Archive for category: Economy

Information and stories about economy.

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Poverty Rate in Burundi Continues to Rise

poverty rate in BurundiFrom the civil war that ravaged Burundi between 1993 and 2005 to the political turmoil that erupted in 2015 when President Pierre Nkurunziza announced he would run for a third term, Burundi has consistently battled displacement, violence and neglect that has dramatically increased the number of people living in poverty.

The civil war of 1993 through 2005—an ethnic conflict between Hutu’s and Tutsi’s that resulted in over 300,000 dead and hundreds of thousands more displaced—took a toll on the poverty rate in Burundi, which rose from 48 percent to 68 percent.

In the aftermath, people lacked access to potable water, adequate sanitation and medical aid. The vast majority of Burundian’s were thrust into poverty, battling sickness, hunger and violence.

Still, the country fought to recover. With the Arusha Accords, which ended the conflict and placed a two-term limit on presidential tenures, and an influx of foreign aid, the poverty rate in Burundi began to decline.

Yet, in 2015, as President Pierre Nkurunziza declared he was going to run for an unconstitutional third term, the country again fell into turmoil.

The repercussions have taken a toll on the poverty rate in Burundi—the United Nations Development Programme has estimated it as an astonishing 77.7 percent. What’s more, the country ranks 184 out of 188 countries on the 2016 Human Development Index. All said, Burundi is one of the poorest nations in the world, where access to basic goods and services is increasingly hard to come by.

As Nkurunziza, the Imbonerakure and Security Forces continue to capture, rape, torture and intimidate the people of Burundi, foreign aid is being pulled. The majority of major donors to the country have suspended budgetary assistance for the Burundian government and both the United States and the European Union have imposed sanctions on many opposition leaders and senior officials.

Even now, the turmoil continues to boil on and people continue to face a precarious future. This has led over 325,000 people to flee the country since 2015, most to neighboring Tanzania, Rwanda, Uganda and the Democratic Republic of Congo.

This outflux has severely crippled Burundi’s economy. Agriculture, which makes up 40 percent of the country’s GDP and employs over 80 percent of Burundians, is losing the labor necessary for production and distribution. What’s more, private consumption has plummeted as people continue to march across borders away from the atrocities being committed.

As the economy continues to struggle; as violence, displacement and death are an ever-present threat and as foreign aid remains stagnant, precarity is becoming a way of life. The poverty rate in Burundi will continue to rise unless the international community takes a stand. Aid is essential, both monetary and humanitarian, in order to overcome the crises and stem rising poverty. The world sat back passively during the first civil war that tore the country apart. Will it happen again now?

– Joseph Dover

Photo: Flickr

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Armenia Poverty Rate Falls After Six-Year Rise

Armenia Poverty RateFollowing a sharp economic downturn in 2009, Armenia is finally seeing a slow but steady decline in its poverty rates. As the country continues to find ways to increase wages and create jobs to stimulate the economy, Armenia’s poverty rate will maintain its decline.

Although Armenia has been experiencing a decline in its poverty rate in recent years, this decline comes after a six-year period of high poverty rates. In fact, in 2008 Armenia’s poverty rate was reported at 17.4 percent and had virtually doubled to 32.4 percent at the end of 2012.

This increase comes directly from the sharp economic decline in 2009 coupled with extremely low salaries that did not compensate for the cost of living in Armenia, despite it already being 54 percent lower than the United States.

However, the country quickly found a solution at the end of 2013 that gradually decreased the poverty rate and increased salaries and pensions.

ARKA News Agency noted that in 2014, 900,000 people were poor, with 310,000 very poor and 60,000 extremely poor. These accounted for 19.4 percent of the population as poor, 8.4 percent as very poor and 2 percent as extremely poor. But by 2015, Armenia had returned to a 29.8 percent poverty rate, just 12.4 percent more than the poverty rate in 2008.

Despite a still inflated poverty rate, the country continues to see improvements in its poverty rates. In 2015, Armenia ranked second to its neighbors in poverty rates at 29.8 percent, but now in 2017, at the same rate, it is ranked fourth.

With the poverty rats continuing to fall, the GDP has reflected the trend by increasing. Last year, the GDP climbed to $10.547 billion, a $0.018 billion increase from 2015.

As the country continues its substantial improvement, Armenia’s poverty rate will sustain its reduction while its GDP and salaries increase.

– Amira Wynn

Photo: Flickr

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Causes of Poverty in Somalia and the Need for Aid

Help People in Somalia
It is no secret that the countries most affected by climate change are the least equipped to combat the implications. Much of Somalia is dependent on livestock and agriculture, and more than half the population is now in dire need of humanitarian assistance after two seasons of poor rainfall. There have been many causes of poverty in Somalia that have left the country unable to aid its own citizens — in fact, the U.N. estimates a need for $864 million to assist 3.9 million people.

 

Leading Causes of Poverty in Somalia

 

The War on Hunger

Famine looms as a very viable threat. In just 48 hours, 110 people died from starvation and drought-related illness in rural Somalia. The drought is more severe in the country’s rural regions. Many Somalis from these areas took to the road out of necessity. Somalia’s capital city of Mogadishu offers feeding centers and food distribution.

Like most, Fadumo Abdi Ibrahim made the 30km journey on foot with her nine-month-old malnourished son in arms. While she was fortunate to complete the trek, others were not so lucky. “We found several bodies of children on the road,” Ibrahim said. The malnourished children died in their mothers’ arms; mothers too weak to carry the small corpses the rest of the way.

Like Ibrahim, Somalia travelled a long and challenging road to arrive at its current state of affairs. There are many causes of poverty in Somalia. The following are a few of the most significant.

In the early 1980s, the International Monetary Fund (IMF) and World Bank instigated an intervention in Somalia and imposed economic and agricultural reforms in hopes of spurring development.

In theory, macroeconomic development seems reasonable.

POVERTIES is an online publication reporting social scientific research and information on economic development, public policy, human rights and discrimination. One article helps to simplify the damages of neoliberal reforms. The neoliberal ideology consistently follows a pattern of “currency devaluation for cheap exports and cheap labor, trade liberalization by opening the borders to world trade (and to global competitors), reducing budget deficits through massive cuts in the public sector and reduction of social services.”

Somali met with many of these consequences thanks to the IMF’s reformations. Unemployment, extremely limited wages and higher food prices proved among the most punishing.

 

Growing Dependency

Somalia was largely self-sufficient in food until the 1970s. Its economy was based on an exchange relationship between herdsmen and agriculturalists. The IMF’s economic reforms undermined these fragile relationships, victimizing food distribution and the agricultural economy.

Since the collapse of the country’s last government in 1991, social and political order in Somalia presents itself in the form of clans. The situation has proved surprisingly less violent than expected. Most conflict, however, is rooted in land and water resources. There is a necessary method within this madness: for many Somalis, access to such resources is dependent on their clan — that is, if they have a clan at all.

Again, the causes of poverty in Somalia are countless, but the IMF and the loss of a centralized government certainly caused the greatest damage.

Somalia’s traditional pastoral economy presented itself as the perfect project for modernization, but forced reformation led the population towards a fight for survival. The reforms devastated Somalia’s agricultural sector, and war and civil war further strained essential resources (as well as other factors too numerous to list).

When the rain stopped, the entire population was at the mercy of drought, with no centralized government to provide relief from impending famine.

The fate of more than half of all Somalis now lies in the hands of foreign and humanitarian aid. Somalia and its citizens like Ibrahim have fought to make it this far on a challenging journey; the question is, will help be waiting to greet them?

– Sophie Nunnally

Photo: Flickr

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Germany’s Poverty Rate

Germany Poverty RateGlobally known for its engineering prowess and beautiful landscape, Germany lies in Western Europe and is undeniably one of the world’s superpowers. Although the country has experienced economic success over the past two decades, there are an unexpectedly large portion of people living below the poverty line. In fact, in 2015 the Germany poverty rate reached previously unseen levels of 15.7 percent of the population living in poverty.

Germany’s thriving economy is the fourth-largest in the world and has continued to grow with the success of its many companies, notably including Siemens Group, BMW and Volkswagen. There was even a 1.7 percent increase in GDP from 2014 to 2015.

This obvious economic development, however, has not had the expected effect of reducing poverty. The welfare organization Paritätische Wohlfahrtsverband reported an uptick in the Germany poverty rate as well as a surge in the rate at which poverty is increasing. The poverty rate in Berlin rose from 20 percent to 22.4 percent from 2016 to 2017. In fact, in 11 of the 16 German states, the number of people living in poverty has increased from the past year.

Single parents and their children are heavily affected, as 43.8 percent remain below the poverty line. Also, many of those who immigrate to Germany do not have access to a stable source of income and consequently live in poverty. Over a third of foreigners are affected by poverty. Old-age poverty has also significantly risen, with a 5.2 percent increase from 2005 to 2015, and it will only continue to rise due to the spread of job insecurity.

Even in the face of lower unemployment, Germany’s poverty rate has not decreased. This may be due to an unequal distribution of resources and wealth. The rich are getting richer while the poor are not necessarily getting poorer, but are increasing in number. The number of millionaires increased from 12,424 to 16,495 from 2009 to 2016. However, the number of homeless also increased by more than 100,000 between 2008 and 2014, and 4.17 million Germans are in serious debt.

Additionally, while the national average pay has increased by 10 percent, wages for lower paying jobs have not increased along with them. The pay for managers has also increased by 30 percent in the last 15 years, which is four times faster than wages. Thus, the problem may lie in the inadequate support of those in poorer social groups.

The booming economy may create new jobs, but these jobs pay so little that people are not able to live above the poverty line even with a stable job. Too many people work part-time jobs that don’t allow them to make ends meet. To help remedy this lack of well-paying jobs, Germany has agreed to increase its minimum wage by four percent in 2017. While the advantages of a higher minimum wage are highly debated, low-wage workers will potentially have the chance to finally climb above the poverty line.

Germany is undoubtedly one of the world’s most influential and powerful countries, but it has much work to do if it wishes to dramatically lower its poverty rate. A few examples of potentially beneficial policy actions include more emphasis on promoting the education of children from low-income areas, more targeted taxes on the rich to help redistribute wealth, financial support for single families and poor pensioners and an overall higher priority placed on combating rampant poverty.

– Akhil Reddy

Photo: Flickr

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What Is the Poverty Rate in Cuba? Difficulties in Narrowing Down

What Is the Poverty Rate in CubaWhat is the poverty rate in Cuba? Because of the country’s socialist economy and the government’s lack of published data, this is not an easy question to answer. Estimates range from claiming five percent to twenty-six percent of the Cuban population lives in poverty. What is clear is that poverty in Cuba has lessened since the devastating Special Period in the 1990s.

But how much have the country and individual Cubans recovered? There are many factors to consider when trying to determine what is the poverty rate in Cuba.

At first glance, it may appear that at least two-thirds of the Cuban population currently live in poverty. The state salary is a mere $20 per month, well below the international poverty line of $2 per day. But this figure does not account for the free social services all Cubans enjoy nor other important sources of income, such as remittances from abroad.

Plus, since the 1990s a small private sector has blossomed in Cuba, and as of 2016 it employed one-third of the Cuban workforce.

There are a number of factors beyond income levels and the poverty line that help inform a conception of poverty in modern Cuba. Cuba scores well in many categories traditionally considered characteristics of “the middle class.” These include education, female participation in the workforce, low fertility rates, home ownership and enrollment in social services.

Based on Cuba’s impressive statistics when it comes to these general indicators of economic security, Cuba could be considered a middle class society.

While the majority of the Cuban population could be counted below the international poverty line according to conventional means, Cubans do not suffer from many of the issues that plague low-income societies. But poverty in Cuba does create many daily struggles that cast a shadow on Cubans’ access to free healthcare and education.

For instance, while Cuba has an impressive homeownership rate of 85 percent, most buildings are in such disrepair that they suffer daily losses of electricity and even frequent collapses. Basic consumer goods, a traditional hallmark of middle class societies, are nearly impossible for most Cubans to acquire. The population counts 11 million people, yet only 173,000 cars.

Cubans enjoy certain measures of economic security, but they also suffer shortages of everything from transportation, to food, to internet access.

What is the poverty rate in Cuba? It is hard to narrow down to a single number. But one important factor to consider for the future of the Cuban people is the new U.S. restrictions announced in June. The renewed regulations on travel to Cuba are likely to hurt the tourism industry, the number-one employer of private entrepreneurs. And the new rules against trade with the Cuban government will also further limit the accessibility of goods in Cuba.

Without political outreach from American citizens, the enigmatic Cuban poverty rate may start increasing.

– Bret Anne Serbin

Photo: Flickr

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Malaysian Government Stifles Poverty

Malaysian GovernmentMalaysia is currently on the rise as far as its economy. The country is now considered an upper-middle income economy that has become a leading exporter of electronic appliances, electronic parts and components, palm oil and natural gas.

Malaysia has been successful in eradicating most poverty in the country with less than 1 percent of households living in extreme poverty. The states of Penang, Selangor, Malacca and the federal territories showed marked improvements in 2012 with no extreme poverty in these regions.

“This is proof that the Federal Government’s initiatives to eradicate poverty have succeeded and been of benefit to the rakyat regardless of differences in political ideology,” Malaysia’s economic planning minister Tan Sri Nor Mohamed Yakcop said.

The Malaysian government has done an admirable job of exceeding the Millennium Development Goals which were introduced in 1990. Malaysia succeeded in halving the number of people living on less than a dollar a day much before the 2015 expectant date.

“This is a result of rapid economic development and the effectiveness of poverty eradication programs carried out by the government,” Yakcop said.

According to the Malaysian government, fewer than 110,000 people were living in poverty and that the poverty statistics had nearly been halved within the span of three years. According to this information, the overall poverty rate in Malaysia dropped to 1.7 percent in 2012 which is a significant change compared to the 3.8% in 2009.

The fall in poverty rates was felt in both urban and rural areas. In urban areas, the number of impoverished people fell to just 1 percent in 2012 compared to 1.7 percent in 2009. In rural areas, the numbers were staggering. Poverty rates dropped from 8.4 percent in 2009 to 3.4 percent in 2012.

The focus of the Malaysian government has shifted toward the well-being of “the bottom 40” or poorest 40 percent of the population. Between From 2014 the average household of “the bottom 40” grew at 11.9 percent a year compared to 7.9 percent from 2009 for the total population.

Income inequality still remains a major issue in Malaysia compared to other East Asian countries but the disparity is gradually declining. According to its Gini coefficient, a measurement of income inequality where 0 and 1 indicates perfect inequality, Malaysia scored around 0.49, one of the highest in the region.

Though Malaysia still has some significant work to do as long as income equality, state programs have been put in place to alleviate much of the disparity. With the help of its own government, Malaysia stands as a significant example of a success in the region.

– Drew Hazzard

Photo: Flickr

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The Youth Unemployment Rate in Greece

Youth Unemployment Rate in GreeceThe youth unemployment rate in Greece has reached tremendously high levels and is resulting in the growth of poverty among young Greeks, in addition to stunting the development of the Greek economy. As of May 2017, the youth unemployment rate in Greece reached a staggering 46 percent. This rate means that roughly half of the Greek youth population are unable to find employment opportunities.

Looking at the high rate of youth unemployment, one factor can be seen as its primary cause: Greek debt.

In 2011, due to its ballooning debt levels and fears that Greece would default on its debt, European counterparts were forced to give Greece a bailout package of €109 billion. As part of the loan, however, major credit rating agencies gave Greece a rating along with a disclaimer saying there would be a substantial risk of default on Greek debt.

By giving Greece this rating, the country pushed away potential investors in the Greek economy, and, in combination with the effects of Greek austerity programs, substantially hurt the growth potential of the Greek economy. The adverse effects observed in Greece are exemplified by the fact that the country’s economy has contracted by a quarter since the crisis began.

The minimum wage in Greece is calculated differently for younger people than it is for people over 30, so young Greeks who have a job are often paid at a significantly lower rate than older workers.

As an overall effect on poverty in Greece, the high youth unemployment rate will very obviously impact the country and raise its poverty rate. As the Greek economy continues to deteriorate and young people continue to go without opportunities to work, the poverty rate in the country will inevitably grow.

Going hand-in-hand with the increase in the rate of poverty among young people in Greece is the level of youth homelessness. As the unemployment rate continues to climb, the rate of homelessness among Greek youth – in addition to the rate of substance abuse – both continue to rise.

Overall, the youth unemployment rate in Greece is elevating enough to become a significant issue requiring foreign assistance to resolve. As countries capable of proving support, the United States and Greece’s European counterparts must increase aid to help Greece combat this problem. By focusing efforts on increasing the success of the Greek economy, issues such as youth unemployment will certainly begin seeing improvement.

– Garrett Keyes

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Investing in the Future: Decreasing the Uruguay Poverty Rate

Uruguay Poverty RateUruguay has made great progress in reducing poverty since the mid-1980s, mainly due to the country’s extensive social policy and macroeconomic stability in the 1990s. The country is also notable in Latin America for its equitable distribution of income. However, the Uruguay poverty rate remains a concern for some Uruguayan communities.

Uruguay’s impoverished residents typically have a critical combination of low skills, weak demand and high family dependency that makes them vulnerable to financial struggles. A dual strategy that improves Uruguay’s investment climate and enhances growth is one method that could help the country’s poor. Investing in human capital via education could assist impoverished residents as well.

Uruguay’s poor are also marginalized. Impoverished Uruguayans are increasingly concentrated in specific neighborhoods, challenging poverty reduction efforts and implying changes to social services. Uruguayan children have become a significant portion of the country’s poor, with 40 percent born into poor families — a fact that foreshadows an intergenerational poverty problem.

Teenage mothers, inactive youths and unemployed adult males (40 to 50 years old) with low skillsets are vulnerable to the Uruguay poverty rate as well. While this demographic is relatively small, it could increase given Uruguay’s past social problems. However, this problem is still manageable in scope and depth. Uruguay would require a change to conventional social programs in order to help this vulnerable demographic.

Uruguayan children are the country’s most vulnerable demographic to impoverished conditions. However, Uruguay’s elderly population are at the least risk due to the country’s pension benefits and increasing job salaries. Uruguay’s constitutional change in 1989 permitted the indexation of pensions to wages, helping the country’s elderly to have higher income deciles and lower poverty rates as well.

Income inequality is another reason for the Uruguay poverty rate. Inequality in workers’ wages was on an upward trend from the 1990s to 2007. Since 2008, increases in labor income have helped lower Uruguay’s income inequality problems. However, Uruguay’s income inequality rate is still relatively high by OECD (Organization for Economic Co-operation and Development) standards.

Thankfully, Uruguay’s poverty rate is continuing to decrease. The country’s poverty rate was 11.5 percent in 2013 and dropped to 9.7 percent in 2014. Uruguay’s homelessness rate of 0.5 percent dropped to 0.3 percent within the same years. The country’s Central Bank stated that Uruguay’s economy grew by 3.5 percent and slightly above market expectations.

While the Uruguay poverty rate continues to decrease, the country’s impoverished communities will require opportunities for income equality. Uruguay has a literacy rate of 96 percent (the highest rate among Latin American countries) and a social contract that stresses the importance of accessing education.

Uruguayans with low skillsets may be able to escape poverty by taking advantage of the country’s educational opportunities, and therefore creating a brighter Uruguayan future for all.

– Rhondjé Singh Tanwar

Photo: Flickr

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Nine of the Most Important Facts About Tongan Emigrants

Tongan EmigrantsTonga is an archipelago in the South Pacific and the last surviving Polynesian kingdom. While isolation, limited markets, frequent earthquakes and cyclones pose a threat to native Tongans, emigration has had a positive economic impact both on Tongan emigrants and native Tongans. Here are nine facts about Tongan emigrants you should know:

  1. Tonga has retained much of its heritage despite 70 years of British colonial rule. The country gained independence and became a member of the British Commonwealth in 1970. Immigration patterns have helped maintain Tongan culture overseas: Emigrants have brought their families abroad, resulting in high concentrations of Tongans in cities like Auckland, New Zealand or Oahu, Hawaii where Tongan language and customs are preserved.
  2. One of the first motivations for Tongans to emigrate was population growth. In 1976, Tonga’s population tripled what it had been in the 1930s. The country’s relatively little land combined with a potential food shortage and greater educational opportunity abroad drove most Tongan emigrants to New Zealand, Australia and the U.S.
  3. Many early Tongan emigrants converted to Mormonism. The Church of Latter Day Saints conducted extensive missionary efforts in Tonga, and converts were offered free plane tickets to the U.S. This led to the creation of one of the first Tongan-American communities in Salt Lake City, Utah.
  4. Today, half of roughly 216,000 Tongans live abroad.
  5. Thirty percent of Tonga’s GDP comes from remittances, or sums of money sent from Tongans abroad to their families at home. Remittances come in the form of cash as well as material goods such as appliances and clothing. They are essential to the Tongan economy as Tonga has few exports, there are few salaried jobs available to young adults and unemployment is common in rural areas.
  6. However, remittances do have their drawbacks—money flowing into the country has caused a spike in material consumption, which has in turn caused inflation.
  7. Even Tonga’s tourism industry is bolstered by Tongan emigrants. Large families who have moved away visit Tonga frequently and support the country’s economy by spending money at local businesses.
  8. The longevity of remittances as the basis of Tonga’s economy currently lies in doubt. As more Tongans are born abroad, some fear that young Tongans’ connections to their home country could be weaker and that remittances could diminish.
  9. Another factor that contributes to economic instability in Tonga is the common occurrence of natural disasters. Tonga is part of the “Ring of Fire,” an area prone to earthquakes and volcanic eruptions near the basin of the Pacific Ocean. In addition, Tonga’s tropical cyclone season takes place November through April, though cyclones can occur at any point during the year. The variety and frequency of natural disasters in Tonga could threaten Tonga’s agricultural export infrastructure.

While Tonga’s economy faces some challenges, the Tongan population has been steadily increasing for decades. Notably, the rate of population increase spiked from 0.35 percent in 2013 to 0.82 percent in 2017. Tongans born abroad will have complex and varied relationships to their native country as time goes on, but the fact their numbers are increasing suggests that Tonga will be able to count on its emigrants for remittances for years to come.

– Caroline Meyers
Photo: Flickr

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Why Is Bulgaria Poor?

Why Is Bulgaria Poor
The European Union is one of the largest single-market economies in the world. However, not all of its 27 countries are able to attain the economic prosperity of the wealthier member states. Bulgaria is one such country. While the EU average risk of poverty is 23 percent, more than 41 percent of Bulgarians find themselves falling into this category, making it the member state with the highest level of this risk. Across the country, almost 10 percent of the population is defined as extremely poor, i.e. living with an income lower than 40 percent of that of the average member of the middle class. While other EU members thrive inside the single market, a question that needs to be asked is this: why is Bulgaria poor?

Perhaps the largest contributor to poverty in Bulgaria is the impact of the 2008 financial crisis on the country. In years prior, Bulgaria had experienced rapid growth. However, like many EU members, this reversed following the crash. In real terms, the economy contracted by 5.5 percent in 2009 primarily due to a decline in foreign direct investment and international trade. Since then, growth has not returned to previous levels, with 2011 figures showing GDP growth to be 1.7 percent. This is far lower than the 6.2 percent growth rate witnessed in 2008.

This lack of growth has negatively impacted wages, with the average annual wage in Bulgaria easily the lowest in the EU at the equivalent of just under 2,000 euros. Around 1.5 million people live on less than 60 percent of the average wage, limiting spending power and leading to further potential issues.

One of these issues is unemployment, with Bulgaria’s unemployment rate standing at 10.8 percent, a full percentage point higher than the EU average. The low wages offered through employment are part of this issue, with people lacking the incentive to work since they are able to receive similar incomes through unemployment benefits. Similarly, the financial crisis has enhanced this issue, with unemployment significantly increasing to current levels from 5.6 percent in 2008. With this being the case, many suggest unemployment as one of the primary reasons for Bulgaria’s high levels of poverty.

There seems to be little progress in assisting those in poverty in Bulgaria. Existing policies are criticised for being unreliable and unable to truly address the problems that the poor of the country face. Additionally, it is estimated that, of the poorest 20 percent of households, such policies impact less than half. Policy focused on growth appears to have failed as well and, despite funding from the EU, increases in employment, income and social inclusion have been minute.

The situation in Bulgaria appears bleak and, without significant policy change at a national level, little will change going forward. Decision makers must investigate ways to increase wages, growth and employment opportunities, while simultaneously providing sufficient aid to those in poverty. While this may be difficult, “why is Bulgaria poor?” should no longer be the primary question; rather, we should be asking about potential solutions.

– Gavin Callander

Photo: Flickr