Archive for category: Economy

Information and stories about economy.

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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

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5 Reasons Why You Should Care About Global Health

Five Reasons to Care About Global Health
Caring about global health isn’t limited to providing mosquito nets and vaccines. It is an expansive endeavor that attempts to deal with illnesses resulting from natural disasters, war and poverty. With this in mind, here are five reasons to care about global health.

 

  • Food Borne Illness: The development of international agricultural trade combined with the misuse of antimicrobials has increased the risk of foodbourne illness outbreaks from microbial contamination, chemicals, toxins and undiscovered diseases.

 

  • Global Economy: Disease outbreaks strain economies monetarily, but also weaken individual workers’ ability to support their families or contribute to society. The biggest hit to many countries affected by disease outbreak is a loss of tourism and consumer confidence. The cost to treat many diseases on such a large scale is astronomical compared to the preventative costs.

 

  • Drug Resistance: With new diseases appearing at a rate of one or more per year, known viruses and diseases are becoming increasingly drug resistant, elevating the likelihood of outbreaks. Diseases that were once considered treatable, like tuberculosis, are now becoming drug resistant.

 

  • Outbreaks: Transmittable diseases are making their way across oceans via airplane passengers and mosquitoes. Examples include the SARS epidemic in 2003, the outbreak of the H1N1 influenza in 2009 and, most recently, the spread of the Ebola virus in 2014.

 

  • Bioterrorism: Both accidental and deliberate outbreaks, whether malicious or simply negligent, pose severe threats globally. Examples include toxic chemical accidents, radionuclear accidents, environmental disasters and intentional release of toxic agents like anthrax and other bioterrorist actions.

There are many more reasons to care about global health in such an interconnected society as is present today. Organizations like the Centers for Disease Control, USAID and the World Health Organization are working to achieve global health security. Investing in global initiatives that increase the probability of early detection and control of communicable diseases can ensure a healthy global economy.

– Rebekah Korn
Photo: Flickr

Job Security in Oman

Job Security in OmanOman is the oldest independent state in the Arab world, which has existed since the mid-17th century after the expulsion of the Portuguese. It is an absolute monarchy, ruled over by the Al Said dynasty for centuries. It is a nation that is rich in natural resources (especially oil) but, unfortunately, almost one-fourth of the people of Oman are unemployed.

Oman relies heavily on its oil production for economic growth and high oil prices until the recent past were what boosted its economy. However, the problem with an oil-based economy is that it is unsustainable because of the inevitable decline in oil production and fall in its prices. Oman, like other oil-rich countries in the Middle East and Africa, has been experiencing the negative effects of this decline in prices and oil production.

It is feared that due to “the global economic slowdown, the recession in Europe and the economic slowdown in China and elsewhere, oil prices are not going to increase.” Consequently, there has been an increase in job insecurities and frustration among the people of Oman. In 2012, the unemployment rate was 25 percent. It is expected to increase if the government does not create employment opportunities in the public and private sectors.

In 2011, the people of Oman, with changes underway in the region due to the Arab Spring, protested against the government, demanding economic and political reforms. The government responded with a police crackdown on protestors as well as taking measures to placate people by creating public sector jobs and raising wages.

Analysts believe that the result of raising wages in the public sector is not encouraging, for two reasons: One is that it has brought pressure on the budget, which is already strained by the decline in oil prices and production. The second is that the increase in wages in the public sector has also proved to be a hindrance to private sector growth. In order for economic diversification to take place, which the country needs, Oman needs to create more jobs in the private sector.

The positive news, according to the 2016 Word Bank Economic Outlook report on Oman, is that the country’s overall real GDP growth is expected to slightly recover “as a gradual recovery of oil prices improves confidence and encourages private sector investment.” Further, trade and investment opportunities with Iran are also expected to increase as sanctions are lifted. There is hope that these and other measures will bring help to the people of Oman in terms of job security.

– Aslam Kakar

Photo: Flickr

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How to Help People in Denmark

How to Help People in Denmark

In the 2016 U.S. presidential election, Denmark and other Scandinavian countries gained attention for their extraordinarily equitable economies. Candidate Bernie Sanders often pointed to the Danish education and healthcare systems as models to be followed by the U.S.

Rather than asking how to help people in Denmark, Sanders and other social democrats focused on how the rest of the world could benefit from understanding the ways in which the Danish government already helps its own people.

In addition to free education and healthcare, the Danish government provides all citizens with a minimum income guarantee of about $100 per day. As a result, Denmark has achieved the fourth lowest inequality rate in the world.

Such a world-class safety net is supported by one of the world’s highest tax rates. All sales in Denmark include a 25 percent tax and the highest income earners give upwards of 60 percent of their income to the state.

The high tax rate has motivated some economists like Rasmus Landerso and James Heckman to frame the Danish economy as equitable only insofar as it compresses the range between high and low incomes, not because it has a high index of social mobility.

Indeed, their recent study found that intergenerational social mobility in Denmark mirrors that in the U.S. A child from a lower-class background, for example, whose parents did not finish college in Denmark is just as unlikely to attend college and become middle-class as his or her American counterpart, despite the fact that Danish higher education is free.

The difference, then, between the two countries is that the Danish government compensates for low social mobility by providing significant welfare benefits to the poor.

In the end, while there may still remain a question about how to help people in Denmark ascend out of their generational social classes, it is clear that the Danish people already receive sufficient amounts of help from their own government.

– Nathaniel Sher

Photo: Flickr

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The Egyptian Economy: A Positive Outlook

The Egyptian Economy

Since the Arab Spring rocked the Middle East in 2011, the countries fortunate enough to avoid devastating civil war were nonetheless impacted by the political turmoil in the region. Egypt was no exception.

However, even with several issues persisting in the Egyptian political and security spheres, the country looks to move forward with privatizing more sectors of its economy and has an overall positive economic outlook. The Egyptian economy, which has suffered from decades of bloated public sector employment, looks to revitalize its push for privatization in various sectors.

“That is the brake on reform,” said an anonymous government official in 2010, before the Arab Spring movement. His comments were about the overreliance on public sector employment. “They have grown up with the state doing everything: ‘You educate me, give me a degree, you give me a job when I die you bury me — and I do nothing.'” While public sector employment is not altogether negative, private sector companies need to flourish if there any hopes for growth.

In 2017, the privatization of the Egyptian economy is being rebooted by the government after encountering setbacks in years prior. The political fallout of the Arab Spring and subsequent policies undertaken by the Morsi and Sisi administrations had left a bad taste in the mouths of Egyptians regarding privatization.

However, after a tragic train collision this year on a government-owned rail line, it was understood that something needed to be done. Officials began drafting new laws that would allow private companies to improve existing lines, as well as permit them to operate their stations. This will inevitably lead to the creation of jobs for Egyptians, a population that still suffers from almost 12 percent unemployment. Fortunately, this is the lowest it has been since the 2011 uprisings.

The Egyptian economy is slowly becoming a destination for foreign investment as well, even beating out South Africa for the top spot on the continent. In tandem with government reforms and an improving business climate, Egypt is attracting large sums of foreign money, most notably from Beijing.

“Currently [the European Union] is the biggest but I think China investors will grow rapidly… We’re in discussion with major players in terms of textiles and automotive. Those are two main projects we are in discussions with,” stated Trade Minister Tarek Kabil. This is in line with China’s growing presence on the continent.

Tourism is one of Egypt’s largest industries, and it has taken a severe hit since 2011. Fortunately, the country is seeing a slight uptick in tourism due to cheaper hotel deals as a result of certain currency policies. While the security situation continues to be a major factor in deterring potential tourists, this short-term low-cost trend will assist the tourism sector, which is a major pillar of the Egyptian economy.

The Egyptian economy undoubtedly suffered enormous setbacks in the aftermath of the Arab Spring. However, its position as the most populous Arab country paired with a strong economic outlook will allow Egyptians to look to the future with optimism.

– Daniel Cavins

Photo: Flickr