Archive for category: Economy

Information and stories about economy.

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Universal Basic Income in Kashmir

Universal Basic IncomeTension-fraught Jammu and Kashmir (J&K) is laying plans to provide a Universal Basic Income (UBI) to all its residents living Below the Poverty Line (BPL). This plan is the first instance of an Indian state committing to a UBI policy.

Jammu and Kashmir’s State Finance Minister Haseeb Drabu proclaims that a UBI will prevent wastage of monetary funds. In a January 2017 budget presentation, Drabu announced that the J&K would use direct benefit transfers. This means that the government deposits money directly into individual bank accounts.

Economic experts have for long endorsed a UBI. According to Pranab Bardhan, emeritus professor of economics at the University of California at Berkeley, Below the Poverty Line (BPL) lists in most Indian states exclude persons legally designated as poor, while numerous well-off families succeed in bribing their way onto the lists.

In Jammu and Kashmir, where geopolitical turmoil wreaks havoc on the economy and the public’s standard of living, UBI systems could tackle poverty. The J&K has a poverty rate of 21.63 percent. Additionally, the unemployment rate among young people is an alarming 24.6 percent.

In 2011, the Self-Employed Women’s Association (SEWA), in a project funded by the United Nations Children’s Fund (UNICEF), launched pilot studies of the effectiveness of such UBI grants in India. Several results stood out:

  1. Recipients often used the money to improve their housing, latrines, walls and roofs. Additional funds were employed to take precautions against malaria.
  2. Nutrition has advanced: the average weight-for-age of young children increased, particularly among girls.
  3. Diets also improved, as commerce shifted from ration shops to markets. More fresh fruits and vegetables consequently became affordable.
  4. Improved health led to superior rates in school attendance and performance.

The SEWA/UNICEF trial yielded greater benefits for working class families, women, and persons with disabilities. Universal Basic Income helps reduce debt and renders less likely the need to go into more significant debt. Individuals reduced the need to borrow money for short-term purposes.

UBI will replace several current welfare schemes, compelling cooperation between the central Indian government and Jammu and Kashmir. Aside from lowering the cost of delivering social programs, Drabu declares UBI plans will deter leakages that plague many current social programs. Existing policies have left over 350 million people mired in poverty, even after two decades of high economic growth.

Universal Basic Income in Jammu and Kashmir will replace several current welfare schemes, necessitating cooperation between the central Indian government and J&K. In addition to reducing the expense of delivering the social projects, Drabu maintains UBI will deter leakages that plague many current social programs.

– Heather Hopkins

Photo: Flickr

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The Fallacy of the Brain Drain in India

Brain Drain in IndiaThere is a common joke in Silicon Valley that the most spoken languages are Hindi and Telugu. Like many common jokes, this one reveals a staggering truth: nearly 60 percent of the engineers in Silicon Valley are of Indian origin. Over the past two decades, high-skilled migration has brought dramatic innovations to the American Information Technology (IT) sector, while leading to what some commentators have called the brain drain in India and other developing countries.

In 1990, as the American IT sector began to boom, Congress passed the H-1B program, granting visas to thousands of foreign nationals in “specialty occupations.”

A recent article published in India’s The Quint claims, “[the brain drain in India] adversely affects the quality and quantity of human capital formation, which is the bedrock of modern economic development.”

Although this is a common contention, it is far from correct.

A recent study published by the Center for Global Development suggests, “better-paid jobs [in the U.S.] incentivize [Indian] students to choose certain majors and supply a highly-educated workforce to Indian firms.” Thus, at the same time as thousands of high-skilled Indians emigrate to the U.S. every year, thousands more acquire STEM degrees in India and never leave. As for those that do find higher-paying jobs abroad, many eventually return to India when their visas expire.

Because of this, between 1998 and 2012, the Indian IT sector grew from 1.2 percent of GDP to over 7.5 percent. By the mid-2000s, India had surpassed the U.S. as the largest exporter of software.

Far from producing a brain drain in India, Gaurav Khanna and Nicolas Morales’ study finds that the American H-1B program not only correlated with the birth of India’s IT sector but also caused a “reverse brain drain” in India.

While some have wrongly criticized the H-1B program for hurting developing economies, others have argued that free movement of labor has imposed downward pressure on American workers’ wages.

A recent article in the Huffington Post suggests that H-1B visas only benefit American tech companies that “want to hire cheap, immobile labor—i.e. foreign workers.”

Although high-skilled migration has certainly led to wage stagnation for certain occupations in the U.S., Khanna and Morales find that the influx of Indian workers has simultaneously motivated many American students to attain even more specialized degrees that lead to even higher paying jobs.

In the end, the new study released by the Center for Global development offers much-needed clarity about the complicated subject of labor migration. Overall, it finds that high-skilled migration is something to be encouraged rather than banned. Indeed, the free movement skilled labor has been proven to bring mutual benefits to both the American and Indian economies.

– Nathaniel Sher

Photo: Google

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Economic Causes of Poverty in Taiwan

Taiwan's EconomyAlmost 2 percent of Taiwan’s population constitutes as being poor and is eligible for monthly government assistance. The causes of poverty in Taiwan are myriad, but one key factor is a lack of public investment in social development.

After the Chinese Civil War, Taiwan’s economy flourished. Taiwan’s middle class rose as a result of economic and social investment: the government was investing in its quality of education, availability of infrastructure projects, and small and medium-sized enterprise support to jumpstart new local businesses. Be that as it may, politics and big business are now significantly associated with one another and this intermingling is one of the causes of poverty in Taiwan.

Taiwanese social institutions remain biased for investors, no longer functioning with its people’s best interests in mind. Wages have been stagnant for 16 years; stagnant wages, high property rates and corporate welfare perpetuate poverty despite the growth of technological and scientific development. People living above the poverty line are also struggling to a similar extent.

If someone falls ill or loses their job they become vulnerable to poverty, domestic violence and alcoholism to name a few. In 2011, 357,000 people depended on welfare and at least 700,000 people were making less than the minimum wage. Presidential candidate Eric Chu suggested that the causes of poverty in Taiwan could be combated by gradually raising the minimum wage over four years.

To help struggling children and families, the Taiwan Fund for Children and Families is currently filling the gap by providing necessities such as money, oil, rice and milk to those without the means to access them.

Taiwan’s economy once prevailed because of its export-centered industry. Unfortunately, since 2001, most factories moved from Taiwan to China or Southeast Asia. It is evident that poverty is perpetuated by the government of Taiwan’s inability to invest in its own people, creating a cycle that disallows Taiwan’s locals to invest in their own country.

– Tiffany Santos

Photo: Pixabay

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Why Is Mali Poor?

Despite achieving the Millennium Development Goal of reducing hunger by 50 percent, Mali continues to struggle with extreme poverty. 50 percent of the population lives on less than $1.25 a day. There are nearly 59,000 internally displaced people and 143,500 Malian refugees located in neighboring countries. More than 600,000 Malians are in need of food assistance. A low-income nation, Mali was ranked 179 out of 188 countries on the 2015 Human Development Index. Though Mali’s economy is projected to grow by 5 percent over the 2017-2019 period and all economic sectors are projected to contribute to this growth, poverty persists. Why is Mali poor?

The answer to this question must consider the negative effects that drought and erratic rainfall have had on the country. Climate change has also led to higher temperatures, less rainfall and growing desertification in Mali, already one of the hottest countries in the world. 90 percent of the rural population works in the agricultural sector. Most farming is done on a subsistence basis; therefore, there is little to no reinvestment made in mechanization. Due to the adverse conditions, 25 percent of families are moderately to severely food insecure. During the 2016 lean season, approximately 315,000 Malians experienced severe food insecurity. One in three Malian children under the age of five is affected by stunting, a condition brought on by poor nutrition which affects both physical and cognitive development.

With an undiversified economy dependent on commodity exports, Mali is also extremely vulnerable to fluctuations in global commodity prices and the consequences of climate change. Though growth accelerated to 7 percent in 2014, its highest level in over a decade, and is expected to remain steady at 5 percent, Mali’s economic prospects are contingent on several important factors, including the stability of global prices for cotton and gold, Mali’s two biggest exports. Climatic shocks that negatively affect harvests could also cause a drop in economic growth and an increase in food insecurity.

Another contributing factor to why Mali is poor is the military coup that took place in the country in 2012. The coup resulted in the occupation of the northern regions of Mali by armed non-state groups. The signing of a peace agreement in 2015 between the Malian government and two rebel coalitions allowed for the implementation of a program of accelerated development in the northern regions. Due to fragile security and attacks on United Nations forces and the Malian army by terrorist groups in the northern regions, putting the program into action is difficult.

In addition to adverse weather conditions and conflict, poverty in Mali has also been perpetuated by the lack of access to education and career training. According to the United Nations Development Programme (UNDP), the expected amount of schooling in Mali is 8.4 years, while the average amount of schooling is only 2.3 years. Educational programs such as those implemented by the Cooperative for Assistance and Relief Everywhere (CARE) have taken steps to make education more accessible to children in Mali, particularly those who have been out of school for a prolonged period of time.

“In Mali, 89 [percent] of out-of-school students who enrolled in a CARE accelerated learning program also completed it,” says CARE’s Senior Technical Advisor for Education, Katherine Begley. “100 [percent] of them successfully transitioned into formal schools.”

With the emphasis put on reaching those most affected by conflict and poverty, it is the belief of organizations like CARE that the cycle of poverty can be ended in Mali.

– Amanda Quinn

Photo: Flickr

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Why is Nicaragua Poor?

Destruction from ten years of The Contra War (1980-1990), as well as a 1987 economic crisis, led to the collapse of Nicaragua’s economy. Among the almost half of the population that is rural, about 68 percent live on less than a dollar a day. Why is Nicaragua poor? Nicaragua’s population currently stands at 6.1 million with two million school-aged kids. Here are four primary answers to the question “why is Nicaragua poor?”

  1. Lack of public services such as education
    The United Nations International Children’s Emergency Fund (UNICEF) logged that 500,000 Nicaraguan kids aged 3 to 17 are not in the education system. Most of these children cannot access education as they are of indigenous descent live in poor, rural areas.Children are more active in the workplace than in the classroom. In 2005, the national child labor survey calculated almost 240,000 child workers aged 5-17. One in three employees is under 14 years old. Nicaragua’s education system is not federally supported, for only a small portion of the government budget is allocated to education. Moreover, teachers in Nicaragua are among the worst paid in the world.
  2. Obstacles to market access
    Nicaragua’s economy is driven primarily by agriculture. Cassava is the main crop grown by local farmers who do not have access to technical support and profitable markets, in turn creating a distortion of commodity prices in the international market. They sell it to local markets at low prices and struggle to earn a profit. Indebted farmers in the coffee-dependent region of Nicaragua are paying off loans even with the increase in coffee prices.
  3. Fragile ecosystems
    In November 1998, Hurricane Mitch caused the destruction of hundreds of thousands of homes, lives and crops, and infrastructure suffered severely. In Posoltega, 2,000 people died in a mudslide. Much land has been overexploited, lessening agricultural productivity, and there is high population density on that same land. In addition, most families live on marginal lands where water is scarce.
  4. Physical isolation
    In 2001, only one out of five poor, rural households had access to electricity. In addition to the damage caused by natural disasters, Nicaragua had previously lacked adequate infrastructure such as roads, water accessibility and electricity supply.

Governmental negligence has left Nicaraguans independently surviving to the best of their ability, and this lack of support goes some way toward answering the question “why is Nicaragua poor?” Consequently, children must enter the workforce, farmers navigate an unfamiliar international market and locals struggle to live without access to transportation, water and technology.

It is the responsibility of the government to expand access to fundamental resources to Nicaraguans in isolated locations. While keeping the geography of rural locals in mind, it is also important for the government to be attentive of Nicaragua’s overall geographic disposition.

– Tiffany Santos

Photo: Flickr

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App Boosts African Informal Economy

African Informal Economy

The informal economy in sub-Saharan Africa is booming. Comprised of jobs ranging from independent manufacturers to food vendors, the informal economy is responsible for nearly 70 percent of employment in the sub-Saharan. Additionally, it’s estimated that on average, the African informal economy accounts for nearly two-fifths of national GDP.

Working in the informal economy does come with certain challenges. Access to communication technology and money transfers is particularly difficult. Additionally, access to loans for ready liquid capital is slim. Most could be addressed with banking infrastructure and all are necessary services that businesses operating in the formal economy enjoy.

However, from the bank’s perspective, it is not in their financial interest to service many in the informal economy. Many unbanked Sub-saharan Africans, nearly 500 million of them, consistently make small transactions—usually less than $5  a day. For this reason and the cost of opening and maintaining banking branches, banks don’t consider these individuals serviceable.

That’s where companies like Nomanini step in.

Nomanini, meaning “Anytime” in saSwiti, is just one of several tech companies investing in the African informal economy. With the use of mobile point-of-sale (PoS) devices, individuals can become walking, talking ATMs.

Nomanini’s physical PoS terminal is no bigger than perhaps two smartphones put together and is fully wireless. The Google cloud also hosts the system, giving clients more stability.

Armed with the PoS device, vendors can sell pre-paid mobile airtime, electricity, facilitate banking transactions, and help others pay their bills. In some cases, clients are even granted micro-loans, allowing them access to working capital and the opportunity to build credit.

With the help of Nomanini’s digital PoS app, the African informal economy is exploding. Some vendors have seen their monthly incomes grow 20-30 percent.

Since launch in 2010, Nomanini has facilitated more than 16 million transactions. With the help of Nomanini, the African informal economy, armed with only smartphones and a wireless connection has shown its viability, It has also proven that its large number of unbanked shouldn’t be ignored by institutions just because of the size of their transactions.

– Thomas James Anania

Photo: Flickr

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The Mysterious Case of the Poverty Rate in Benin

Poverty Rate in Benin
Benin, a country of 9.4 million people and 113,000 square miles, is known to  be one of the most stable and inclusive democracies in Africa. The country has seen consistent GDP growth over the past two decades, between 4 and 5 percent annually, with even higher rates in 2013 (7.7 percent) and 2014 (6.4 percent). However, political stability and economic growth have not lessened the poverty rate in Benin. Instead, the country’s poverty rate has been rising.

Despite the GDP, Poverty Rates are Climbing

In 2006, the poverty rate in Benin stood at 37.5 percent, dropping slightly to 35.2 percent in 2009. It then began to rise again, reaching 36.2 percent in 2011 and 40.1 percent in 2015.

How is it that GDP growth has gone hand-in-hand with rising poverty rates?

Economic Vulnerabilities

Twenty-five percent of Benin’s GDP is based on agricultural production. Environmental factors, like drought and severe weather conditions, affect the economy’s predictability and stability. Additionally, production tools are outdated, infrastructure is inadequate, and financing is absent.

Benin’s economy is largely dependent  on informal re-export and transit trade with Nigeria, which makes up about 20 percent of the country’s GDP. Informal labor employs over 90 percent of the country’s labor force and makes up roughly 65 percent of the overall GDP. According to the World Bank, “events in Nigeria can have considerable impact on Benin and create uncertainty in its fiscal space.” African Economic Outlook has reported that the recent economic slowdown in Benin is in part due to lower growth in Nigeria.

Recent Attempts at Reducing Poverty

Benin has been formally trying to fight poverty since 1999. In 2000, the country implemented the Interim Poverty Reduction Strategy (I-PRS). It  then enacted the Poverty Reduction Strategy (PRS 1) for 2003-2005, the Growth and Poverty Reduction Strategy (GPRS 2) for 2007-2009, and most recently the Growth and Poverty Reduction Strategy (GPRS 3) for 2011-2015.

These strategies aimed to bolster the rural economy, control demographic growth, reduce gender inequality, strengthen basic infrastructure, and enrich a microcredit policy–especially for women. Some progress has been measured, with Benin’s Doing Business ranking moving from 158th in 2015 to 155th in 2016.

Building a Diverse Economy from Within

With reliance on Nigeria and agriculture, Benin has the opportunity to improve its business environment from within, becoming more attractive to domestic and foreign investors. Increasing access to credit and infrastructure, such as electricity, will also be key in generating and sustaining business development.

Continuing its efforts to ensure the equal geographical distribution of resources, including access to health and education, and increasing economic opportunities for women will be instrumental for Benin to overcome the steady level of poverty its people have been facing.

 

– Joseph Dover

Photo: Flickr

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Tourism Holds Hope for Dominica Poverty Rate

Dominica Poverty Rate

The Dominica poverty rate has always been high, but in recent years with changes in the banana industry, the poverty rate has increased. There are very few wealthy Dominicans and there are no huge income gaps making Dominica one of the poorest countries of the Eastern Caribbean. But tourism to the country may be one solution that can decrease the poverty rate.

The area that is most affected by poverty in Dominica is the northern rural areas where agriculture is the main source of income. In these rural areas, one in every two households is poor. There is also a small urban class of people, which is made up of professionals and civil servants, who are considered middle class while the rest are working class. For the island as a whole, the unemployment rate has reached an estimated 20 percent.

This increase of unemployed people has to do with the decline of banana production. The decrease in banana production partly has to do with large agricultural businesses choosing suppliers in South American countries and getting bananas for a cheaper price. At the height of the banana industry, banana farmers in Dominica were producing 72,000 tons. That number has since dwindled to 12,000 tons of bananas being produced, with banana farmers barely able to cover costs.

With banana production so low, the Dominican government has been looking at other ways to boost the country’s economy. Tourism is being touted as a new solution since the island has beautiful views of waterfalls, rainforests, coral reefs and volcanic sites. Today, tourism contributes more than 30 percent of the country’s foreign exchange earnings while banana production only contributes 10 percent.

But Dominica has a long way to go to increase its economy and decrease the poverty rate. The government needs to protect the island’s ecosystem since that is the draw for tourists. Protection of the island’s ecosystem includes creating and supporting sustainable development and energy systems, having water quality management and deforestation prevention. With these plans set in place, the Dominica poverty rate will be able to decrease once the economy improves.

– Deanna Wetmore

Photo: Flickr

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Why is Guyana Poor?

Why is Guyana Poor
With a population of 758,000, Guyana is the third smallest country in South America. It is at once considered a middle-income country and the third poorest in the Western Hemisphere. So why is Guyana poor?

Tense History and Natural Riches

Guyana has been ruled by the Dutch, the French and the British. It became an official British colony in 1831 and won its independence in 1966. Since then, the country has faced tensions between its African and Indian populations. These cultural divisions have caused political instability and corruption.

In 2015, former army general David Granger won elections and ended the rule of the Indian-dominated People’s Progressive Party. Granger’s goal has been to end corruption and racial divisions. He formed a multi-ethnic coalition, Afro-Guyanese Partnership for National Unity and the Alliance for Change.

Guyana has one of the lowest deforestation rates in the world. Tropical rainforests cover over 80 percent of Guyana, and its agricultural lands are fertile.

Eighty-three percent of Guana’s exports are natural resources, including sugar, rice, gold, bauxite and timber. While offshore oil also shows economic potential, it has also revived border disputes with Venezuela.

A Fluctuating Economy

Guyana’s economy has shifted between strong periods of growth and impending disaster. In 1982 Guyana nearly faced an economic collapse. The country then saw some recovery from IMF-backed economic reforms. Guyana has since privatized many state-owned industries, which has led to new investments and more jobs.

Guyana’s economy was thriving during the mid-1990’s, growing at an annual rate of more than six percent. In 1998, economic growth stalled due to drought, falling commodity prices and political uncertainty. Growth was halted until 2005 and then increased until 2008 when world demand collapsed. Starting in 2009, the economy showed signs of growth at an annual rate between 3 and 5.5 percent.

The People Facing Poverty

The most recent poverty survey in Guyana was in 2006. The survey revealed that 36 percent of its people live in poverty and that 18 percent live in extreme poverty. The per capita income in 2015 was $4,090. Guyana’s currency is the Guyanese dollar. The exchange rate equals 206.55 Guyanese dollars for one U.S. dollar.

Children and indigenous people are the most likely to experience poverty. In 2006, UNICEF reported that 47.5 percent of children under the age of 16 in Guyana were living in poverty. Young adults between ages 16-25 are the second most affected, with a poverty rate of 33.7 percent.

Poverty levels vary by region. Rural coastal communities are the most impacted, followed by urban areas and the rural interior. Thirteen percent of people in urban areas are considered poor. In rural areas, 22.5 percent are considered poor, nearly doubling the urban percentage.

Why is Guyana Poor?

The poverty rate in Guyana is a case of contradictions.

Guyana has a growing economy and an abundance of natural resources. While this seems to suggest prosperity and jobs, the youth unemployment rate is over 30 percent. Current estimates are closer to 40.

Education is another factor that contributes to why Guayana is poor. The country has one of the highest reported literacy rates in the Western Hemisphere. From 2008-2012, youth ages 15-24 had literacy rates of 93.7 percent for females and 92.4 percent for males. However, the functional literacy rate is considered low, due to poor quality education, teacher training and infrastructure.

According to the World Factbook, Guayana has one of the highest emigration rates in the world. Over 55 percent of Guayana’s citizens are residents of other countries. More than 80 percent of citizens with higher education emigrate, causing a deficit of skilled workers, especially in healthcare. In addition to a lack of professionals, Guyana’s healthcare sector also suffers from a lack of medical resources.

Hope for Sustainable Growth

Guyana has the potential to reduce its poverty level. One of the first steps is to update the 2006 poverty measurements. UNICEF recommends that Guyana adopt methods to monitor poverty that takes various ages, regions and ethnicities into consideration.

Guyana has signed onto to Sustainable Development Goals to end poverty by 2030.

– Christiana Lano

Photo: Flickr

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Jordan Poverty Rate Increases with Refugee Crisis

Jordan Poverty RateJordan, while small in size, is often seen as a focal point in many Middle Eastern conflicts. This, among other points of stress, has been a major contributor to the country’s economic struggles.

The Jordan poverty rate has taken some hits in recent years, with high unemployment and weak economic growth. Job growth is a particular challenge in the area. In 2016, unemployment was at 15.3 percent.

The World Bank reported that in April that there are over 650,000 Syrian refugees currently in Jordan, which has put a strain on the country’s economy.

Economic growth has slowed in recent years. In 2016, Jordan’s economic growth saw a slight decrease, from 2.4 percent in 2015 to 2 percent. The ongoing Syrian crisis and the closure of export routes to Iraq and Syria have contributed to the country’s state of minimal growth.

However, the Jordan poverty rate is expected to see improvement in the coming years. The World Bank reports that Jordan should see a 2.3 percent growth rate for 2017, and an average rate of growth of 2.6 percent between 2017 and 2019.

According to data from the World Bank, Jordan’s GDP is approximately $38.655 billion. Its population is approaching 9.5 million.

As of 2010, the poverty headcount ratio at national poverty lines was approximately 14.4 percent, according to data from the World Bank.

According to a report from the World Bank, Jordan has undergone massive reforms in respect to education, health services, privatization and liberalization.

Additionally, social protection systems and reformed subsidies have been introduced by the country’s government. While issues of investment and business exchanges are still present, these improvements have positively influenced the region’s economy and poverty rate.

Jordan’s proximity to major conflicts in the area has put a major strain on the country’s economy. However, Jordan’s government has major improvements in the works that will benefit the economy and the Jordan poverty rate.

– Leah Potter

Photo: Flickr