Information and stories about economy.

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New Report Finds 1.3 Million Living in Poverty in Hong Kong

Hong Kong 1.3 Million in Poverty
The recently released Hong Kong Poverty Situation Report 2012 found, to the surprise of many, that over one-fifth of the population is living below the poverty line. This translates to 1.3 million people, or roughly 19.6 percent of the total population who are living in poverty in Hong Kong. One of the reasons that the figures are so surprising is that such measurements have never before been readily available. With this report, the government of Hong Kong has instituted a poverty threshold for the first time.

The threshold represents 50 percent of the median household income before tax or welfare benefits. For a one-person household this stands at US$464, $993 for a two-person household, $1,483 for a three-person household, and $1,844 for a four-person household. Hong Kong’s Commission on Poverty says that, because of these constraints, the actual number of individuals living in poverty may be lower.  They believe that if welfare benefits were to be taken into account, the rate would decline to 15.2 percent.

Nevertheless, the fact remains that there is a staggeringly huge wealth disparity within Hong Kong. Marked by skyscrapers, malls, and other such signs of affluence and modernity, the city is home to some of the wealthiest individuals in the world. This disparity is one of the contributing factors to the relatively high Gini coefficient cited by the report.

According to the World Bank, the Gini index “measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution.” Any coefficient above 0.4 is indicative of a possibility of social unrest; Hong Kong’s coefficient as of 2011 stands at 0.537.

The city is particularly susceptible to such unrest because of its precarious political situation. Although it has its own government and legal system, Hong Kong has remained under the auspices of China since its cession from Britain in 1997.  In fact, the city’s official name is the Hong Kong Special Administrative Region of the People’s Republic of China. Largely due to a difference in ideologies between the two governments, several popular movements among Hong Kong’s population are calling for autonomy or outright independence from China.

Because of the report’s findings, Hong Kong’s leader, Leung Chun-ying, has pledged to introduce measures early next year to help the country’s impoverished. According to Matthew Cheung, the city’s secretary for Labor and Welfare, the introduction of a poverty line has been an important step in alleviating widespread inequality.

He says of the government’s continued efforts to reduce wealth disparity and help struggling individuals and families, “We want to build a more caring, compassionate and inclusive society here.”

– Rebecca Beyer
Feature Writer

Sources: CNN, Hong Kong Commission on Poverty, World Bank
Photo: Flickr

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What is the OECD?

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What is the OECD?

In short: OECD stands for Organization for Economic Co-operation and Development. It is an international economic organization whose mission is to “promote policies that will improve the economic and social well-being of people around the world.”

A little more detail: In the beginning, the OECD was actually named the OEEC – the Organization for European Economic Co-operation. It was founded in April of 1948, with 18 original European participants. The first and original principles of the OEEC were as follows: “Promote cooperation between participating countries and their national production programs for the reconstruction of Europe; Develop intra-European trade by reducing tariffs and other barriers to the expansion of trade; Study the feasibility of creating a customs union or free trade area; Study multi-lateralization of payments; and Achieve conditions for better utilization of labor.”

In 1961, the OEEC became the OECD, and membership was extended to non-European countries. Most OECD members are regarded as “developed countries” with a high human development index. To this day, according to Pierre Tristam at about.com, the OECD remains one of the most cited sources for “economic data and information” because the organization keeps vast databases and “conducts some of the world’s most authoritative analyses and studies on the world economy.”

The OECD said that it provides a forum in which countries can work together to “seek solutions to common problems.” The organization aims to identify good practices and to coordinate “domestic and international policies.” It is committed to democracy and a sustainable market economy. Some of these good practices include taxes and social security, leisure time, school systems and “pension systems” that look after country’s elderly citizens, since the OECD tries to look at issues “that directly affect the lives of ordinary people.”

Its reach extends to the environment, the economy and social issues. The OECD is committed to helping the lives of ordinary people, thus making life harder for those “whose actions undermine a fair and open society,” such as terrorists, unethical businessmen and tax evaders.

The OECD promotes policies designed:

“To achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; to contribute to sound economic expansion in Member as well as nonmember countries in the process of economic development; and to contribute to the expansion of world trade on a multilateral, nondiscriminatory basis in accordance with international obligations.”

As of 2013, the OECD has 34 active member countries, including the United States, and “is in accession talks with the Russian Federation.”

– Alycia Rock

Sources: OECD: About, OECD: Report 2013, Middle East About, OECD
Photo: CIB

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What is the G-20?

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G-20 stands for “Group of 20 [nations]” that come together every year in a different place to discuss solutions to global issues, mainly economic issues. The 20 nations included in the G-20 summit are: Australia, Japan, South Africa, France, Turkey, the USA, Saudi Arabia, Russia, Mexico, Korea, China, Canada, Italy, Indonesia, India, the EU, Germany, the UK, Brazil, and Argentina.

At their summit once a year, these nations discuss various problems whose solutions can only be reached with international cooperation. The first G-20 session (conducted in Washington D.C., USA) dealt with the economic crisis of the time.  Ever since then, the G20 has taken the responsibility of preventing further economic meltdowns with international cooperative measures. The G20 summit is also a great place to address poverty. Helping stabilize the economy and encouraging growth will result in a better economy even in poorer nations. It would help improve infrastructure, and allow smaller nations to build their nation and economy.

This year, the G20 summit, hosted by Russia, will again tackle financial and economic problems. Russia has organized its main priorities for growth in three main categories: Regulation; Jobs and Investment; and Trust and Transparency. One of the main recommendations to ensure economic growth is to confront corruption. Corruption effectively holds back progress. Especially in smaller nations, or nations where aid is necessary to build infrastructure and economy, corruption prevents funds from reaching their destination. The G-20 committee will address the issue of corruption in October. In a solution to, and an active fight against, corruption, lies the future of the fight against global poverty.

Solving economic problems will directly impact poverty; fighting poverty will result in a stronger global economy. Attempting to address economic issues with this in mind will help the international economy, and the national ones as well. The G-20 summit, which meets mainly to address these economic issues, has the potential to greatly impact the fight against global poverty.

– Aalekhya Malladi

Sources: G20, U.S. Department of State
Photo: Radio Netherlands Worldwide

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Government Shutdown Threatens Foreign Aid

Government Shutdown Brinksmanship Foreign Aid Cuts
Even to those who display the most passive attention to the news, it is clear that politics in Washington D.C. has reached a fever pitch. Without any doubt, the implications of what is being discussed are, in fact, no hyperbole. Beholden to special interests, factions within the Republican Party have resolved to agree on a continuing resolution to fund the government – absent defunding of the Affordable Care Act (ACA). Short of passing the continued resolution, a government shutdown has taken effect. Yet, while the detractors of the ACA site economic concerns over the law, it is in our interests to consider the victims of even a short-term government shutdown.

While The Borgen Project is a non-partisan group, the implications of a government shutdown are serious and will have great effect on foreign aid and all government programs moving forward.

To put this argument into perspective, we should take an objective stance. By turning our attention towards the Congressional Budget Office (CBO), we can keep our feet rooted in the ground rather than in the clouds of ideological waffling. In their estimation, the CBO found the ACA would grant health coverage to 32 million people and raise government spending by almost one trillion dollars. While the specter of raising spending tickles the ire of republican ideologues, the CBO also found that revenues and savings would exceed this amount, effectively reducing the deficit over time.

With the non-partisan CBO stating the ACA would, in fact, benefit our economy, we must direct our attention to the victims of a government shutdown.

First and foremost, hundreds and thousands of government employees will effectively lose their jobs for the period of the shutdown. From many Pentagon employees, to park rangers, pockets will be squeezed tightly as they will not be receiving income for the period of the shutdown. Despite this, members of Congress will continue to be paid. The only bright side seems to have been President Obama’s decision to sign a bill in the midnight hour that would allow members of the military or any civilians working for the Pentagon who provide “direct support to the military” to be paid during the shutdown.

Secondly, the health of our economy is on the line. Looking back to August, 2011, our economy was dealt a blow when, for the first time in history, a credit rating agency, Standard and Poor, downgraded our rating from AAA to AA+. Dealing with confidence in markets, the mere fact that we were having the discussion we are having now was enough to reduce confidence in our economy. An actual government shutdown will have far wider and much deeper consequences.

While this is strictly political at the moment, the economic consequences will be difficult to assess until we are in the muck of it. Yet, as Obama addressed a crowd in Maryland early on Thursday, he sited the fact that even a short government shutdown will affect worse economic consequences than the proclaimed economic consequences of the ACA.

This form of brinkmanship will carry with it ramifications in all areas. If we cannot afford a cost-effective health care law in our own land, the fate of allotments for foreign aid will be the next bit of meat on the chopping block. While we call our representatives to advocate for the poor, let them know that political brinkmanship will only hurt humanity.

– Thomas van der List

Sources: MIT, NPR, ABC News, Politico
Photo: CNN Money

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International Cooperation is Essential for Global Economic Development

International Cooperation Global Development Soccer
The UN’s Millennium Development Goals (MDGs) have resulted in a number of successes, yet there is still room for improvement, particularly regarding global economic development, according to Professor Jose Antonio Ocampo, chairman of the UN committee for development policy. He believes that the MDGs lack the inclusion of developing nations in international decision-making, which will be essential for ending poverty beyond 2015.

The Millennium Development Goals were clear, concise, and not unreasonable. The high visibility of these goals, and the support of many powerful nations, has not only spread awareness about global poverty, but has also resulted in real achievement. One goal, to reduce global poverty by half, has already been met.

The area where the MDGs fall short, according to Ocampo, is goal eight: develop a global partnership for development. This goal was aimed at facilitating the progress of development for the world’s poorest countries, with assistance from the international community. It was also meant to develop an “open, rule-based, predictable, non-discriminatory trading and financial system.”

MDG8 is essential for ending global poverty in the long run, since the biggest predictor of poverty is the country in which a person is born. The reason is the drastic income inequalities between countries. Facilitating economic development, and reducing the income inequalities at an international level is “the most important contribution to fighting global poverty,” says Ocampo. Developing nations have long been calling for “a change in the rules that govern global finance, trade and technology generation and transfer.”

The decision-makers at the UN proposed that a number of multi-stakeholder partnerships comprised of foundations, the private sector, and academics would make-up the “global partnership” to facilitate economic success in the developing world.

While Professor Ocampo welcomes their insight, he believes that this collaboration “can never be a substitute for the central role that intergovernmental co-operation has to play.” Intergovernmental cooperation is essential to global decision-making regarding economic development to reduce income inequality at an international level, and poverty worldwide.

– Jennifer Bills

Sources: The Guardian, The Borgen Project
Photo: Grameen Foundation

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How Diseases Lead to Poverty

How Diseases Lead to Poverty

What causes poverty? When looking at the factors that can lead to poverty in a region, there are many things that could be highlighted. One can look at the government, at conflict, at the lack of natural resources, or at the shortage of quality education in a region. However, poverty in a region is not only caused by conflict or inadequate education, but also by diseases. Increasing health in a region can significantly reduce global poverty, in effective and unexpected ways.

People in developing countries face challenges due to diseases that those in developed nations do not. For instance, in a developing country, someone who gets sick may have to sell their possessions to pay for medicine. Parents, not expecting their children to survive, have more children and spend less on education. Tropical diseases, and other health risks specific to a region limit tourism and foreign direct investment, affecting the potential prosperity of a nation.

According to research done in 2011 by The Foundation for AIDS Research (amfAR), more than two-thirds of all people living with AIDS (23 million) lived in sub-Saharan Africa. An estimated 1.2 million people died from the disease, accounting for 71 percent of all the AIDS related deaths in the world. Not surprisingly, sub-Saharan Africa is also one of the poorest regions in the world.

But while the problem of AIDS – and the poverty it causes – might seem insurmountable, it only takes around $100 a year to save one AIDS victim.  To put this amount in perspective: the United States spends roughly $600 billion annually on its military, nearly twice as much as the second highest spender, China.  How different would the world be if the United States decided to trim the amount it spends on its military, and use that to help other countries eradicate diseases?

People from poor countries need help to get healthier. Unfortunately, most developing countries simply do not have the resources to provide healthcare for their people. The richer nations need to make an involved effort in helping these countries eradicate diseases such as AIDS and malaria. By increasing the amount of aid that the United States and other developed nations give to combat diseases, the world will see a decrease in death from preventable diseases, and, as a result, a decrease in global poverty.

– Travis Whinery

Sources: WHO, UN AIDS, Economist
Photo: China Daily

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Thousands of Migrant Workers Expected to Die in Qatar

Qatar FIFA 2022 World Cup Migrant Workers Exploited
The 2022 FIFA World Cup will be hosted in Qatar and the construction on hotels and stadiums has already begun. This internationally-renowned sporting event will boost Qatari infrastructure, economy, and national spirit. However, groups like the International Trade Union Confederation (ITUC) claim that thousands of migrant workers will die before construction is finished, and have called for policies that will prevent the exploitation of these workers.

Many migrant workers from countries like India, Nepal and Sri Lanka have been entering Qatar for employment, joining the already 1.2 million migrant workers present in this country. Although many migrant workers are needed to prepare Qatar for the World Cup, the current system of employment may mean that many of these workers will never return home.

Unless reforms are made, 600 migrant workers a year could die on building sites due to harsh working conditions and lack of safety protocols.

Recently, 30 migrant workers fled to the Nepalese Embassy in Doha, Qatar to escape these conditions. They reported having their passports withheld in order to prevent them from fleeing, being denied water and a salary, and being forced to work in intolerable heat. Some equated such hardships with modern-day slavery. In addition, workers have been found living in unsanitary and crowded conditions, resulting in illness.

Employees that complain are often fired, with no means of returning home or finding more work. With passports and salary withheld, most migrant workers have no choice but to continue to work in such conditions.

Nepalese migrant workers aren’t the only workers turning to their embassy for help. Thousands more have complained to the Indian embassy in Qatar. According to the Indian ambassador, more than 700 Indian workers have already lost their lives in these deleterious working conditions.

The ITUC stresses the need for significant changes in workplace sanitation and safety. Otherwise, the organization estimates that at least 4,000 migrant workers will lose their lives by the 2022 World Cup.

These working conditions come as a surprise to many, as Qatar is the world’s richest nation in regards to income per capita. The country is expected to spend over $100 billion on infrastructure, hotels, and other facilities for the World Cup alone.

The ITUC has also commented on the need for FIFA to send a strong message to the Qatari government on how this system of modern-day slavery is unacceptable.

– Rahul Shah

Sources: Middle East Online, Opposing Views, The Guardian
Photo: BBC

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Was Karl Marx Correct?

Karl Marx Correct Income Inequality Communism Socialism Wealth Redistribution
Was Karl Marx correct? Considered one of the fathers of modern communism, Karl Marx is not exactly a celebrated figure in western culture. Nor is he well understood. It is not possible to provide an adequate summary of his political or economic theories in this space, but a general discussion of some of his ideas may prove beneficial to understanding the current global economic crisis and the growing crisis of income inequality. Whatever our preconceived notions about Marx may be, one cannot deny the thought-provoking nature of his ideas.

Marx envisioned history as a kind of evolution in the modes of production, each mode being defined or characterized by class struggle. Marx theorized that the capitalist mode of production relies on profits that are generated by the exploitation of workers’ time and labor. The desires of the workers–higher wages and better working conditions–will always be pitted against that of the capitalist, who seeks only to maximize profits.

Naturally, this idea is not popular in western societies where “free markets” and “capitalism” are considered canon. But Marx’s theories may need to be revisited. Since 2008, the world’s economies have experienced sluggish growth, stagnant incomes and widening gaps in income inequality. As a result, there is an increasing tension between the rich and working classes as evidenced by movements such as Occupy Wall Street and the fast-food workers’ strike in the United States and the garment workers’ protests in Bangladesh. Though these events garner little mainstream media attention, they are worth exploring and understanding.

If there is one Marxist idea that is particularly relevant today, it is this–capitalism will impoverish the working masses and concentrate wealth in the hands of a very small but very powerful class of über-rich individuals. According to a study by the Economics Policy Institute, between 1983 and 2010, 74 percent of the gains in wealth in the U.S. went to the richest 5 percent while the bottom 60 percent suffered a decline. There are plenty of troubling statistics like these that evidence a crisis of wealth inequality in the United States and across the world.

Marx wrote, “Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole.” Any objective view of global economics today can see how this statement makes practical sense.

This is not to say that Marx developed a perfect worldview or flawless economic theory. But perhaps the critical question is not whether Karl Marx was correct, but whether western policymakers are (at best) the victims of dogmatic groupthink or (at worst) well-compensated puppets of the über-rich.

To change current economic trends, people everywhere will need to come together to generate new ideas and begin thinking about alternatives to capitalism. Marx might be a good place to start.

– Daniel Bonasso

Sources: Time, Economic Policy Institute, Stanford Encyclopedia of Philosophy
Photo: Critical Theory

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Poorest Country in the World: Democratic Republic of Congo

Poorest Country in the World Democratic Republic of Congo
You might be surprised to find that the United States isn’t the richest country in the world. Actually, that crown goes to Qatar who has recently jumped ranks to take first place. But what about the other side of the spectrum, the parts of the world struggling with devastating poverty? Well, on that end the Democratic Republic of Congo comes in first – or last, to be more accurate – as the poorest country in the world, with the lowest GDP per capita than any other country.

 

The Poorest Country in the World: The Democratic Republic of Congo

 

Determining a country’s rank in wealth isn’t the easiest of tasks when you sit down and think about the data and economics involved. However, a good indicator of a nation’s standard of living is the assessment of its GDP (gross domestic product) per capita, which is defined as the total value of all domestic goods and services that country produces annually, times its PPP or purchasing power parity. GDP per capita (PPP) isn’t a perfect shot because its purpose isn’t to calculate that kind of economic rank but it’s measured frequently, widely and consistently, allowing trends to become visible.

In 2010, GNI (gross national income) per capita replaced GDP in the calculation, but the list is the same between the two. Qatar was still first with about $100,000 GDP per capita (PPP) in 2012 just as it was on the GNI list and the Democratic Republic of Congo came in last at around $370 GDP per capita (PPP). The gap is massive.

Of the 40 poorest countries in the world, a solid 33 are in Sub-Saharan Africa. They include Zimbabwe, Burundi, Liberia, and Niger. Other parts of the world notoriously infamous for high poverty rates include Afghanistan, Haiti, and Nepal. But none of these places takes it quite as harshly as the Democratic Republic of Congo (not to be confused with the Republic of Congo) whose turbulent past and bloody wars have eclipsed the nation’s potential to thrive.

Since its independence in 1960 and once the most industrialized country in Africa, Congo has bled onto the ground because of its lack of infrastructure and the brutal impact of civil war. Disputes between Congo’s prominent rival groups, the Hutu and Tutsi, erupted after the Rwandan Genocide in which 500,000 people, mostly Tutsi, were victims of mass slaughter by the Hulus in the East African state of Rwanda.

The result was an exodus of over 2 million Rwandans fleeing to neighboring countries like the Democratic Republic of Congo, known in that time as Zaire. Most of the refugees were Hulus attempting to escape the Tutsi who had climbed to dominance at the end of the genocide. The Hulu refugee camps in Zaire, however, became politicized and militarized and when Tutsi rebels invaded Zaire to repatriate the refugees, the conflict escalated into the First Congo War in 1996.

The situation only grew worse and by 1998, the Second Congo War, which was sometimes called the “African world war” because it involved a total of nine African countries and twenty armed groups, devastated Zaire and laid waste to her population and economy. The political turmoil continues today despite intervention and peace attempts and is one of the world’s deadliest conflicts with a death toll of 5.4 million people.

More than almost 90 percent of the conflict’s victims, however, died due a lack of access to shelter, water, food and medicine – all severely aggravated by displaced and overcrowded populations living in unsanitary conditions. Not to mention, 47 percent of deaths were children under 5 and some 45,000 children continue to die each month.

The nation also faces the problem of human rights and the countless crimes against humanity because while many have returned home, an estimated 1.5 million are still displaced. DR Congo is also infamous and heavily criticized for its treatment of women. The east of the country has been described as the “rape capital of the world” and rates of sexual violence has been described as the worst in the world.

It doesn’t help that DR Congo is consistently poisoned by corruption and greed. While mining growth has somewhat boosted the country’s economy, the elite are said to syphon off revenue for their own personal gain due to the nation’s lack of strong central government. Conflicts over basic resources, access and control over rich minerals and oil, and political agendas are some of the many complex causes behind the Democratic Republic of Congo’s inability to rise among the ranks and take the title of the poorest country in the world.

–  Janki Kaswala

Sources: World Bank, Maps of World
Photo: The Telegraph

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Civil War and Economy in Sierra Leone

Economy in Sierra Leone
The Sierra Leone civil war destroyed the national economy, making it one of the poorest countries in the world. The civil war that ravaged the small west African nation from 1991-2002 was the impetus for a huge displacement of people within Sierra Leone, leading to a downturn in the economy that left almost 75% of the population living in extreme poverty.

Sierra Leone’s main export is diamonds. Diamonds have created a significant wealth gap in Sierra Leone that has benefited the rich and paralyzed the poor for decades. The country’s dependence on this single mineral resource impedes economic growth. In order for Sierra Leone to lift itself out of abject poverty, the economy must diversify. Economic diversification is exceptionally difficult, however, with around 50% of the adult working population working in subsistence agriculture. Luckily, the IMF set up a program in 2010 to deliver $45 million to Sierra Leone through 2013.

Over the last few years, Sierra Leone has developed its offshore oil resources as another source of income. This, however, does not negate the enormous need for international aid to power the development process and prevent increased in inequalit in Sierra Leone. In order for the economy to stabilize, foreign aid must be delivered on a consistent basis and domestic peace must be preserved at all costs.

– Josh Forgét
Source: BBC News, Rural Poverty Portal, CIA World Factbook
Photo: Human Trafficking Movie Project