Archive for category: Economy

Information and stories about economy.

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Why Is Trinidad and Tobago Poor?

Why Is Trinidad and Tobago PoorThe island nation of Trinidad and Tobago lies in the Caribbean Ocean off the coast of Venezuela. Built primarily around the oil and gas industries, Trinidad and Tobago‘s economy is one of the strongest in the Caribbean. Despite this, several factors have led to economic stagnation as well as relatively prevalent poverty. So, why is Trinidad and Tobago poor?

A lack of economic diversification and overdependence on petroleum and natural gas are some of the most important factors holding back Trinidad and Tobago‘s economy. With oil and gas constituting 80 percent of exports and about 40 percent of the gross domestic product (GDP), the island nation has clearly devoted much of its economy to the sale and manufacturing of these natural resources. This leads to several problems.

Oil and gas prices have been in an overall decline over the past several years, so Trinidad and Tobago’s economy has suffered from job loss, reduced tax revenue and reduced development in human capital. These natural resources are also nonrenewable, meaning that they will eventually run out. Trinidad and Tobago’s government has done little to ensure that the country is ready to expand its economy beyond oil and gas once the underground reserves run dry. The overall lack of a business environment to stimulate entrepreneurs is one of the main answers to the question of why Trinidad and Tobago is poor.

Furthermore, the non-energy areas of the economy remain severely underdeveloped and continue to heavily depend on government subsidies. This lack of economic success in non-energy areas discourages potential foreign investors from investing in Trinidad and Tobago, despite the oil and gas sector’s success. Direct foreign investment is undeniably crucial for a country seeking economic diversification, as the inflow of money can help build a strong foundation for new sectors in the economy.

According to a review conducted by the Commonwealth Foundation, a nonpartisan think tank focused on public policy, over 20 percent of Trinidad and Tobago’s citizens currently live below the poverty line. The report also states that 11 percent of the population is undernourished. These unexpectedly high rates of poverty and malnutrition may be partly due to the considerable gender-wage gap present in Trinidad and Tobago.

A study conducted by the Central Bank of Trinidad and Tobago shows that women, on average, earn a staggering 35.3 percent less than men. While this may be partially due to a large portion of women taking low-income jobs, there is certainly a serious amount of gender-based discrimination in wages. It is easy to fall into complacency after the increase in the average woman’s wage – from $9,000 in 2012 to $12,000 in 2014. Despite this rise in pay, however, the wage gap has only been increasing. The average male wage was $18,000 in 2012, but has disproportionately increased to $30,000 in 2014.

Another issue presented by the gender-wage gap affects families with single parents. In Trinidad and Tobago, the children of single parents are six times more likely to live under the poverty line. With about 75 percent of single families headed by the mother, the issue of the gender-wage gap becomes truly alarming. It is illogical to expect single mothers to not only care for her children but also provide for them if she is working for significantly reduced wages and has no supplemental income.

This economic disparity between men and women has led to efforts in increasing the resources dedicated to educating and training women. With the number of women in the workforce steadily increasing over the past few years, women in Trinidad and Tobago have definitely seen improvements in their social and economic standing. Nevertheless, there is still much progress to be made. Passing legislation to eliminate the wage gap would be a substantial step toward promoting economic success in Trinidad and Tobago, in addition to the inherent benefits of working toward gender equality.

Answering the question “Why is Trinidad and Tobago poor?” requires a more convoluted response than expected. The nation of Trinidad and Tobago is undoubtedly one of the wealthiest countries in the Caribbean despite its deeply embedded economic flaws. While the country has made impressive progress by developing social programs to help the vulnerable, nurturing new businesses to encourage private sector growth and eradicating the gender-wage gap must be near the top of Trinidad and Tobago’s priorities for there to be long-term economic improvement.

– Akhil Reddy

Photo: Flickr

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Addressing the Curacao Poverty Rate

Curacao Poverty RateOn October 10, 2010, after centuries operating as a deep-water port for the Dutch, the small Caribbean island of Curacao gained autonomy as a state in the Kingdom of the Netherlands. 80 percent of the country’s debt was forgiven by the Dutch, and most government positions were undertaken by local citizens. For many who lived on the island, 10/10/10 marked the dawn of a new era of opportunity. “We were confident that we were going to have this perfect future,” said political analyst Michiel van der Veur.

Enthusiasm was short lived. Soon after gaining autonomy, the assassination of politician Helman Wiels plunged the island into turmoil. Between 2012 and 2013, Curacao had four prime ministers, greatly increasing the instability. As a country plagued with such unrest, it should be no wonder that the Curacao poverty rate is over 25 percent.

A small island country located in the Caribbean, much of the economy in Curacao is based around tourism and is thus highly sensitive to fluxes in the world market. Most of the country’s necessities are imported, leading to large trade deficits.

The Curacao poverty rate is likely increased by the country’s “brain drain” problem. Like many other developing island nations, citizens who are ambitious and educated often leave, moving to other countries with better opportunities for people with their skill sets.

However, Curacao has committed itself to addressing the country’s widespread poverty. With the support and assistance of the U.N. Development Program, Curacao has created a National Development Plan (NDP), which will focus on improving the economy through a series of steps from 2015 to 2030.

The NDP focuses on five themes to accomplish its goal: education, economy, sustainability, national identity and good governance. As diminishing the Curacao poverty rate is a priority, economy is one of the most important themes. In order to accomplish this, Curacao will focus on structural reform, government support, sectoral growth, supporting investments and broadening ownership of industry and land.

With the NDP, Curacao has taken a significant step towards strengthening the economy and the country as a whole. While there is much work to do, the country’s history as a long time trading center and large deep water port point to a high probability of success.

– Connor S. Keowen

Photo: Flickr

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How to Help People in Kosovo

How to Help People in KosovoThe Republic of Kosovo is a disputed Southeastern European territory nestled in the Balkan Peninsula. Over the last two decades, the country has battled intense civil wars, horrific ethnic cleansings and a fight for freedom that finally culminated in its independence from Serbia (previously Yugoslavia) in 2008. In the early years of its autonomy, Kosovo’s poor economic conditions led the international community to brainstorm ways of how to help people in Kosovo.

As a result, Kosovo was under supervised independence by the International Steering Group until 2012. After 2012, the new country’s economy finally established some semblance of equilibrium. Kosovo held its own elections in 2013 and 2014 for the first time. Since then, their GDP has steadily been on the incline.

Although things are starting to look up for Kosovo, the country is still grappling to stabilize its workforce and job creation. In fact, 30 percent of the population still lives in poverty, 10 percent of which live off less than $1 per day. These discouraging numbers make sense considering the current growth model relies heavily on the remittance of citizens that fled during the war.

However, this strategy cannot be sustained over the long term, especially when the number of migrants leaving Kosovo for neighboring countries is still quite high. Thankfully, there are many charitable organizations and governmental efforts strategizing how to help people in Kosovo. Below are but a few that are doing spectacular things to bolster the Kosovo economy.

The Stabilization Association Agreement

The Stabilization Association Agreement (SAA) could perhaps be the single most influential document in Kosovo’s membership in the European Union. Negotiated in 2013 and 2014, the SAA was signed in 2015 and finally implemented the following year.

The agreement represents a new phase of Kosovo’s relationship with the E.U. and will pave the way for a more stable and prosperous Kosovo by implementing democratic principles and a variety of reforms set in accordance with E.U. standards. These restructurings will not only increase Kosovo’s wealth, but they will also bring the country closer to its goal of joining the European Union.

CARE International

Care International is a nonprofit organization that fights poverty around the world. They also have a specific focus on empowering women and girls. The organization has been working in the Balkans since 1993, providing humanitarian assistance during the worst of the conflict between the Serbs and Albanians. More recently, CARE has been initiating programs to build sustainable peace and development. These programs help to integrate minorities and youth into the job market, two of the largest unemployed groups in the county.

Anyone interested in learning how to help people in Kosovo through CARE need only visit their website, where the organization has a variety of strategies that the average person can act on today to join the fight against global poverty. These strategies include: signing petitions to help protect U.S. foreign aid; information on how to volunteer; and ways to raise money for the world’s most vulnerable populations.

Charles Stewart Mott Foundation

Established more than 90 years ago by businessman and philanthropist Charles Mott, the foundation’s original purpose was to address the growing economic problems facing Flint, Michigan. As the organization built traction, however, it expanded its efforts to include international initiatives, as well.

For the last several decades, the Charles Stewart Mott Foundation has been providing assistance to the western Balkans, including Kosovo, through its Civil Society program. In 2008, Mott provided Kosovo with a two-year $50,000 grant to the Kosovo Women’s Network in support of its efforts to ensure that women play an active role in Kosovo’s key political policies.

Although Kosovo is still struggling with high rates of unemployment and fluctuating markets, the nation has demonstrated economic expansion every year since establishing its statehood in 2008. It has been able to accomplish this in part through its constitutional rule of keeping public debt below unsustainable levels and maintaining competitively low corporate tax rates.

The admirable efforts of the governmental reforms and non-profit organizations listed above, and many others like them, also reveal powerful ways of how to help people in Kosovo. Hopefully in the coming years, the combination of these factors will thrust Kosovo into a time of much-deserved economic growth, leaving its painful recent history to fade.

– Micaela Fischer

Photo: Flickr

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On the Overseas Private Investment Corporation

Arguments for and Against the Overseas Private Investment CorporationSince the Trump administration has taken office, the International Affairs budget has come under attack. Among the many potential items to be cut, the Overseas Private Investment Corporation (OPIC) has been singled out by the administration as a particularly unnecessary agency.

As a result, a slew of arguments for and against the Overseas Private Investment Corporation have been published in recent months. This article is an attempt to provide clarity about the role of OPIC and suggest that its overall benefits outweigh its costs.

Established by President Nixon in 1971, OPIC provides loans and political risk insurance to private American companies seeking to invest in developing countries. Developmental financing was conceived as a complement to governmental aid insofar as it facilitated the transference of private capital to developing economies.

Critics of OPIC often argue that, as a public institution, the agency crowds out private banks that should, in theory, be more efficient financiers of international development.

The truth is that, although a robust private market for developmental finance exists, private capital oftentimes averts especially risky and poor countries due to the inevitably high premiums and interest rates.

OPIC, on the other hand, is in a unique position to support investments in these countries.

With the backing of the U.S. government, OPIC has been able to recover over 90 percent of its political risk claims. This fact has allowed the agency to offer affordable loans and political risk insurance in countries deemed too risky by private finance institutions.

Other critics of OPIC claim that it represents a form of “corporate welfare,” citing the fact that the agency gives loans to some of the largest U.S. firms, like J.P. Morgan, Citibank, and Wells Fargo.

Although all American firms are welcome to apply for financing, year after year, more than half of OPIC’s commitments go to small- and medium-sized businesses.

Even if one remains unconvinced about the benefits of OPIC, it is important to recognize that the agency imposes virtually no cost on the U.S. government. While OPIC does require federal backing to insure its $20 billion worth of outstanding loans, the agency has been self-sustaining for almost four decades. In fact, it has used its interest receipts to contribute nearly $4 billion to U.S. deficit reduction.

In the end, while there are many arguments for and against the Overseas Private Investment Corporation, the truth is that the agency has a net positive effect on American firms and developing economies alike.

– Nathaniel Sher

Photo: Flickr

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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