particular women, must become overseas domestic workers to provide for their families.

The Philippines in Numbers

The Philippines’ economy is highly dependant on the global market. Over a fifth of the country lives in poverty and one-third of children grew up with stunting from malnutrition. Though the government attempted to expand access to education, children in the Philippines only live to achieve 55 percent of their potential productivity, according to the World Bank’s Human Capital Index. Wealth in the Philippines also does not have equal distribution, and it is nearly impossible for those in lower classes to become financially stable. This leaves them desperate for any opportunity to pull themselves out of poverty.

Because of this bleak economic situation at home, millions of workers in the Philippines seek jobs elsewhere, then send the money they make to their impoverished loved ones at home. While the country celebrates this practice, the government endorses it and it may provide families with some economic security, this system leaves both overseas domestic workers and their families vulnerable to trauma. It also frequently perpetuates cycles of poverty.

The Horrific Treatment of Domestic Workers

In wealthier places like Kuwait, Hong Kong and Italy, domestic labor is in high demand. Millions of Filipino workers – mostly young, able-bodied women – travel thousands of miles from their homes to become maids, nannies or housekeepers for the foreign elite. These women often have a good education but lack the resources necessary to successfully navigate the global marketplace. They frequently find themselves vulnerable to exploitation and abuse at the hands of their privileged and well-connected employers.

A 2011 report from the Philippines’ Committee on Overseas Workers Affairs detailed the horrific treatment of domestic workers from the Philippines in Saudi Arabia. The report noted that physical abuse and rape of overseas workers was rampant in Saudi Arabia. Seventy percent of Filipino women working as domestic helpers in Saudi Arabia endure both physical and psychological violence. Despite this, until very recently, workers from the Philippines continued to enter the country as domestic servants. In January 2019, Saudi authorities executed a Filipino woman for killing her employer after he had allegedly attempted to rape her. After this event, both countries barred Filipino workers from employment in Saudi Arabia.

While the treatment of these women is absolutely deplorable, their families in the Philippines also suffer due to this system of labor. Mothers are often unable to return to their young children for several years. This leaves families with deep scars from which it is wildly difficult to recover. While many initially believed that this may lead to increased gender parity in parenting, with fathers being more involved in their children’s lives, the burden of childcare usually falls on poor female relatives, who must sacrifice their time and education to care for their younger siblings, cousins, nieces or nephews.

What to Do to Protect Workers and Their Families

Countries can enact legislation to ensure that workers have protection from abuse at the hands of their employers. In 2016, Singapore enacted the Employment of Foreign Manpower Act in order to protect the well-being of foreign employees. This law ensures that employers give them a salary, work hours and overtime, rest days, holidays, annual leave and sick leave.

Beyond legislation, non-governmental organizations can do plenty to ameliorate the lives of domestic workers. KAKAMMPI (the Association of Overseas Filipino Workers and Their Families) is one of these organizations. Its mission is to “empower Overseas Filipino Workers and their families through integrated services and programs such as organizing, advocacy, campaign, gender responsiveness and partnership projects.”

The organization provides workers with several different types of support. It provides counseling for those working through the stress from either themselves or their loved ones being overseas. It assists victims of abuse in acquiring legal services and welfare. KAKAMMPI also focuses on capacity building projects throughout the Philippines so that vulnerable people no longer feel that they have to jeopardize themselves to ensure the safety of their loved ones.

Ultimately, people have done little research on how effective overseas domestic workers from the Philippines are at lifting their families out of poverty. However, most accounts indicate that few actually succeed, and most have little money and psychological wounds at the end of it. The best way to prevent the trauma that workers feel after leaving their families for years while facing potentially brutal and abusive employers is to work toward bettering the economic status of the Philippines. Improving educational systems and health care in the nation are other important steps. If there are jobs and opportunities at home, families will not have to make the difficult choice to separate and put their safety at risk.

– Gillian Buckley
Photo: Flickr

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7 Facts About Ethiopia’s Economy

Ethiopia's Economy
Ethiopia is the second-most populous country in Africa with an estimated population of 112 million people. Ethiopia also has the fastest growing economy on the continent and is located on the east coast. In 2015, the World Bank reported 23.5 percent of Ethiopia’s population to be living under the national poverty line, however. As of 2019, its GDP is expected to grow between seven and eight percent in the next year in large part due to Prime Minister Dr. Abiy Ahmed Ali, who proposed large scale economic reforms in June 2018, two months after assuming office. The following facts about Ethiopia’s Economy give a closer look at the country’s development in recent decades.

7 Facts About Ethiopia’s Economy

  1. Prior to 2018, the state primarily controlled the Ethiopian economy, which was in line with the beliefs of its dominant political coalition, the Ethiopian People’s Revolutionary Democratic Front (EPRDF). In 2018, however, Prime Minister Dr. Ali, chairman of the EPRDF, announced that it would allow private investors into some of its monopolies, beginning with select airlines, electricity and telecommunications. Ali and the EPRDF found this shift necessary to spur economic growth according to the government.
  2. Agriculture, textiles, minerals and metal processing are the largest industries in Ethiopia. According to the CIA World Fact Book, the country can trace 40.5 percent of its GDP to the export of coffee, vegetables and sugarcane. Recently, foreign investment in flower, wine and textile industries have become major contributors to the Ethiopian economy as well.
  3. Despite this, Prime Minister Ali has declared his intention to move Ethiopia’s agriculture-based economy into manufacturing, which he announced in a national plan titled Vision 2025. The goal of the plan is to create more than two million jobs and grow the manufacturing industry to 25 percent of Ethiopia’s economy. The idea is for Ethiopia to position itself as a viable contender for low wage jobs to foreign companies in need of labor.
  4. Infrastructural development is also an integral player in the expansion of the Ethiopian economy. Vision 2025 also details the timeline for the creation of 10 new public industrial parks as well as six others to be completed by private developers, bringing at least 60,000 jobs to the area. The sites will receive supplementation in the form of free water, subsidized rent and electricity. To this end, the government has created the Industrial Parks Development Cooperation to oversee the project, and communicate with potential investors. This initiative has been rather controversial to date, however. Strikes erupted at Hawassa Industrial Park, which opened in 2016, due to low wages and unsafe working conditions.
  5. Another significant infrastructural development has been the light rail, the first transportation system of its kind in sub-Saharan Africa. Since its completion, the metro has allowed more than 60,000 people easier access to urban centers where they are more likely to find work or able to attend school for $.027 a ride.
  6. Ethiopia’s potential as an energy provider superpower can not only be seen by its light rail, which relies on hydropower, but also by its large stake in the Ethiopian Renaissance Dam, which once completed, will be largest in the continent. It has been under construction since 2011 but will be able to generate 6000MW of electricity, serving not only Ethiopia’s water and hydropower needs but those of 10 other countries as well.
  7. As a rising global economic powerhouse, Ethiopia also has a great interest in expanding its tourism industry. With multi-billion-dollar investments spread across industrial parks and transportation, Prime Minister Ali announced his intentions to no longer African citizens require visas to enter the country. The plan to expand the Bole International Airport so it can serve 22 million people, more than triple the number it accommodates today, accompanied this.

The economic reforms and rapid, large scale infrastructural development happening in Ethiopia today are a promising start to reducing its poverty levels worldwide. Internationally, others recognize Ethiopia’s efforts too; the World Bank pledged $1.2 billion of support in 2018. These seven facts about the Ethiopian economy highlight the government’s rightfully ambitious initiatives— sure to result in a more advanced country supported by the creation of hundreds and thousands of jobs it requires to continue to thrive.

– Jordan Powell
Photo: Flickr

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Education in Venezuela: Childhood Learning

Education in Venezuela
The Council of Foreign Relations refers to Venezuela as a failed petrostate, or as a nation struggling economically—and, as a result, socially—due to extensive reliance on a once successful, now-fractured petroleum trade. In 2015, global prices plummeted to less than $49 per barrel of oil. Just a year earlier, the average was $93 dollars per barrel. Since then, the Venezuelan economy has experienced inflation at record high rates—the highest at 2,688,670 percent in January 2019. This led to food and vital medicine shortages across the country. Almost 90 percent of the country’s population now lives in poverty, and education in Venezuela has experienced a major decline.

The economic situation this country has experienced since 1990 is almost entirely responsible for the lack of funding and resources that the country allocates to social welfare programs—particularly those supporting electricity, running water and food security in education. Despite worldwide support for leadership change in Venezuela while it is desperately in need of humanitarian assistance and guidance, people are doing very little to address the needs of individual citizens and the currently under-covered establishment of education in Venezuela.

Why Venezuelans Cannot Stay in School

Under the current system, basic education in Venezuela is compulsory and free–in recent years, however, the Venezuelan government has failed to follow through in ensuring these elementary level schools are in stable condition to foster a learning environment. As the disadvantages of remaining in Venezuela continue to increase, a growing number of Venezuelans have begun immigrating to countries like Colombia and Brazil in search of a better life. The conditions for learning in Venezuela are so dire. UNICEF reported on May 31, 2019, that up to 3,000 Venezuelan children in one region of the country cross daily into neighboring Colombia to get to and return from their school in the Colombian border city of Cúcuta. Seven thousand more students with their families have already left Venezuela behind and migrated to Colombia to live and learn there full time.

The quality of consistent and scheduled education in Venezuela has declined drastically in recent years. Country-wide power outages that lead to the cancellation of classes for days and weeks on end discourage many people in Venezuela from trusting the educational system of their country. While the Ministry of Education in Venezuela has yet to report on the frequency of power outages in Venezuelan schools, a Reuters article found that two major blackouts in March 2019 led to the government canceling classes for a week at the beginning and end of that month. Though classes would normally end at the start of July, Venezuelan Education Minister Aristibulo Isturiz said the school would be open until the end of July to account for missed educational days.

UNESCO has found Venezuelan youth are not remaining in school as they did in years past. In 2009, the gross enrollment ratio for primary students in Venezuela was 101 percent. In 2017, that ratio became 93.37 percent. This is alarming due to the fact that nine years of education (ages 7-14) are legally compulsory by decree of 1880 Venezuelan President Antonio Guzman and solidified through the creation of the Ministry of Public Instruction and the Bolivarian social program Mission Robinson. Though there should be no obstacles keeping children of this age in school, on average 7 percent do not attend. Secondary education adolescent gross enrollment dropped from 92 percent in 2013 to 83 percent in 2017. Between 2013 and 2017, the number of out-of-school children grew by 200,000 and the number of adolescents no longer in Venezuelan schools increased by 150,000.

No Food, No School

This overall decrease in quality also has to do with the fact that children who made sure to attend for the sake of receiving at least one meal per day are no longer receiving a meal at school. At the Santo Anglo School an hour outside Caracas, the nation’s capital, schools have adjusted their protocol so that they are not responsible for feeding students anymore. They ask parents to feed children breakfast before they go to school and end school around 11:45 a.m., which is just before lunch so they do not have an obligation to provide it.

These issues persist in all parts of this country. Francy Rodriguez, a teacher in Venezuela’s capital, told an Al-Jazeera reporter that, “The children have no food at home and they come here to at least get one meal. But we haven’t had food for a year because the kitchen is broken. The children faint during physical education class because their stomachs are empty.” A Venezuelan regional president to a chapter of the National Federation of Educational workers stated that “Hungry people aren’t able to teach or learn. We’re going to end up with a nation of illiterates.”

Efforts to Fix the Crisis

In a joint effort led by the International Organization for Migration and the office of the United Nations High Commissioner for Refugees, 95 worldwide organizations that strive to end migrant crises will be working to solve the Venezuelan migrant crisis by following the Refugee and Migrant Response Plan of 2019. This plan provided “a total of USD 738 million … for the period January – December 2019, including USD 315.5 million for Colombia, USD 117.3 million for Ecuador, USD 106.4 million for Peru, USD 56.6 million for Brazil, USD 35.7 million for the Southern Cone, USD 34.8 million for the Caribbean, USD 21.7 million for Central America/Mexico and USD 49.7 million for regional (Venezuela).”

In addition, UNICEF advocates are appealing to allocate around $70 million to the Venezuelan cause, with a focus on assisting local and national governments within that region to improve the quality of “drinking water and sanitation, protection, education and health services for uprooted children and those in vulnerable communities.” Also, the World Food Programme plans to expand its initiative supplying food in schools that are not meeting healthy standards to Venezuela. In doing so, it provides food security so that children do not feel obligated to enter the labor force at an age they should be learning and growing their intellectual capabilities.

– Fatemeh-Zahra Yarali
Photo: Flickr

 

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The Industrialization of the Ivory Coast

Industrialization of the Ivory CoastAlthough the Ivory Coast has a high poverty rate of 46 percent, its gross domestic product growth rate ranked number 10 out of 224 countries. High GDP growth implies increased productivity, which also leads to industrialization. The Industrial Revolution caused productivity to skyrocket along with mass industrialization and thus brought the poverty rate down. The industrialization of the Ivory Coast might be the key to eliminating the high poverty rate.

The Current Economy of the Ivory Coast

Rising prices of cocoa in 2018 and increased crop production marked a positive turn for the Ivory Coast since at least two-thirds of its population works in the agricultural industry. The Ivory Coast is the world’s biggest producer of cocoa. Although the amount of cocoa in the market surprised even analysts, the Ivory Coast must still transition from agriculture into manufacturing and service industries. This follows the same pattern of evolution that the U.S. and Japan took as they were industrialized. The transitional period will be long and gradual as industrialization is a major change to an economy.

To sustain one of Africa’s fastest-growing economies, the government is investing more than $7 billion in infrastructure between 2018 and 2023. Most of the investment was directed to the capital and major port city Abidjan. “We want to be an emerging country but to achieve that, we will need high-quality infrastructure to support the economy,” states Amede Koffi Kouakou, Minister of Economic Infrastructure. Kouakou explains work must be done to fix the roads damaged by floods. A train network and bridges to Abidjan are other investments currently underway. The roads are in poor condition. However, an infrastructure boom is a sign that the country is prepared to become an emerging economy.

The Benefits of Industrialization

Japan presents an industrialization success story. From the 1880s to 1970, Japan grew rapidly and became a powerful economic leader by the 1980s. Japan is now highly developed and is the third-largest economy in terms of nominal GDP, just behind the European Union and the United States. The process of becoming one of the most powerful economies took enormous effort and focused on infrastructures, such as building roads, schools and hospitals. Japan decreased its poverty rate from an unusually high number, the exact figure is unknown, to 16 percent as of 2013. In comparison, the U.S. has a poverty rate of about 15 percent. Ultimately, the progress Japan made originated with industrialization.

Job creation would be a major benefit of the industrialization of the Ivory Coast. Poor farmers flock to jobs and receive training. In turn, they become a valuable asset to companies and the particular industry. Another benefit is the advancement in farming equipment and machinery. These advancements will increase productivity and improve the quality of crops. This results in a more automated agricultural industry where machines do the arduous work and leave extra income to buy products and services.

“In developed countries, economic growth is driven by industrialization underpinned by strong manufacturing. We need to engage African leaders and policymakers to promote industrialization on the continent if we are to accelerate Africa’s transition into a middle-income continent,” states Joseph Mungarulire, director-general of the National Industrial Research and Development Agency in Rwanda. Mungarulire explains that Africa is mostly supported by agriculture, not industry, which leads to slow industrialization and high poverty.

A Pre-Requisite for Industrialization

Industrialization of the Ivory Coast must begin with a strong, stable government that welcomes private investment whether abroad or within its borders. Thankfully, China sees opportunity in investing in Africa. By 2018, China had invested more than $60 billion in Africa. Part of this investment is for building railroads, a simple but life-changing idea that brings jobs and people, just as it did in the U.S. from the 1830s to 1860s. The industrialization of the Ivory Coast, along with investments by the public and private sector, might be the solution to reduce poverty in the country.

– Lucas Schmidt
Photo: Flickr

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Escaping the Resource Curse: The Impact of Diamonds in Botswana

Diamonds in Botswana

Botswana, located in southern Africa, has a population of 2 million. The country has achieved an impressive record of economic development and poverty reduction over the last half-century. In 1950, Botswana’s GDP per capita was $1,344. Today, it is $15,015, making Botswana a middle-income country. As the second-largest exporter of diamonds, the prudent economic management of diamonds in Botswana is responsible for much of this growth.

The Resource Curse

Paradoxically, many countries that discover large domestic reserves of natural commodities like petroleum, gold or rare-earth metals experience economic stagnation or decline. A recent paper by the International Monetary Fund explains that this trend often occurs because of commodity-dependence. When a country is heavily dependent on just one commodity export and the price of that commodity declines, there is no other revenue stream to salvage the economy. However, Botswana is a standing reproach to this trend. Judicious fiscal policy has allowed Botswana to reap the rewards of their vast diamond reserves while avoiding many potential setbacks.

Botswana’s Fiscal Prudence

Due to its capital intensive nature, the employment potential of mining is Botswana has always been limited. While diamonds make up 40 percent of Botswana’s GDP and 90 percent of Botswana’s exports, diamonds in Botswana only account for four percent of employment. As a result, the government has had to find ways to distribute the wealth generated from diamond exports across the country’s population.

Botswana has been lauded for the effective management of its diamond supply. In particular, the country has employed two strategies to ensure that its diamond exports promote sustainable, egalitarian economic growth: decoupling expenditure and revenue and investing in economic diversification.

First, Botswana has chosen not to automatically increase government spending during economic booms. Instead, when diamond prices rise and government revenue increases, Botswana often saves cash to cushion the blow during price shocks. This long-term economic mindset has prevented recessions. For example, the World Bank writes that when diamond revenues fell in 1981, Botswana used a rainy day fund to avoid any drastic decrease in government expenditure.

Botswana uses six-year National Development Plans to outline their expenditure levels. These plans involve feasibility checks to make sure that investment projects are sustainable even if government revenue falls. Once the National Development Plan has been approved, no additional projects can be added without a majority vote from parliament. These mechanisms work toward assuring that Botswana has enough reserve cash if its diamond reserves falter.

Economic Diversification

The second strategy Botswana uses to grow its economy is diversification into sectors other than diamond mining. A variegated economy is less vulnerable to commodity price shocks. Botswana has invested much of its earnings from diamond exports into incentive structures that encourage manufacturing and agriculture. In 2005, Botswana created the Business and Economic Advisory Council (BEAC) tasked with identifying barriers to diversification and crafting responsive action plans. As a result of this focus, the Botswanan economy has continued to grow even when global diamond prices fall. What is more, manufacturing today comprises 14 percent of Botswanan GDP and is more diversified than it was at independence. Even though Botswana has relied on diamonds for the last few decades, manufacturing growth in Botswana outpaced the sub-Saharan African average from 1970 to 1996.

Botswana’s Progress

Good governance has propelled Botswana from a low-income to a middle-income country. In 1985, 59 percent of the population was living in poverty. Today, that percentage has dropped to 19 percent. In 1966, 60 percent of Botswana’s government expenditure came from foreign aid. Today, only three percent of expenditure comes from foreign aid. As Botswana continues to aim for economic diversification and prudent fiscal management, they stand as an impressive example of the impact that judicious economic policy can have on a vulnerable population.

– Abraham Rohrig
Photo: Flickr

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A Look at India’s Center for Policy Research

India's Center for Policy ResearchEstablished in 1973, the Center for Policy Research (CPR) is a non-partisan nonprofit think tank designed to produce better public policy that shapes Indian life. Its unique team draws from a diverse set of occupational backgrounds to confront social issues with a multi-dimensional lens. Some highlights include Shyam Divan, Senior Advocate for the Supreme Court of India; Chandrashekhar Dasgupta, former Indian ambassador to the EU and well-known historian and Vinita Bali, former CEO of Britannia Industries Ltd.

India’s Center for Policy Research, located in the heart of Delhi, divides its research into five main categories:

  1. Economic policy
  2. Environmental law and governance
  3. International relations and security
  4. Law regulation and the state
  5. Urbanization.

The following will breakdown these subgroups in an attempt to decipher just exactly what the organization supports.

Economic Policy

The think tank recognizes the necessity for growth and productivity for the maintenance of a healthy economy. What makes it stellar is its commitment to equity

For example, one of their most recent projects involves the analysis of India’s “Special Economic Zones” and who truly benefits from their implementation. The organization’s non-partisan and nonprofit approach liberates them from the bias of special interest groups that oftentimes heavily influence the outcomes of these “case studies.”

These sentiments are echoed in another of the group’s economic policy projects. It is a campaign to officially define the characteristics of the country’s middle class. This could serve as a critical step in enhancing the rights of millions of Indian citizens.

Environmental Law and Governance

The goal of India’s Center for Policy Research is to establish a clean and sustainable environment. To address this, the group focuses their programs on pivotal topics such as Delhi’s air pollution, water use in rainfed agriculture, overall water policy and state action plans on environment sustainability.

International Relations and Security

The CPR’s international relations and security division is more in tune with typical slants on the subject than the other divisions. But, it still has some standout components. In the quest to understand India’s past and present role in the shifting global order, the think tank vows to research international relations from traditional and alternative perspectives. This aspect is very important as it deviates from the usual one-dimensional historical viewpoint.

Law, Regulation and the State

This sector of the CPR delivers a sort of institutional examination of the country of India. The purpose is to identify the relationship between laws, institutions and Indian life. It consciously aims to figure out the implications of these entities on basic rights such as land and intellectual property.

This category unites the others to land rights and dialogues on Indian politics. The hallmark project in this section is labeled “Balancing Religious Accommodation and Human Rights in Constitutional Frameworks.” This project is especially important because it targets issues with the country’s constitution that suppress rights, providing a direct opportunity to rework the country’s unequal beginnings.

Urbanization

This final subset is focuses on the rapid effects of urbanization currently taking place in India. The process of urbanization comes with a range of different challenges such as personal issues with governance and citizenship, to material issues regarding infrastructure. Because of this, urbanization holds a very multifaceted array of projects. These aim to work in unison to uncover the connection with urbanization and its effect on how people engage with the state.

Overall, India’s Center for Policy Research is tackling many different issues and challenges that India faces today. If it helps enact effective policies in its five focused areas, it could help boost India’s already growing economy and even eliminate its national poverty.

– Liam Manion
Photo: Flickr

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The Save the State Protests in Liberia

Save the State Protests

Liberia, or officially the Republic of Liberia, is a small country located on the western coast of Africa. Coming from a rich history of international involvement, the nation holds the title of the first African state to declare independence and, therefore, is the oldest African modern republic. The Save the State protests are currently gripping Liberia.

On June 7, 2019, in the capital city of Monrovia, ongoing tensions and disappointment in the current regime reached a head, resulting in the largest anti-government protest since the end of the civil war in 2003. This was the first of the Save the State protests, which a coalition of politicians, professionals, students and regular citizens called the Council of Patriots organized.

The main goal of the demonstration was to protest high inflation rates and governmental corruption. These two points of frustration have been amplified during the current presidential administration, as these were the two major campaign promises behind the 2018 election of President George Weah. However, these issues merely represent the breaking point of decades-long tensions and it is necessary to understand the socio-economic situation in Liberia which has caused so much unrest, especially as protests continue.

A Damaged Economy

Liberia has continued to feel the effects of two civil wars that took place between 1989 and 2003 and resulted in the death of a quarter of a million people. The wars crippled the Liberian economy by 90 percent and the economy has struggled to fully recover ever since. It suffered another blow with the outbreak of Ebola from 2014 to 2015 that claimed the lives of thousands.

After these crises, foreign aid flowed into the country to help in the restoration of the economy and offer assistance to those struggling in the aftermath. But, as international funding began to dissipate – most recently with the withdrawal of the U.N. peacekeeping mission in 2018 – the country has struggled to develop on its own.

The country continues to rank among the poorest nations in the world, according to the Central Intelligence Agency’s World Factbook. The fact that inflation reached a record high of 28.5 percent in 2018 and an International Monetary Fund growth rate projection of only 0.4 percent in 2019 compounds this.

Disillusioned Voters

The socio-economic situation of sustained, long-term poverty and poor living conditions due to rising prices and financial mismanagement have escalated since the election of President Weah. This is as a result of the lack of changes he made following his campaign promises. His connection to the people of Liberia as a former football star who achieved international acclaim initially spurred people’s excitement for his presidency.

However, hope for improvement has soured as prices continue to rise, fiscal growth continues to slow and the president’s personal wealth appears to be growing. This dissatisfaction brewed alongside a huge scandal where $102 million in new banknotes was allegedly missing. Although no one found evidence to support this claim in an investigation, people cited accuracy and completeness as major issues in the central bank’s records.

As 64 percent of Liberians continue to live below the poverty line and the people have planned more Save the State for the coming months, it is clear that long-term poverty engenders long-term instability and, therefore, a constant state of tension. This kind of unstable environment becomes a powder keg for tensions to erupt, making the future of these peaceful protests uncertain.

Despite President Weah’s opposition to the demands of the protestors thus far, their message remains clear: they want to save their state and improve the lives of their compatriots. It is a prime example of citizens wanting their voices be heard.

– Alexandra Schulman
Photo: Flickr