Archive for category: Economy

Information and stories about economy.

,

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

,

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

, ,

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

,

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

, ,

Top 10 Facts About Living Conditions in Cuba

Top 10 Facts about Living Conditions in Cuba

The rise of Cuba’s Marxist-Leninist regime is situated in the context of the nation’s history, leadership and government. Cuba remains one of the few one-party socialist government bodies in the world. Living conditions for the people of Cuba were on par with European levels prior to the Cuban revolution of 1959, led by Fidel Castro and his socialist constituents. Following the overthrow of then-Cuban authoritarian President Fulgencio Batista, specific metrics of living conditions from the macroeconomic, sociopolitical and sociological perspectives weakened and consequently placed the people of Cuba under enormous political and financial strain.

Presently, little empirical evidence suggests that the top 10 facts about living conditions in Cuba are contextually related to Cuba post-revolution or pre-revolution. Living standards measure the general wealth, prosperity and quality of life for any given national population. Economic and non-economic factors that contribute to the assessment of living standards include but are not limited to: consumption, GDP per capita, income inequality, regular access to food and water, housing, crime rates, education, healthcare, social services, environmental health and economic freedom.

In assessing the top 10 facts about living conditions in Cuba, the country’s political climate, past and present, plays an important role in understanding living standards and how they affect the people of Cuba every day. Moreover, the normalization of relations between Cuba and the United States insofar as mainstream tourism carries with it the caveat of unreconciled embargoes placed on Cuba’s economy. In addition to living standards, present and planned solutions serve to incentivize U.S. lawmakers to revisit relevant legislation that empowers Cuba to trade, produce and export with more sovereignty. Until the issue of U.S. embargoes is reconciled or at the very least ameliorated, living standards in Cuba will cease to improve. With Cuba’s past and present contexts in mind, here are the top 10 facts about living conditions in Cuba:

  1. Cuba’s GDP has increased each year since its historic low of $5.69 billion in 1970 to a record-setting $87.13 billion in 2015. The country focuses much of its exports on tourism, construction, transport and agriculture. As of 2016, Cuba exported $1.18 billion worth of goods and services and imported only $6.73 billion. This denotes a negative trade balance between Cuba and the rest of the world.
  2. The Human Development Indicators (HDI) rank Cuba 73 in the world with an index of .777 according to the United Nations Development Program. This suggests Cuba has high human development. Cuba maintains a high HDI because of its allegiance to a centrally planned economy. Government ownership of land, labor and capital facilitates total control over goods/services production.
  3. Women in Cuba represent a large and growing faction within politics, labor and education. According to the American Association of University Women, they “make up 66 percent of the labor force in Cuba, and more than 70 percent of professionals in the country are women” (AAUW). Women and girls in Cuba have a long way to go as far as equality is concerned. However, female representation in political office maintains 43.6 percent of the 614 member unicameral legislature.
  4. Women have a significantly higher gross enrollment ratio as a percentage in education compared to their male counterparts. In 2008, women represented nearly 150 percent GER compared to men at just 90 percent. In the years following, women continued to dominate in the field of college enrollment. As of 2016, the parity of gender-based gross enrolment as moved towards equilibrium.
  5. The infant mortality rate has fallen from 80 per 1000 live births in 1950 to 5 per 1000 in the modern-day due to Cuba’s centrally planned government system. In 2015, over 10 percent of Cuba’s GDP, or $9.2 million, went to public health. Specifically, funding went to providing more staff, supplies and medicine to hospitals and clinics across the island. Additionally, Cuban Health Minister Roberto Morales Ojeda focuses his efforts on public health measures, including potable water, adequate diet and food supply and regular free checkups for expecting mothers and children.
  6. The construction of new housing units in Cuba has fallen from 42,940 in 2000 to 31,103 in 2012. This indicates a monumental challenge for Cuban residents to build and reside in safe, structurally sound homes. In response, the Cuban government shifted its focus onto the construction industry in order to attract more foreign investment. They have implemented 10 construction sector projects across Cuba, proposed in the 2016-2017 Foreign Investment Portfolio during the 34th Havana International Trade Fair. This is an economic development program in the works. No data has been released on its return or growth as of yet.
  7. The rapprochement strategy nicknamed “Cuban Thaw,” initiated by former President Barack Obama in 2014, is intended to normalize diplomatic relations with Cuba after a half-century of hostility and restricted trade. Eased restrictions on travel and remittances allowed Americans to send unlimited sums of money to Cuba. Additionally, U.S. citizens to travel to Cuba for religious and educational purposes. As a result, the tourism sector strengthened and put more money into the pockets of Cuban business owners. Despite President Donald Trump’s recent attempts to stomp out the Cuban Thaw, more than 4.7 million visitors pumped more than $3 billion into the Cuban economy at the end of 2017, according to U.S. government figures.
  8. Hurricanes remain a threat to Cuba’s agricultural industry. Flash floods destroy coffee bean crops and disrupt communications and citizen access to electricity. In order to address the economic and sociological needs of Cuban citizens, a Spanish NGO named Hombre Nuevo, Tierra Nueva, works to aid farmers in rural areas, provide medicine to dispensaries for children and the sick and improve the food supply for the elderly.
  9. La Libreta, a 50-year-old food rationing system, is still operational in order to control food supply for Cuba’s population. This system allots a certain amount of rice, bread, milk, matches, sugar and oil depending on the individual’s age, gender and income.
  10. There are several subsidized public transport options for tourists and Cuban citizens, owned and operated by the Cuban government. Tourists tend to use Viazul, the premium bus service offered by the Cuban government. Viazul is different than other more mainstream public transport in that it has air conditioning and provides a more comfortable experience for passengers. Meanwhile, more accessible and affordable options leave much to be desired for Cuban citizens.

The top 10 facts about living conditions in Cuba concern the nation’s political history, present leadership and the possibility of civilian intervention insofar as to move the dial in favor of normalizing relations between the U.S. and Cuba. Presently, the U.S. embargo on Cuban trade creates disparate equality on the basis of income, GPD per capita, GDP by nation and GNP.

– Nicholas Maldarelli
Photo: Flickr

,

10 Facts about Poverty in Mongolia

Facts about Poverty in Mongolia
Mongolia experienced a relatively democratic revolution in the early 1990s. As a result, the country formed a multi-party system, wrote a new constitution and even created new means of economic growth. Mongolia is abundant in resources and its economy has received support from the country’s established mining and agricultural sector. The country also boasts some successes as it has worked to pass a variety of new legislation. For example, legislation that strengthens inclusive governance and reduces gender disparities. Despite engagement in its future, there are still challenges of continuing poverty in Mongolia. Furthermore, Mongolia faces a lack of access to equal opportunities that would improve livelihoods. Here are 10 facts about poverty in Mongolia which present some of those challenges in more detail.

10 Facts About Poverty in Mongolia

  1. There has been a decrease in the prices of coal and copper – These were previously two of Mongolia’s main export products. This has influenced the decrease in growth percentage over the last decade. Compared to 11.6% growth in 2013, Mongolia has been experiencing decreasing economic growth in the single digits. In 2016, the growth percentage was at a low of 1.2%.
  2. Development growth is reducing poverty rates – Though there has been a recent economic downturn, Mongolia’s overall development growth has helped to reduce poverty rates in the country. Poverty rates decreased from 38.7% in 2010 to 27.4% in 2012. That difference is greater than 11%.
  3. Poverty rates are barely decreasing – According to an estimation that the National Statistical Office and the World Bank conducted, Mongolia’s recent estimation in 2018 shows that 28.4 percent of the population is below the poverty line. This is a decrease of slightly over one percent from the 2016 estimate.
  4. Income inequality is continuing the cycle of poverty – What continues to reinforce poverty in Mongolia is its income inequality. Poverty rates are higher in rural areas in comparison to urban areas at 35.5% versus 23.2%. Subsequently, many people move to Ulaanbaatar. That is Mongolia’s most densely populated city, home to 60% of the population. The living conditions in the outskirts of the city lack basic services, resulting in a lower quality of life. For example, sanitation or primary education is not available there. Additionally, jobs in the larger city require more qualified skills which newcomers do not have. With these factors, poverty rates are constant and unemployment rates stagger in Ulaanbaatar.
  5. Rural areas lack access to sanitation – In urban areas, two-thirds of the population has access to working sanitation. However, in rural areas, only 36% of the population has access. In the poorest households of rural areas, slightly over 10 percent have access to those resources.
  6. The “100-Day Plan” aims to improve the economy – In April 2014, Mongolia’s prime minister launched a “100-day action plan” intended to boost the economy. The plan has a 50-point agenda that covers various areas of the economy such as manufacturing and the development of small businesses, to lift more people out of poverty. An economic council oversees the action plan, jump-starts the projects and reports back to the Prime Minister. The plan works to address current needs but the country will need a sustainable strategy to benefit the economy and populations long-term.
  7. People who escaped poverty are in danger of becoming impoverished again – Even those who make it above the poverty line in Mongolia are vulnerable to slipping back under. In fact, this is a sign of unsustainable economic support. The National Statistical Office noted that this is due to the consumption level of people who get out of poverty being at the bare minimum. Its report presents that those who were above the poverty line in 2014 returned to poverty in 2015 and 2016. This was due to sudden and negative socioeconomic decreases.
  8. There is a lack of educational opportunities – Families living in poverty, especially in rural areas, have trouble finding consistent and equal educational opportunities for their children. However, organizations like UNICEF are impacting changes in education among all students. The Basic Education Programme has assisted the Mongolian government in providing socioeconomic services to families in poor regions. Additionally, the program has helped to reduce secondary school drop-outs by 68%.
  9. Infant mortality is high – A vast household survey conducted in 2010 uncovered that infant mortality rates in rural areas are double that of urban areas. Additionally, children in poor households are three times more likely to be underweight than children in wealthy households. Growing up below the poverty line can influence a Mongolian child’s survival rate.
  10. Urban area populations are growing which can result in a geographical transfer of poverty rates – The World Bank stated that between 2016 and 2018, the poverty rate decreased by four percent in rural areas, though the rate is still high. It also increased by 0.1% in urban areas. Poverty is highly concentrated in these urban areas.

Looking to the Future

These 10 facts about poverty in Mongolia show that the country’s transition has come with many struggles in its fight to better people’s livelihoods. However, as the country gains more income, there is a chance for more diverse opportunities in job placement which will raise economic growth. As long as poverty-reduction measures are included in the development of the country, poverty rates can decrease in the future.

– Melina Benjamin
Photo: Pixabay

,

10 Facts About the Recession in Iran

10 Facts About the Recession in Iran

Iran, a southwest Asian nation of over 81 million people, currently struggles with a dire recession. Iranians face a combination of inflationary pressures and economic stagnation, known as stagflation. Listed below are 10 facts about the recession in Iran:

10 Facts About the Recession in Iran

  1. Sanctions – The recent resumption of U.S. sanctions has taken a large toll on Iran’s economy. Sanctions contributed to a gross domestic product contraction of 3.93 percent in 2018 after a GDP growth of 3.73 percent the previous year. The sanctions particularly target oil exports, Iran’s primary revenue stream. A BBC report states that Iran’s oil trade has lost $10 billion in the past six months because of sanctions.
  2. Oil Dependency – Iran contains the fourth most crude oil reserves in the world, which has led to a volatile economy based on petroleum. Oil was a boon to Iran’s economy in 2016, a year in which the country witnessed a 12.52 percent GDP growth. However, as the World Bank notes, this success rapidly diminished to approximately 3.8 percent growth in 2017 as petrodollars became rarer.
  3. Ambiguous Poverty Line – Poverty is difficult to fight because Iran’s government cannot decide on a poverty line. The Iran Observer stated in 2017 that various government representatives define absolute poverty differently. Iranian Vice President of Economic Affairs Mohammad Nahavandian estimated 10 million Iranians live in poverty while, Parviz Fattah, head of the Khomeini Relief Foundation, claims the number is closer to 20 million.
  4. High Unemployment – Iran currently suffers from an unemployment epidemic, particularly among the educated youth. A mere 14,000 new jobs appeared yearly for the 700,000 youth entering the market between 2006 and 2011. Now, the Brookings Institution reports that college-educated men aged 25 to 29 years have a 34.6 percent unemployment rate, and women of the same group have a 45.7 percent rate.
  5. Emigration – One result of Iran’s employment dilemma is the mass emigration of skilled labor from the country. There is a surplus of skilled labor without the necessary demand, so educated Iranians flee the country for new opportunities. CNN Business reports that Iran’s Science Minister, Reza Faraji Dana, admitted 150,000 skilled Iranians had fled the nation in 2014 for this reason.
  6. High Cost of Living – The cost of living in Iran between 2018 and 2019 has skyrocketed alongside rapid inflation. According to the BBC, the Iranian rial has lost 60 percent of its value in the past year. Housing costs and medical attention have risen by 20 percent and especially harm the poorest individuals.  In March 2019, a Statistical Centre of Iran report also showed a 57 percent increase in white meat prices and a 37 percent uptick in dairy costs for average citizens.
  7. Increasing Poverty – As employment and affordable goods become scarcer, more Iranians fall into poverty. The Brookings Institution estimates that poverty remained at roughly 10 percent nationally in 2011, but it has risen since then. Research by the Foundation for Defense of Democracies found that it rose as high as 38 percent in the Sistan and Balouchistan provinces between 2016 and 2017. The threat of insulated urban areas succumbing to poverty displays the problem’s magnitude. Qom, the renowned traditional center of Islamic clerical training, suffered from a 30 percent poverty rate in 2017.
  8. Relief International Helps – Relief International is one nongovernmental organization mitigating the recession’s effects and preventing the economic crisis from deepening. Originally founded by Iranian-Americans in 1990 as “The Iran Earthquake Relief Fund,” RI focuses on cash assistance for flood victims and training local NGOs. The floods in the Golestan province have exacerbated hard times, and RI’s instant cash assistance will help 2,000 families from slipping into poverty. RI also hopes to have an indirect effect on poverty reduction by training 20 Iranian NGOs in efficient service to the poor.
  9. Amenities Expanded – Despite the recession, most Iranians have access to basic amenities due to government efforts post-1984. The Brookings Institution charts that in 1984, below 80 percent of citizens had electricity or plumbing. The government realized the issue stemmed from underdeveloped rural areas and immediately provided funding. It was an incredibly successful campaign that brought Iranians universal electricity and plumbing by 2000. These efforts continue today, spawning progress in the midst of recession and delivering baths to nearly 100 percent of Iranians by 2017.
  10. Improving Efficiency – Iran’s government is acting to make the economy more efficient, and there are many recommendations available for enhancing fiscal stability. An International Monetary Fund consultation with Iran in 2015 congratulated the government on widening the revenue stream by implementing simple direct taxation. Recommendations included expanding employment for women and increasing privatization, both of which should unlock new productivity for the economy.

The above 10 facts about the recession in Iran show that many hurdles still block the country’s growth. However, the steady increase in access to amenities displays economic progress within the recession and the IMF’s recommendations provide viable solutions to stagflation. Continued improvements will service the poor and provide a path to Iran’s economic stability.

– Sean Galli
Photo: Flickr

, , ,

An Update on Living Conditions in Paraguay

Living Conditions in Paraguay

Paraguay, a country located in central South America, is bordered between Argentina, Bolivia, and Brazil. Being a more-homogenous country, most of the population are of European and Guaranί ancestry. Guarani is a South American Indian group that lived mainly in Paraguay, which spoke a Tupian language. Many Paraguayans can understand Guarani rather than Spanish, which allowed the official language to become Guarani in 1992. With the growth of exportation, Paraguay has continued to thrive in others as well. Among the list of advancements in Paraguay are economic growth, health care, the country becoming Malaria free, and many technological advancements, that have allowed the country into today’s world.

Economic Growth and Living Conditions in Paraguay

When the economy grows, the lowering of extreme poverty goes hand-in-hand. For the past 15 years, extreme poverty has “fallen by 49 and 65 percent, respectively.” In 2018, however, Paraguay’s economic growth suffered in the second half of the year due to the “performance of the main trading partners, especially Argentina” and has continued to weaken since the recent drought, impacting agricultural products.

Due to inflation from the Argentina crisis, there was a decrease in public investment by 11.8 percent in 2018. However, public wages increased by 9.5 percent. International investors believed in macroeconomic management, boosting their Eurobond by 5.4 percent.

The poverty rate, however, is less than half of what it was in 2003.

Health Care and Living Conditions in Paraguay

Another aspect among advancements in Paraguay is in mortality. Life expectancy in Paraguay for males is 72 and 78 for females. The healthcare system is drastically understaffed with 11.1 doctors and 17.9 nurses and midwives to 10,000 people in the population. Paraguay’s government spends up to 37.7 percent toward health care. However, 87.7 percent of health care comes out of pocket. Health care coverage has begun to increase since 2008. It is still not where it needs to be. Less than 10 percent of total health spending comes from NGOs and other external resources.

While many who live in urban areas have improved access to clean water, those living in rural areas are not as fortunate. About 60 percent of inhabitants have access to clean water. This is better than the 25 percent who had access in 1990.

HIV and TB are below average. However, in neighboring countries like Argentina and Brazil, there is an outbreak of HIV. Poor urban countries tend to contribute to the under-reporting of TB. For these reasons, anyone who travels should take routine tests and checkups just be safe.

To ensure that there are more health care facilities to assist the country’s population, the national health care system has created public sectorss. These include:

  • Ministry of Public Health and Social Welfare
  • Military, Police and Navy Health Services
  • Institute of Social Welfare (IPS)
  • Clinics Hospital, which is part of the National University of Asuncion
  • Maternal and Children’s Health Center
  • Paraguayan Red Cross

One major improvement regarding living conditions in Paraguay has to do with health care. Paraguay became the first country in the region to be free of Malaria since Cuba in 1973. With no detection of the disease in five years, Paraguay was declared malaria-free in 2018 since Sri Lanka in 2016. Although Paraguay is malaria-free, other countries are still facing the disease. However, it gives hope to other countries that they can become malaria-free as well.

Technological Advancements and Living Conditions in Paraguay

Paraguay’s Space Agency (AEP), founded in 2014, is currently training specialists. AEP hopes to gain the interest of young children with the idea of space and astronomy. By 2021, Paraguay hopes to launch the first satellite. Research centers have already started to develop CubeSat, which is a type of miniaturized satellite. It will be used for forest monitoring and cadastral mapping.

BBVA (Banco Bilbao Vizcaya Argentaria) is a Spanish bank that has sponsored the League since 2008. BBVA prioritizes ensuring that Paraguay is digitally connected. About 68 percent of the population owns a smartphone. Additionally, 76 percent have access to the internet. BBVA wants “to bring the age of opportunity to everyone through the implementation of an ambitious transformation plan, encompassing not only processes and structures but also our culture and the way we get things done.” More and more people are using their access to the internet and smartphones to communicate with others.

Advancements in Paraguay have allowed the country to move forward with new opportunities to ensure that those in rural areas will continue to grow from extreme poverty. Even with a few setbacks along the way, Paraguay can grow economically, gain more health care opportunities and develop more ideas for technological advancements.

– Emilia Rivera
Photo: U.S. Dept of Defense

,

8 Ways the African Continental Free Trade Area Agreement Will Impact Intra-African Trade

Intra-African tradeSince 2015, the African Union (AU) has been working to boost intra-African trade. In May 2019, 52 out of the 55 AU member countries signed the African Continental Free Trade Area (AfCFTA) agreement, making Africa the largest free trade area in the world. Africa, as a whole, has struggled with extreme global poverty and economic development. AfCFTA aims to unlock Africa’s economic potential and improve the lives of over 1.2 billion people. Here are eight ways AfCFTA will positively impact Africa.

Eight Ways the African Continental Free Trade Area Agreement Will Impact Africa

  1. AfCFTA will lower tariffs. Within five years, AfCFTA plans to cut tariffs by 90 percent. Currently, it is easier for AU members to export goods to the U.S. and Europe than to other African countries. Only 15 percent of trade in Africa is intra-regional. In comparison, intra-regional trade accounts for approximately 70 percent of all trade in Europe. By reducing the cost of importing and exporting goods in Africa, AfCFTA hopes to increase trade negotiations between African countries.
  2. AfCFTA will replace Africa’s Regional Economic Communities. Since 1991, eight sub-regional bodies called Regional Economic Communities (RECs) were the key building blocks for economic growth. RECs were one of the obstacles that prevented intra-regional trade from blooming. Essentially, Africa was home to eight different trading blocks. Each REC followed its own unique set of trade rules and regulations. AfCFTA will replace RECs as the authority over trade and ultimately unify all the RECs into one trading block.
  3. AfCFTA will standardize trade rules and regulations. Time and money were frequently wasted due to the ambiguity and guesswork required for intra-regional trading. AfCFTA will simplify the process for AU members to trade with each other by standardizing trade rules and regulations. Standardization eliminates the inefficiencies related to intra-regional trading and gives AU members the freedom to build trade relationships with neighboring countries.
  4. AfCFTA will promote a shift towards industrialization. Africa’s new trade agreement came at the best time. China, the lead producer of industrial goods, is increasing its efforts to move away from industrializations. China’s trade tensions with the U.S. has prompted the country to find other ways to sustain their economy. Many economists have predicted that Africa will become the next hub for industrial goods. By allowing goods to move more freely across the continent, AfCFTA will give AU members an incentive to shift towards industrialization.
  5. AfCFTA will advance manufacturing opportunities. With the new focus on industrialization, Africa will have to add more factories to produce more goods. AfCFTA gives small and large African countries alike the opportunity to advance manufacturing opportunities. Many economists believe that manufacturing is one of the main drivers of economic growth. Since global trade is based on goods, countries that produce the most goods often have the highest economies. The increase in factories and goods produced in Africa will help drive economic development.
  6. AfCFTA will replenish Africa’s natural resources. Raw materials, such as oils and minerals are currently one of Africa’s main exports. These extractive exports account for 75 percent of Africa’s external exports. The U.S., Europe and China are the main consumers. The extractive market is a volatile one and severely depletes African countries from valuable natural resources. The shift towards industrialization and manufacturing will help stabilize reserves of oils and minerals in Africa. AfCFTA also opens a new demand for extractives within Africa, allowing for the continent’s natural resources to move freely throughout its borders.
  7. AfCFTA will create more job opportunities. Employment is another important factor for economic development. Agriculture is the biggest industry in Africa and therefore the source of most employment opportunities.  As AfCFTA encourages AU members to invest in industrialization, the labor force will shift from agriculture to manufacturing. Research has shown that one manufacturing job has created an additional job in another sector that supports the work being done by the manufacturers.
  8. Through AfCFTA, Africa hopes to improve the lives of its citizens. Today, Eritrea remains the only AU country that has not signed the AfCFTA. Benin and Nigeria signed the agreement in early July. Once all 55 countries sign the agreement, it is predicted that intra-African trade will spike up to 52.3 percent. Industrialization and manufacturing opportunities are predicted to develop rapidly in Africa as well.

These changes will not occur overnight. But in a couple of years, through intra-African trade, Africa can expect to see an overall improvement in its economy and a significant dip in extreme global poverty thanks to the African Continental Free Trade Area Agreement.

– Paola Nuñez
Photo: Flickr

,

The Promise of the East African Federation

East African FederationA proposed federation between Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda seeks to establish a single currency, political unity, modern infrastructure, improved trade relations and ensured peace. In the 1960s, when many of the above countries won their independence, a political federation was first proposed. Today, all six countries are members of the East African Community (EAC), which started in 1999 as a less ambitious form of unity. The East African Federation remains mostly an idea; however, leaders in all six countries are now working together to see the idea come to fruition.

Where it Stands

The countries began drafting a unified constitution in 2018, which would render each member’s individual constitution subordinate to that of the East African Federation. They have set the deadline for its completion to 2021. The EAC has already neared completion of a monetary union, likely being something akin to the European Union’s euro. The euro has allowed for the free movement of capital, stimulating trade activity between member states. Additionally, all six countries are planning to hold a referendum with their own citizens in order to gauge support.

Ambitions

The countries’ leaders say that a federation will lead to economic development and greater African sovereignty. The advantages of the East African Federation include linkages of infrastructure, which will allow four of the landlocked members to have access to the trading ports of Kenya and Tanzania. Further, the East African Federation, due to its enormity, will have more influence in international diplomacy, and its governmental institutions will become more robust through information sharing.

Limitations

When integration efforts were attempted in the past, they became derailed by individual national interests and existing tensions. While the East African Federation attempts to overcome these tensions, some doubt its ability to do so. Critics point to trade disputes between Rwanda and Uganda and military rivalries between Tanzania and Rwanda as prominent examples for why unity will remain unaccomplished.

The Promise

East Africa’s economy is the fastest-growing on the continent; GDP increased by 5.7 percent in 2018 and is forecasted to hit 5.9 percent in 2019. According to the World Bank’s most recent data, the average poverty rate for the 6 countries is 49.6 percent. Kenya has the lowest rate with 36.8 percent, and Burundi has the highest with 71.8 percent. The East African Federation promises to improve cooperation methods and increase economic potential, yielding greater growth, quicker development and lasting stability for the region.

– Kyle Linder
Photo: Flickr