Archive for category: Economy

Information and stories about economy.

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Inequality: Causes of Poverty in Liechtenstein

Immigrant In-Equality: Causes of Poverty in Liechtenstein

The Principality of Liechtenstein is a country located in Europe that is landlocked between Switzerland and Austria. It is a relatively wealthy country, containing one of the highest measures of GDP per capita in the world, a low inflation rate and the benefits of a monetary and economic union with Switzerland. It therefore has one of the highest standards of living across the globe, although it comes with the trade-off of an extremely high cost of living.

Much of the country’s wealth can be attributed to its status as a tax haven, though it has taken steps in recent years to regulate and rid itself of this image and to reposition itself as a legitimate financial center. Despite the country’s economic successes, there is still poverty to be found here.

The causes of poverty in Liechtenstein become evident when analyzing the immigration policies put in place by the country’s government. In 2013, many media outlets in Europe began to report that the growing immigrant population was composed of many low-income families. This is mainly due to the increased share of the population that are immigrants, with the incomes earned by these immigrants being lower than those of the native population. This has caused the overall income growth of Liechtenstein to be subjected to downward pressure in recent years.

The unemployment rate of immigrants in Liechtenstein is approximately twice as large as it is for national citizens that have lived in Liechtenstein for their entire lives. In terms of how this applies in practice, one in two unemployed persons living in Liechtenstein is an immigrant. Despite these concerns, compared to other European countries, Liechtenstein remains in a prosperous position and the unemployment rate in general is at a very low level. As of 2012, the average unemployment rate faced by the country was 2.4 percent, with the unemployment for national citizens being 1.7 percent, compared to immigrants, who had an unemployment rate of 3.5 percent.

This is the result of a restrictive immigration policy based on bilateral agreements and clear economic considerations, combined with the insatiable job demand of Liechtenstein’s economy. One of the essential guidelines for immigrants is that there is a requirement for the person immigrating to have the ability to support one’s own cost of living when applying for residence. This means that the onset of poverty usually occurs sometime after having immigrated, with the main reasons for poverty ultimately being unemployment, illnesses, death of an employed family member and excessive indebtedness.

A relevant quote by economist John Kenneth Galbraith rings true with poverty in Liechtenstein, in which he writes, “people are poverty-stricken when their income, even if adequate for survival, falls markedly behind that of the community.” This is one of the main causes of poverty in Liechtenstein and it illustrates an area that can be improved upon, leading to a greater equality of wealth between national citizens and immigrants and less poverty overall.

– Drew Fox

Photo: Flickr

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Why is Nauru Poor?

Why is Nauru PoorIn recent years, news about the small island of Nauru pertains to the violation of human rights for asylum seekers. However, what is not being discussed is why these people are seeking asylum in the first place or why Nauru maintains the third highest proportion of refugees per capita in the world. The explanation partially lies on the deterioration of the country’s wealth over the last few decades. So, why is Nauru poor?

In fact, the country was not always poor. In 1980 Nauru became the wealthiest nation globally, per capita. The country’s natural resource endowments were recognized for this feat. Large deposits of phosphate were discovered in the late 19th century across the island, and once Nauru gained independence in 1968, intensive mining boosted the country’s income.

After this, Nauru seemed to experience what is called the “resource curse.” While the country’s specialization in phosphate mining originally provided wealth, Nauru experienced a drastic economic collapse when phosphate ran out in the early 1980s.

The country was then left with was a series of long-term problems. Today, 50 percent of households in Nauru live on an average of only $9000 a year. As phosphate mining had such a destructive toll on the environment, 80 percent of the island has been labeled wasteland and threatens the remaining resources. Because the phosphate specialization drove away other business previously developed in the country, it now obtains limited revenue, and the unemployment rate in 2011 rested at 23 percent.

To spark growth in Nauru’s economy, the government agreed to open the Australian Regional Processing Center for asylum seekers in 2012. Australia’s offshoring tactics pay Nauru $312 million annually to run detention centers on the island.

While this has improved the incomes of families in Nauru, the country has faced much backlash due to the living conditions of the refugees sent to the country. Consequently, a new deal is being formulated to move these vulnerable groups to other areas including Cambodia and the United States. This will leave Nauru, again, without the revenues necessary to keep its people from poverty.

Reverand James Aingimea, a minister of the Nauru Congregational Church confessed to the New York Times, “I wish we’d never discovered that phosphate…When I was a boy, it was so beautiful… Now I see what has happened here, and I want to cry.” This pain can be felt across the island where the residents bear witness to the question, “why is Nauru poor?” The exploitation of Nauru without environmental protection or diversification in the economy has led the nation to a state of dependency.

– Tess Hinteregger

Photo: Google

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Why Is Suriname Poor?

Why Is Suriname Poor? Poor Planning and Unhealthy Dependence.
Suriname, one of the smallest countries in South America, is also one of the poorest. Nearly one out of every two people in Suriname are impoverished. Tucked between Brazil and Guyana and endowed with oil reserves, one may wonder: why is Suriname poor?

The most important answer to this question lies in Suriname’s exports. Economically, Suriname is heavily dependant on exporting commodities, namely oil and gold, for revenue. As market prices fluctuate, so too does Suriname’s economy.

Mining for said commodities is the main source of employment in the nation. Stagnant markets cause production to slow and unemployment to jump. From 2014 to 2015, Suriname’s unemployment rate climbed from 6.9 to 8.9 percent.

The country’s GDP decreased two percent in 2015 and 10 percent in 2016—more than eight full quarters of economic contraction. A country is considered to be in a recession after just two.

Oil Dependence
After the crude oil price spikes during the global recession, crude supply increased as North America, and Russia exploited domestic supplies.

The sharp increase in supply, coupled with the plateauing of China’s demand for crude, depressed the global price. This led to a decrease in Suriname’s exports and public revenues. Couple that with the announcement that Alcoa, a major U.S. aluminum company, was ending its operations in Suriname after 100 years of activity—Suriname’s economy entered free fall.

In 2016, Suriname’s GDP plummeted to 2008 levels. In the same period, the U.S. added $4 trillion to its GDP, an average increase of 1.4 percent.

Currency Issues
In response to the recession, Suriname experimented with a number of monetary and fiscal policies. The Suriname dollar was devalued by 20 percent amid the drop in oil prices, was unpegged from the U.S. dollar and, by the end of 2016, had lost more than 46 percent of its total value.

Suriname also implemented austerity policies in last two years to reign in spending and raise revenue. As a result, the Suriname dollar inflated over 50 percent in 2016.

In regards to the question “why is Suriname poor?”, there are a few big takeaways:

  • The drop in global oil prices dealt a major blow to Suriname’s export-driven economy.
  • Suriname’s economy is in a two-year-long contraction. The unemployment and poverty rates have both increased.
  • The Suriname dollar has lost a great deal of value and purchasing power, hurting the country’s less-fortunate.

The short and mid-term economic forecasts for Suriname are bleak, according to economists. Economic contractions are expected to continue throughout 2017. However, the discovery of another offshore oil deposit has given the nation hope. With foreign investment and revenues from another oil project, Suriname might stabilize its economy, which will allow it to restructure to rely less on exports.

– Thomas James Anania

Photo: Flickr

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What Causes Poverty in San Marino?

What Causes Poverty in San Marino?

San Marino, said to be the world’s oldest republic, is a small country landlocked by Italy. At only 23.6 square miles, it is the fifth smallest country in the world, only larger than Vatican City, Monaco, Nauru and Tuvalu. It is also one of the richest countries in the world, with an estimated 2021 gross domestic product (GDP) per capita of $54,982.45. Despite its wealthy status, the 2008 recession, from which the country is still recovering, has significantly increased poverty in San Marino.

The 2008 Recession

San Marino‘s main economic activities are tourism, banking and the manufacture and export of different goods such as clothing, ceramics, fabric, wine and spirits. As Italy surrounds it, most of San Marino’s economic sectors are highly supported by this nation; in fact, 90% of San Marino’s export market is supported by Italy. Italy also suffered from the 2008 recession, so its demand for imports from San Marino has lessened, which has, in turn, weakened San Marino’s economy.

After the recession, San Marino’s strong economy took a downward turn. Unemployment – which had been at its lowest in 2007 at 3% – jumped to 4.5% by 2009 and reached its peak of 7.9% in 2017. However, after significant efforts and initiatives, San Marino’s unemployment rate declined to approximately 5% in 2022. While poverty is not a major issue in San Marino compared to many other countries, the recession certainly caused a notable increase.

Unemployment

Although San Marino’s poverty rate is low enough that it is not necessarily significant enough to be recorded, such a rapid increase in unemployment likely led to hardship for a significant portion of San Marino’s population. Increases in unemployment cause greater stress for the individual and strain the government, as it puts more pressure on the government to support those who are unemployed. Additionally, it weakens the economy further, as those who are unemployed lose purchasing power.

Final Remark

Although the recession increased poverty, the government of San Marino has been working to curb its effects by eliminating its status as a tax haven. Notably, the country’s nonfinancial sector recovery, which started in 2014, has placed its economy in a strong position to face shocks.

Furthermore, as other countries have bounced back from the recession, demand for goods from San Marino has increased as well. Hopefully, as more countries start recovering, this will also help San Marino’s economy recover so that progress can be made regarding its poverty rate.

– Mary Kate Luft

Photo: Flickr
Updated: May 29, 2024

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USAID Helping People in Qatar

How to Help People in Qatar

Qatar is a nation of extreme economic stratification between rich and poor. An oil rich gulf state, Qatar’s economy is booming, with its GDP reaching a soaring $329.2 billion in 2016 – making Qatar the wealthiest Arab state. Despite this title, there are still unfortunately a large number of people living in poverty here. In this climate of extreme inequality, the question of how to help people in Qatar remains of vital importance.

This economic growth is coupled with a massive population spike, due to the influx of migrant workers needed to sustain the economic growth of the country. Migrant workers are estimated to comprise about 90 percent of the Qatari population, with nearly 60 percent living in what the Qatari monarchy officially calls “labour camps.”

This influx of migrant workers has been further exacerbated by the construction for the upcoming 2022 FIFA World Cup. Human rights groups have long condemned the working conditions of migrant workers in Qatar. Under the kafala labor sponsorship system, workers are dependent on their employers for their visas, living accommodation and even permission to enter or exit the country. Amnesty International has deemed labor conditions as “squalid and cramped,” while the International Labor Organization is launching investigations into the labor camps and systems surrounding the construction of World Cup infrastructure.

Qatar is an absolute monarchy, ruled by Emir Sheikh Tamim bin Hamad bin Khalifa Al-Thani. As an official ally of the U.S., diplomats from the U.S. have unique access to the small faction of the Qatari population that maintains control over the political and economic realities that the poor face. It is crucial that the U.S. uses its influence to advocate for the outrageous treatment of migrant workers, on whose backs the immense wealth and economic growth of Qatar is built.

USAID has already begun to answer the question of how to help people in Qatar, and are still working to implement a Memorandum of Understanding (MOU) regarding Cooperation to Enhance Global Food Security, signed in 2011. Dr. Rajiv Shah, then the administrator of USAID, signed the MOU, saying, “Both the United States and Qatar see food security as a development issue that must be addressed comprehensively and creatively.”

It is critical to the health and well-being of the impoverished Qatari workers that these goals be pursued. Moreover, resources must continue to flow to organizations such as USAID, which work to pressure the Qatari monarchy to provide a social safety net and adequate human rights for its subjects.

– Jeffery Harrell
Photo: Flickr

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Causes of Poverty in Kuwait Often Overlooked

Causes of Poverty in Kuwait

Despite being one of the wealthiest countries in the region, many of the citizens of Kuwait live in squalor and poverty, while their countrymen revel in the wealth of the nation. While Kuwaiti government officials deny the existence of extreme poverty in their country, and accurate data on the extent of its poverty is hard to come by, accounts coming from within the country help indicate what the causes of poverty in Kuwait are.

Kuwait has a GDP per capita of over $70,000, indicating that the roughly four million inhabitants should have plenty of wealth to support themselves, even in countries with costs of living much higher than Kuwait’s. Kuwait is also one of the most charitable countries in the Middle East and the world as a whole, according to the Charities Aid Foundation World Giving Index, with millions of dollars committed to charitable causes every year. Given these two factors, it would not be unreasonable to presume that the standard of living in Kuwait must be quite good.

However, most of this wealth appears to be consolidated in the top several percent of Kuwaiti citizens. Kuwait is a nation whose wealth is built on the back of its natural oil reserves, which comprises nearly the entirety of Kuwait’s industry. The large dips in oil prices over the past decade have begun to pressure the Kuwaiti economy, as 2015 marked its first budget deficit in decades.

There is undeniable wealth present in the country, which manifests itself in areas such as Kuwait’s excellent public infrastructure; nearly the entire country lives in an urban area and has easy access to clean water, sanitation and medicine. Yet the nation only employs just over 75 percent of its citizens, which leaves nearly one in four workers without an income to support their families. Though unemployment is just one of the causes of poverty in Kuwait, other causes are pointed to by Kuwaiti citizens themselves.

Writing in a column for the Kuwaiti Times, Thaar Al-Rasheedi talks about the divide between the wealthy and the poor, which he believes to include some 90 percent of Kuwaiti citizens. He points to the over a half million Kuwaiti who live in rented houses, and another 100,000 people who have applied for a house from the government but have yet to receive their housing. The reason for this, Al-Rasheedi points out, are the exorbitant prices on everything in Kuwait. “Salaries are high but, on the other hand, there is hardly a citizen who still has a single dinar by the 15th of each month,” Al-Rasheedi writes.

He goes on to note that many Kuwaiti are forced into “intentional poverty” for half of every month to be able to afford enough food to survive until their next paycheck. Meanwhile, the oil tycoons live comfortably off their millions and tell the rest of the world that there are no poor people in Kuwait.

Though the poor of Kuwait seem to be largely glossed over, at least by the Kuwaiti government, citizens of the nation feel it is a very real issue, and the causes of poverty in Kuwait stem largely from the extreme top-heaviness of wealth distribution in the nation.

– Erik Halberg

Photo: Flickr

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How to Help People in Portugal

How to Help People in Portugal

Like many countries across the world, Portugal was one of the nations in Europe significantly impacted by the financial crisis in the late 2000s. By 2009, the country began facing high levels of debt and a rising unemployment rate that, to this day, still weighs on the nation’s economy. While the Portuguese government attempts to understand how to help people in Portugal, much more needs to be done to address the country’s economic conditions.

Poverty and Unemployment
Since the beginning of the European debt crisis in 2009, Portugal has been affected by high levels of poverty, large instances of labor market segmentation and high unemployment rates.

In 2010, 18 percent of the population lived under the national poverty line, with certain groups affected more than others, such as women, children, ethnic minorities and the elderly. The incidence of poverty varies quite drastically between regions in Portugal. For instance, many areas in the northern region of the country have larger pockets of poverty due to the restructuring of the textile industry, while Lisbon may not see such a large impact, as its GDP nears the European average.

After joining the European Economic Community in 1986, Portugal experienced strong growth, decreasing interest rates and declining unemployment. However, with the economic problems faced in 2009, unemployment grew to over 10 percent by 2010, reaching a 24-year high.

By 2017, Portugal’s unemployment rate of 9.8 percent still lands the nation above the OECD average of 5.9 percent, yet the fall since 2010 has been quicker than the average across OECD countries. The main catalyst of the unemployment issues stretch beyond the recent debt crisis and are rooted in the country’s structural weaknesses.

Increasing the number of available jobs is one of the answers to how to help people in Portugal, as the country ranks in the bottom third of performers across OECD countries. The number of jobs has been decreasing in the nation since 2006 and is a major cause of the high levels of unemployment and poverty across the nation.

Portugal also needs to focus on improving the quality and inclusiveness of jobs. To improve the living conditions for Portuguese families, there must be a focus on improving earnings quality by increasing wages and reducing earning segmentation.

Certain groups are more likely to be employed on a temporary basis or through atypical contracts, which creates a barrier to inclusiveness in Portugal. This creates labor market segmentation and insecurity that also contributes to unemployment in the country.

Demographics
In addition to the effects on unemployment, the segmentation has also had a large impact on the country’s demographics and immigration of refugees. Portugal’s population is expected to shrink by 30 percent between 2015 and 2100 due to low fertility rates, higher life expectancy and migration outflows. With the old-age dependency ratio expecting to more than double over the same period, the economy will suffer from low future earnings.

The government believes they have a solution for how to help people in Portugal instead of simply allowing the statistic to unfold. The economic strategy focuses on increasing the number of asylum seekers and resettled refugees welcomed into the country. By attracting more people to settle in Portugal, the idea is that openness will boost economic activity while also counteracting an aging population and falling birthrate.

While the people of Portugal support immigration, the labor market conditions, lack of immigration historically and segmentation within society discourage refugees from resettling in Portugal. Therefore, to help those looking for refuge, integration and employment prospects must be considered in policy formation.

Fortunately, there is also support beyond the political sector. Abou Ras was himself a refugee who resettled in Portugal and has formed the association “Families of Refugees” with other asylum seekers to help migrants adjust to life in the country.

With Portugal taking a proactive approach to the inflow of refugees, the country could benefit from its efforts in the long run. However, emphasizing the importance of improving labor market conditions is one of the best ways to help people in Portugal. This will not only improve the current living conditions of the population, but also improve the prospects for all those to come.

– Tess Hinteregger

Photo: Flickr

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The Hidden Face of Poverty in Brunei

The Hidden Face of Poverty in BruneiBrunei Darussalam, the Abode of Peace, is a small Southeast Asian country with a population of approximately 350,000 people. Data on poverty in Brunei is scarce, but it shows that roughly five percent of the country’s population lives in poverty. Nevertheless, there is another face of poverty in the small nation: the poverty of freedom and opportunity.

Brunei is an Islamic Sultanate Kingdom ruled by a monarch in whom rests the executive, legislative and judicial powers of the State. The reigning monarch, Hassanal Bolkiah, is the 29th ruler in an unbroken line of succession for the past six centuries. The country’s citizenry has allowed the monarchical rule to survive for this long because of two reasons: welfare benefits and the respect for social and political order enforced by the state.

Economic poverty in Brunei is not a big problem because it is a rich nation and the third largest exporter of oil and gas, which allows the subjects of the King to enjoy a high per capita income of nearly $24,000 annually. The human development index (HDI) ranks it 30, which falls in a very high human development category, over countries such as Malta, Qatar and Cyprus, which rank 33. Brunei also ranks well in the gender development index (GDI). According to the 2015 HDI report, the female HDI value for Brunei is 0.854 which is a GDI value of 0.986, placing it into Group 1 with countries such as Norway, Australia and Singapore.

However, poverty in Brunei exists in the sense that there are reported problems of smaller economic inequalities and the lack of freedom and opportunity. Development across some areas is uneven and opportunities for younger generations to participate actively in the State affairs through education, employment and promotions on merit are less than encouraging. Brunei has no representative institutions due to the total control of the King’s authoritarian regime. Analysts believe that the State has been able to maintain harmony due to the vast wealth at its disposal for welfare activities.

The less diversified nature of economy, dependency on the oil and gas industry and the spread of ideas due to the rise of Internet and globalization among the younger generation do seem to pose a challenge for the current socioeconomic and political model. Economic and political measures in Brunei must be taken to address the emergent issue of poverty of opportunity and freedom and, simultaneously, sustain growth and prosperity.

– Aslam Kakar

Photo: Flickr

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Why Is Kuwait Poor?

Why Is Kuwait Poor?Kuwait, a small country located in the Middle East, is a country that tends to be stereotypically characterized as stricken with poverty. A common question that is asked is, why is Kuwait poor?

But this stereotype is not necessarily true. Kuwait is indeed small, but its oil reserves have made it one of the richer countries in the region. In terms of purchasing power, Kuwait’s GDP is ranked 55th in the world by the CIA World Factbook.

Due to Kuwait’s small population size, this success directly correlates to its people’s standard of living. As of 2016, Kuwait’s GDP per capita ranked 11th in the world at $71,900. This figure is much higher than many major economies such as the United States, which ranked 20th at $57,400.

Based on these figures alone, Kuwait appears not to be a poor country, but one of the most prosperous in the world. So, why is Kuwait poor? On the international stage, it is not. When one looks further, however, key figures may legitimize that question.

What is interesting about Kuwait is that the country’s poverty rate is extremely difficult to find. Neither the World Bank, the CIA World Factbook nor UNICEF have access to it, which raises a lot of questions. Why do these trusted international organizations not have this information? Is this information being withheld, and if so, for what reason?

Based on other metrics, it is hard to see Kuwait as a stereotypical poor country. The figures mentioned above related to GDP show that the nation as a whole is seeing economic success, and an unemployment rate of 3 percent suggests that its poverty rate must be low.

Still, the lack of specific data in this area is unsettling. If Kuwait is as prosperous as it seems to be, there should be no issue in providing data relevant to its poverty rate and income distribution. In order for the world to know for certain, the international community needs this data.

So, why is Kuwait poor? It technically is not poor, but that is not necessarily the right question to be asking. By asking questions regarding Kuwait’s poverty rate, its income distribution, and the general livelihoods of its people, we can better analyze the country’s successes, its shortcomings and its opportunities for growth long into the future.

– John Mirandette

Photo: Flickr

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Three Ways Poverty in Uruguay is Being Addressed

Poverty in UruguayWithin the past few decades, Uruguay—a small country with a population of about 3 million—has managed to reduce its moderate poverty rate from 25.5 percent in 1989 to 12.4 percent in 2012, and the extreme poverty rate from 3.3 percent to 0.5 percent over the same period. Because of the great reduction of poverty in Uruguay, the nation’s Human Development Index ranking is ever increasing, and it is seeing longer life expectancy and greater birth rates.

However, despite improved conditions for citizens of Uruguay, there is still anxiety among community members due to a long embedded history of fluctuations in the economy and government that have contributed to poverty-like phases for many. The last 40 years have been illustrated by a slow-moving economy, one that is not quick to adapt to change, but with moments of remarkable growth. Uruguay is uniquely addressing its poverty issues, some with successful outcomes and others with less positive consequences. Here are three ways poverty in Uruguay is being tackled.

  1. Economy
    Uruguay has been relatively successful in ramping up economic development, which has seemed to keep up with globalization. Gross Domestic Product increases in the late 80s have been able to sustain Uruguay through some economic downturns in recent history. This, coupled with social reform, is keeping extreme poverty low.
  2. Social Integration
    Uruguay still experiences marginalization and social disintegration, but has taken initiatives in the last few decades to bring these issues to public view. It has been argued that education is a key element is bringing many different demographics of people together and enabling students and families to take charge of their lives. From the early 90s to the present, referendums have been drafted regarding education and social reform as well as being a topic for political platforms.
  3. The Work Force
    Women have become more of a present figure in the job market, having the highest rate of participation in labor in Latin America. While the amount of active workers is higher than it has ever been, Uruguay still has relatively high unemployment rates. However, the Uruguay legal system is working toward slimming the gap between wage discrimination and job security rights among its citizens.

While Uruguayans are working toward a more stable economy and social reforms, there is clearly still some way to go. But, despite slow moving and small-scale changes, Uruguay is a positive example of poverty reduction efforts and there is growing hope for change in the South American nation.

– Casey Hess

Photo: Flickr