Archive for category: Economy

Information and stories about economy.

Social Impact and the Green Bond Market

Green Bond MarketWhat if there was a way to invest money and change the world? The global green bond market may be the answer.

The potential of these bonds to facilitate global change is irrefutable. Green bonds are similar to other fixed-income instruments in their financial attractiveness but they are unique in their ability to provide a positive social and environmental impact.

The capital raised is dedicated to programs that benefit the environment and encourage more prosperity within nations, such as delivering clean water, promoting renewable energy sources and increasing efficiency.

Developed and developing countries alike face rising financial challenges from changing climate conditions and environmental hardships, but often it’s the poorest nations that suffer most. The green bond market finances many life-changing development strategies that support sustainable development, focusing on poverty reduction and inclusive growth. They are innovative financial tools to finance railways, roads, airports, buildings and energy and water infrastructures, while simultaneously achieving positive returns for the environment and society.

The green bond market has seen explosive growth and increased attention from investors in recent years. Launched by multilateral institutions less than a decade ago, green bonds have seen a 38 percent increase in the first half of 2017 compared to the year prior.

The Climate Bond Initiative, an international nonprofit focused on this niche, estimates that the total amount of green bonds issued in 2017 could reach upwards of $150 billion; this is a monumental increase from the $3 billion worth of green bonds that were issued in 2012.

This surge in interest can be explained by an increased desire by consumers to invest in an impact-driven market; this has caused a record number of public and private entities to join or issue green bonds.

The number, and nature, of the financial players involved in the green bond market have also contributed to the rapid growth. Development banks, such as the World Bank and the European Investment Bank, large corporations, including Apple and Intesa and sovereign states, like Poland and France, have all emerged in the green bond market.

Individual projects by each green bond issuer carry great reach. Just one project by the World Bank to improve sustainable water management in Brazil benefits 2.6 million people and provides 164,000 people with improved sanitation, enhancing the overall quality of life.

The interest that the green bond market has sparked is helping to change how investors think about their investments and how issuers think about the projects that they finance. So long as investors continue to ask questions about the expected social and environmental impacts of their investments, green bonds will continue to build a meaningful new capital market, providing financial support for environmental and sustainability initiatives around the world.

– Jamie Enright

Photo: Flickr

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African Development Bank Group’s Global Strategies

African Development Bank Group's Global StrategiesA large part of poverty strategies is implementing some kind of spur in economic growth. This kick-start can be a gateway to social and economic reform in some of the poorest countries in the world, eventually leading to self-sustainability. The African Development Bank Group has made it their mission to place poverty reduction back into the hands of Africans and to create a stimulus that can enable the extremely poor in reducing their poverty scores.

The African Development Bank Group was born out of three different economic groups in Africa. It has set a plan that began in 2013, targeted to reach major benchmarks by 2022. The group has recognized that Africa has begun a transformative journey and progressed greatly over the last decade, yet this progress remains markedly uneven in some areas of the continent. This particular organization relies on a few major objectives to help lift regional member countries out of poverty, while staying congruent with ideals and values. The group first aids by mobilizing and allocating a country’s resources, then provides advice and guidance on technical aspects for development efforts. The African Development Bank Group has also laid out 17 sustainable development goals in order to achieve its mission. These goals include food security measures, sanitation, healthcare, sustainable energy use and procurement, social equality across gender and age gaps, economic growth and stability and ecological preservation plans.

The holistic approach to poverty reduction through economic growth and sustainability is what sets apart the African Development Bank Group. While taking advantage of models such as the World Bank and Multilateral Development Banks, The African Development Bank Group is able to remain primarily domestically-reliant and position itself in such a way as to gain more traction as the 2022 goal nears. Balance sheet optimizations have been a key focus in doing so, as projects continue to be carried out in both the private and public sectors through multilateral funds involving developed countries. The group’s procurement procedures – unlike other bank methods – involve strict standards. These include investments in member countries whose approval processes ensure that procurements are in line with the values and mission of The African Development Bank Group.

– Casey Hess

Photo: Flickr

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The Issue of Overfishing in Saint Pierre and Miquelon

Overfishing in Saint Pierre and Miquelon

The French islands of Saint Pierre and Miquelon are located off the coast of Newfoundland and have a population of about 5,533, according to July 2017 data. It is estimated that about 90 percent of inhabitants live on St. Pierre, while a smaller population lives on Miquelon. The islands focus largely on the fishing industry and have for over a century, but overfishing in Saint Pierre and Miquelon has led to Canada imposing a long-term closure of the industry, causing a negative ripple effect on the economy of the islands.

The overfishing in Saint Pierre and Miquelon started when the United States repealed Prohibition in 1933. The islands’ thriving economy decreased dramatically and forced the laborers to turn back to fishing. Since then, Saint Pierre and Miquelon have constantly been fishing, leading to the overfishing problem.

In addition to the issue of overfishing in Saint Pierre and Miquelon, there has been a decline in the number of ships using the Saint Pierre harbor. This could be due to the weather and the natural environment of the islands. Surrounding the islands are “treacherous currents and fog [that] have contributed to hundreds of shipwrecks off Saint Pierre and Miquelon.”

The four-mile strip of water between Saint Pierre and Miquelon is called “The Mouth of Hell” by the local fisherman because of the strong currents that have contributed to about 600 shipwrecks near the islands. The residents of Saint Pierre and Miquelon have used this to their benefit, as they can add to their earnings from fishing somewhat by salvaging the wreckage.

Dealing with overfishing in Saint Pierre and Miquelon has not been easy for the residents of the islands, but there has been some progress with sustainability and trying to stabilize the island’s economy, as the residents have turned to other kinds of seafood fishing such as crab fishing. They have slowly developed other types of agricultural farming, including vegetables, poultry, cattle, sheep and pigs. The government of Saint Pierre and Miquelon is also working to grow its tourism industry. With the hope of more tourism on the islands, a more sustainable way of fishing and more farming, Saint Pierre and Miquelon’s prospects are looking brighter and more stable.

– Jennifer Lightle

Photo: Flickr

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How to Help People in Brunei

How to Help People in Brunei Darussalam

Brunei is a small nation located in the northern coastal area of the island of Borneo, which also encompasses parts of Malaysia and Indonesia. Brunei‘s territory extends itself through an area of 5,765 kilometers of land, where about 423,000 citizens live.

How to help people in Brunei is not an easy question to answer at first glance. The fact is that despite its size, Brunei’s economy is considered to be one of the best performing in the world.

The country mainly exports liquefied gas and crude oil across the globe; natural gas and petroleum represent 60% of the country’s economy. Brunei’s extended forest territory allows it to produce abundant amounts of non-renewable resources and energy.

In spite of Brunei’s level of productivity, the issue of how to help people in Brunei remains because, despite the country’s great wealth, the social and political system causes difficulty for Brunei’s citizens.

As an absolute monarchy led by Sultan Hassanal Bolkiah, freedom of speech has been limited within the media, including radio, television, and print, as well as for citizens.

In 2014, Brunei adopted sharia law, a list of laws based on the religion of Islam. Consisting of three phases, two of which have to be yet implemented, sharia law is currently enforced among Brunei’s citizens.

The only approved phase for the moment includes prison sentences for what most developed first world countries would consider minor. Pregnancy outside marriage, failing to attend Friday prayers, propagating religion other than Islam, among other offenses, are severely punished with prison sentences or fines.

Organizations such as the United Nations have spoken out regarding Bolkiah’s intentions, but despite commenting on the sultan’s ideas for the future of Brunei, the country remains part of the United Nations due to providing free medical care, education and more to its citizens.

Boycotts of the Beverly Hills Hotel and other properties that Bolkiah owns have been enacted by numerous international companies to put pressure on the sultan to repeal sharia law. Celebrities such as Ellen DeGeneres and Elton John have taken up the issue to bring awareness to the inequality and discrimination that is currently taking place in Brunei.

How to help people in Brunei is a social issue rather than an economic one. Brunei is a country that violates human rights every day and no organizations are actively fighting against it. The imposition of sharia law in Brunei is continuous and awareness is key in order to eradicate such human rights violations.

– Paula Gibson

Photo: Flickr

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Causes of Poverty in Sao Tome and Principe

Causes of Poverty in Sao Tome and Principe

The most recent survey on the causes of poverty in Sao Tome and Principe, an island nation off the western coast of Africa, dates back to 1995. It showed that over 40% of the population was living below the poverty line, and 33% were living in extreme poverty.

Unfortunately, there is little household information about Sao Tome and Principe, but a decline in the nation’s per capita income through 1997 and difficult social conditions led to the increase in poverty since then. Specifically, fluctuations in the world’s cocoa prices triggered such conditions and have caused an influx of migration to urban areas.

In spite of this, its rank of 142 out of 188 in the United Nations’ Development Programme Human Development Index is relatively good compared to other Western African countries. This mostly stems from foreign investment in health and education between 1975 and 1985, but this aid slowed with economic instability in the 1990s.

This country struggles to develop largely due to its low income, which stems from a lack of assets and means of production. Without the ability to export, Sao Tome and Principe struggles to resolve its economic instability. Without tools or proper infrastructure, agriculture as an industry is unable to generate income.

Despite this, since 1990, Sao Tome and Principe’s Human Development Index rating has gone up from .454 to .574, which is an increase of about 26.4%. Progress in different areas has been seen, as the life expectancy has gone up by 4.8 years, as well as mean years of schooling increased by 2.4 years and expected years of schooling increased by 3.8 years. Sao Tome and Principe’s GNI per capita also increased by 55.6% since 1990.

Sao Tome and Principe is still below the average level of HDI rating of .631, but above the average of .523 of sub-Saharan African countries. One area it must work on is its gender inequality rating, as only 30.8% of adult women have received a secondary level of education. Further improvement in some of these areas will help limit some of the causes of poverty in Sao Tome and Principe.

– Tucker Hallowell

Photo: Flickr

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How to Help People in Dominica

How to Help People in Dominica

The Commonwealth of Dominica, a small island nation, is one of the poorest countries in the Caribbean. While other Caribbean nations have moderately successful tourist industries, Dominica’s tourism has decreased in recent years along with its economic growth. Dependence on a failing banana industry has further exacerbated the country’s poverty; therefore, it is necessary to help people in Dominica reinvent their economy.

As recently as the 1990s, Dominica supported itself through banana farming, which was well-suited to the country’s tropical environment. While banana-centric agriculture was reliable and productive, economic specialization proved to be a kiss of death for Dominica’s economy in a changing trade landscape. When global tariffs on American-grown bananas were lifted in 2008, Dominican farmers simply could not compete with the low prices offered by American companies.

While the revenue generated by banana exports once supported nearly 2,000 Dominican farmers, only about 700 struggling banana farmers remain. Dominica’s unemployment rate sits at a staggering 23%, having decreased only two percent over the last decade.

Dominica’s economic hard times have impacted the lives of its citizens. Forty percent of Dominica’s population lives in poverty. Since the fall of the banana industry, Dominicans have left the country in droves, seeking employment. The exodus has been so significant that remittance payments from emigrant family members account for 16% of Dominica’s GDP.

The Dominican government has promoted economic diversification in an attempt to resurrect the economy and provide more jobs for Dominican citizens. Another Caribbean nation, Antigua and Barbuda, set the example for a diversified economy after the decline of its sugar cane industry. By embracing tourism and online gaming, as well as construction, Antigua and Barbuda saw significant financial benefits. Unfortunately, Dominica has not yet successfully diversified. The tourism industry in Dominica is still meager compared to that of other Caribbean nations, and other agricultural exports, like coffee, fruit and flowers, have not replaced the lucrative banana.

In addition to monetary problems, water sanitation issues and resulting diseases plague Dominica’s inhabitants. Thirty-seven percent of Dominicans do not have access to clean water. Unsanitary water increases the incidence of diseases such as typhoid fever, which has increased in Dominica by nearly 40% since 1990. Though Dominica’s government created a water and sewage management company in 1989 (The Dominica Water and Sewage Company), Dominica still relies on foreign grants for infrastructural maintenance.

Changes in trade policy would greatly help people in Dominica. The reimplementation of tariffs on U.S. produce would make it easier for Dominican farmers to sell their bananas on the global market. Fair trade organizations, such as the Windward Islands Farmers Association, have helped banana farmers access profitable trading opportunities, so buying fair trade Dominican bananas supports the livelihood of Dominican farmers. However, further assistance is needed.

The EU is Dominica’s most significant donor, though China also contributes aid. If Dominica is going to be successful, more wealthy countries such as the U.S. should provide aid programs or create legislation to strengthen infrastructure, reenergize and diversify the economy, and help people in Dominica live free from poverty.

– Mary Efird
Photo: Flickr

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How to Help People in Andorra

How to Help People in Andorra

Mountains draw people to the European microstate of Andorra, which offers the best skiing and resorts in the Pyrenees. Prior to World War II and the modernization of Andorra, subsistence agriculture was the dominant industry, even though its mountainous geography is not conducive to large agricultural gain. After the war and the integration of Europe, Andorra quickly modernized and moved toward a lucrative service economy based on tourism. Today, with the rise of the tourism industry, agriculture makes up a small proportion of Andorra‘s industry. Most families own hotels, restaurants and other businesses rather than supporting themselves through farming, greatly increasing their quality of life and wealth.

Andorra has a very low poverty rate due to its booming service economy fueled by its tourism industry. Over 95% of people work in the service industry and only 3.7% of people were unemployed as of 2016. Poverty is so low that the percentage of the population below the poverty line is not measured. One can help people in Andorra stay out of poverty by supporting the Andorran tourism industry, thus sustaining Andorra’s equitable living standards and strong economy, with the added benefit of exploring Andorra’s culture in its beautiful Pyrenees location.

As of 2016, Andorra’s population was 77,281. Its GDP from the year prior was $3.327 billion. Its GDP per capita from 2015 was $49,900, making it the twenty-fifth wealthiest nation in the world as of 2015. These figures show the country’s strength and the lack of direct need to help people in Andorra.

Although there is not a crucial need for foreigners to help people in Andorra, it is important to maintain the success of Andorra, which can only continue by foreigners continuing to visit Andorra and support its tourism industry — an enjoyable way for one to help Andorrans.

– Mary Kate Luft

Photo: Flickr

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Why is Cabo Verde Poor?

Why Is Cabo Verde Poor?

Cabo Verde, or Cape Verde, is a former Portuguese colony made up of 10 islands and five islets located just over 300 miles off Africa’s west coast. Why is Cabo Verde poor? Severe droughts during the 1900s killed 200,000 people and caused many to leave the islands.

Cabo Verde does not have many natural resources, and only 10% of the land can sustain crops. This makes the nation vulnerable to poor economic growth. Although the poverty rate has been reduced significantly, one-quarter of the population is still poor.

The national poverty rate in Cabo Verde fell from 37% to 27% between 2003 and 2008, according to the World Bank, and the extreme poverty rate went from 21% to 12%.

Tourism is a major source of economic growth in Cabo Verde and is credited as the main reason for the drop in poverty rates. Still, one is compelled to ask: why is Cabo Verde poor?

The Congressional Research Service reported that slow economic growth in Europe has fostered slow growth in Cabo Verde. This is because Europe is a major trading partner and source of foreign investment, and Cabo Verde is also a major tourist destination for many Europeans.

Despite all this, growth has recovered due to a resurgence in tourism and foreign investment. Gross domestic product grew from .93% to 3.63% between 2012 and 2016. Unemployment is now estimated to be at nine percent, which is a significant drop from 16.8% in 2012. Yet, one must still ask: why is Cabo Verde poor?

Public debt in Cabo Verde was 130% of the GDP at the end of 2016, according to the World Bank. It is also estimated that growth was above four percent which is 1.5% more than in 2015 but still not enough to bring down debt levels. The World Bank predicts that debt will continue to increase in 2017 because of a state-owned airline (TACV) and social housing.

Modest growth is predicted for Cabo Verde’s major trading partners which may slow foreign investment in the small nation as well.

– Fernando Vazquez
Photo: Flickr

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Causes of Poverty in San Marino

Causes of Poverty in San Marino

San Marino is a small, landlocked country located within Italy. It is a remnant from a time when city states dotted the European landscape. San Marino is believed to be the world’s oldest surviving republic, and tourism plays the largest role in the economy. More than three million people visit the republic each year. However, the nation still struggles with poverty. Here is a look at causes of poverty in San Marino.

One of the causes of poverty in San Marino was the recession of 2008. San Marino‘s economy is heavily reliant on tourism, and the recession incited a drop in tourism rates.

Although tourism is a large part of the economy, San Marino also acted as a tax haven for the wealthy people of Europe. This changed when the European Union and Italy pressured San Marino into going along with a crackdown on tax evasion and money laundering.

The United States Department of State reported that the strict regulations placed on the financial sector has led to a decrease in money laundering. There is not a large enough market for illegal goods, so most money laundering was done on the behalf of people outside of the country looking to avoid higher tax rates in their own countries.

A number of top executives at the Cassa di Risparmio della Repubblica di San Marino were arrested on money laundering charges. This was the nation’s top bank, so the arrests dealt a heavy blow to the nation’s economy. Thus, while it is good for the global economy, the inability to launder money is another one of the causes of poverty in San Marino.

The government of San Marino has taken actions in order to combat the economic downturn, which includes subsidized credit for businesses. San Marino has also taken steps to move its economic growth model away from a dependence on bank and tax secrecy.

Due to its low corporate taxes compared to other nations, the economy can profit from foreign investment as well. San Marino’s income tax is also about one-third the amount compared to other nations in the EU.

The Organization for Economic Cooperation (OECD) removed the small nation from its list of tax havens that have not fully complied with global tax standards in 2009. San Marino also signed tax information exchange agreements with most major nations in 2010.

Causes of poverty in San Marino are largely due to the loss of tourism and its strict regulations on the financial sector, but with its advantages for foreign investments, the small nation hopes to turn its economic woes around.

– Fernando Vazquez

Photo: Flickr

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Why is Papua New Guinea Poor?

Why is Papua New Guinea Poor?
Papua New Guinea, the name given to a group of islands situated in the southwest Pacific ocean, has experienced tremendous economic growth since its days of being an Australian colony, and has gone on to hold elections involving the indigenous population. Despite this, however, many people on the island still experience extremes of poverty. 80 percent of Papua New Guinea’s people live in rural communities with little to no modern conveniences, and 39.9 percent of the population lives below the poverty line. So, why is Papua New Guinea poor, despite economic growth? Here’s a brief look at some of the reasons behind this.

 

Why is Papua New Guinea Poor? 3 Simple Reasons

 

Income inequality
In 1996, the Gini index rated Papua New Guinea’s income inequality as 55.43 on its scale from 0-1, with 0 being perfectly equal (for comparison, the U.S. was rated around 45 on the scale in 2007). The evidence would seem to suggest that this inequality is due to the failure of economic growth to keep up with population growth, but could also have been caused by structural adjustment policies that came about along with rapid economic growth. Whatever the reason, it is clear that income equality has led to much greater poverty within Papua New Guinea. The good news is that this inequality has gone down significantly since the 1990s: In 2009, Papua New Guinea scored a 43.88 on the Gini scale.

Lack of long-term planning
Many citizens are critical of the fact that the government of Papua New Guinea has had little to no plan in place to modernize the country, which would include steps like building permanent houses, supplying water and sanitation and building infrastructure. The government, instead, acts reactively, creating short-term solutions only when it is absolutely necessary. For example, in 2002, Papua New Guinea faced an incredibly violent and chaotic election, but it was not until 2004 that police were deployed to fight this rampant violence. This lack of planning makes it difficult for real progress to be made in terms of poverty.

Corruption
Why is Papua New Guinea poor? Perhaps the biggest contributor to Papua New Guinea’s continuing poverty problem is the fact that so many government officials, in charge of funds that could help, have historically chosen to pocket the money instead. Michael Somare, prime minister of Papua New Guinea from 1975 to 2011, faced charges of political misconduct and misappropriation of funds spanning over 20 years, while in 2014, Paul Tiensten, former senior minister and later MP, was sentenced to nine years imprisonment for misappropriating over $1 million. Somare’s replacement as prime minister, Peter O’Neill, has also been accused of political misconduct involving a loan of $1.3 billion.

So, why is Papua New Guinea poor? In short, because of income inequality, aggravated by years of poor planning and corruption by the government. To correct this problem, new measures will need to be taken to outline and enforce government oversight and the proper use of government funds. Thankfully, awareness has risen about these issues over the past few years. During the last election, many people in Papua New Guinea protested and called for Peter O’Neill to resign after more corruption allegations were brought to light. And while O’Neill still won re-election, the fact that these protests exist shows that the citizens of Papua New Guinea are beginning to demand more from their politicians, hopefully a first step in strengthening the government and using it to enact real change.

– Audrey Palzkill

Photo: Flickr