Archive for category: Global Poverty

Key articles and information on global poverty.

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Ascariasis: A Major Health Problem in the Developing World

Ascariasis

Throughout the developing world, one kind of disease remains more common than any other: worms. In fact, according to The Huffington Post, recent figures have suggested that nearly every person residing in a developing country has some form of worm infection, due to the abundance of worm larva in soil all over the world.

While there are a variety of these infections, one in particular called ascariasis, or ascaris, has become so widespread that, according to the Center for Disease Control, it “account[s] for a major burden of disease worldwide.” In total, 807 million to 1.2 billion people around the world are infected with this parasitic illness, which is also classified as a neglected tropical disease.

It is caused by the consumption of its eggs, which reside in contaminated soil. This happens when fingers that have touched contaminated soil are put in the mouth or if produce has not been properly washed, cooked and peeled.

After ingestion, the eggs make their way to the intestine, where they hatch into larva. The freshly spawned larvae then wait to develop into fully mature worms. An adult female worm can grow up to around 30 cm in length while in the intestine, all while producing eggs that will then return to the soil via the host’s feces.

Upon reaching maturity, these adult worms wiggle through the intestinal wall and make their way towards their host’s lungs through the blood stream. This is where things get even more disgusting. Once near the lungs, they reside by the back of the throat, where they once again lay their eggs and continue the cycle.

Sufferers often do not experience any symptoms, but some of the most common signs of the disease are abdominal pain, coughing, difficulty breathing and fever. In more severe cases, excessive worm growth can cause intestinal blockages. As the worms migrate to the lungs, they are also one of the most common causes of Asthma in the developing world.

Ascariasis can stunt the growth of young children and this age group is also its most common target. When children play in the soil they expose themselves to risk of infection when putting their fingers in their mouths afterward. While usually not lethal, ascaris takes the lives of 60,000 annually, most of which belong to children.

In order to combat this disease, the World Health Organization and many other international aid organizations have attempted mass de-worming efforts. Using the two drugs albendazole and mebendazole, these groups have made progress by treating whole communities.

Another effective way of preventing ascaris does not involve drugs at all and instead relies on health education. These campaigns teach those in afflicted areas how to keep a sanitary kitchen and how to consume food safely, without the risk of catching the disease.

While treatment efforts are ongoing, less than 40 percent of the world’s children in need of treatment have not actually received any. This accounts for more than 850 million children worldwide and stands as one of the largest public health issues in the world. In order to improve the lives of millions, deworming campaigns must carry on.

– Andrew Logan

Sources: The Center for Disease Control, The Deccan Herald, The Huffington Post, The New York Times, The World Health Organization
Photo: Flickr

Large Solar Plant Coming to West Africa

Large-Solar-Plant-Coming-to-West-Africa
Mali has signed an agreement with Oslo-based renewable energy specialist Scatec Solar to build West Africa’s first industrial-scale solar plant. The plant will be built near the southwestern city of Segou and has a life expectancy of 25 years.

According to Scatec Solar’s website, the company is “an integrated independent power producer, aiming to make solar a sustainable and affordable source of energy worldwide. Scatec Solar develops, builds, owns and operates solar power plants and delivers power from 219 megawatts in the Czech Republic, South Africa and Rwanda.”

Mali’s energy minister, Mamadou Frankaly Keita, said, “This landmark agreement signals the government’s commitment to meet the nation’s growing energy demand and to provide clean, renewable and affordable energy to our people.”

In recent years, Mali has been plagued by chronic electricity outages. In 2013, the government reported that it was only able to supply 45 percent of its 16 million people with electricity.

But with the addition of this solar plant, the problem of electricity shortages will be solved. The plant is expected to produce enough electricity each year to power 60,000 family homes, while cutting annual carbon dioxide emissions by 46,000 tons.

It has been reported that Mali’s EDM-SA energy company, two thirds of which are owned by the states and one third of which is owned by the Aga Khan group, is in crisis. It is failing to ensure an adequate supply of electricity, despite state subsidies worth 87.7 million euros in 2013.

With this new solar plant, Scatec will own 50 percent of the Segou plant while the World Bank’s International Finance Corporation will hold 32.5 percent, leaving the remaining equity to local power partner Africa Power 1.

Scatec Solar will construct the plant and will also provide operation and maintenance services after the plant is connected to the electricity grid.

The chairman of Africa Power 1 SA and General Administrator of Scatec Solar West Africa SA, Dr. Ibrahim Togola, said, “Today’s event is historic because Mali now becomes the first country to install the largest solar grid connect power plant in the region. This high-profile joint venture, in which Malian citizens participate, will serve as a model to launch the solar era in West Africa.”

By tapping into the available sunlight, sunlight that is available almost all day, citizens in Mali will be able to use this clean and free energy. It will also have a positive impact on the air by reducing carbon dioxide emissions.

Although solar panels are expensive at the beginning, the reduction in electricity bills can be seen in about seven years after installation. With the large solar plant being built in Mali, homeowners do not need to pay the expense of private solar panels.

Hopefully, the solar plant in Mali is a test run for the effectiveness of solar electricity in West Africa and is something that will soon be present in the rest of Africa.

– Kerri Szulak

Sources: Africa Renewal Online , Phys.org, Scatec Solar
Photo: Aspire Africa

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The Fall of Chinese Stock Markets and the Impact on Poor

stock_markets
The recent collapse of the Chinese stock markets has been tumultuous. Millions of Chinese middle-class citizens were caught up in the fervor; many of the stock-buyers have been Chinese without high school diplomas. Many observers in the west had feared that the meteoric growth of the stock markets in China was unsustainable. In 2014, the Shanghai Composite Index rose 21 percent in one month alone — a warning sign to many that this type of growth could not continue forever.

Since the beginning of the falling stock prices, at least 3.2 trillion dollars in value has vanished. The bubble was seemingly inflated — in part with government encouragement — with lax policies put in place to encourage further investment in stocks. Many people began to pour savings and accrue debt in order to pump more money in the over-valued stock prices. The government’s role in encouraging the bubble has now led to a loss of face for Chinese leadership and policy makers.

The ramifications of the Chinese stock market collapse could be widespread. A large fraction of the investments made were done not by large businesses or businessmen, but by middle class urbanites and even rural villagers. Much like the housing bubble in 2008, a tremendous loss in assets for middle and lower class Chinese could be hugely detrimental to the country. In light of the fact that the Chinese economy has been attempting to transition into a more consumer-based economy and the slowdown in growth in recent quarters, this financial crisis could be a major setback in China’s economic ambitions for the future.

The loss of value for stocks owned by every-day Chinese citizens means that demand would suffer and begin the cycle into lower economic health and greater uncertainty about the future of the markets. In general, an economic downturn is bad for everyone, from the most impoverished, to the well off. The poor in China will almost certainly suffer more, should the economy take a turn for the worst.

The Chinese Government has taken strong steps towards avoiding a complete collapse in stock prices. Pouring money into the teetering markets, the government is attempting to push back against the tide of sellers and avoid what many consider to be inevitable. Forty percent of stocks have stopped trading in an effort to stop the bleeding prices, but many argue that this is will do little. Market corrections will occur regardless — the bubble has already popped.

The secret is out — the majority of these unsustainably growing stocks belong to companies who are simply not worth even close to the price tag. Many of these Chinese companies have suffered huge blows to their reputation and legitimacy. Stopping trading is more likely than not, a desperate measure to allow for some leeway and time to think. The market is no longer in a psychological craze, and all the freezes will do is delay the inevitable market corrections.

The real question now is, how much value will be lost and how much will this hurt the middle and lower classes in China?

– Martin Yim

Sources: New Yorker, Bloomberg 1, Bloomberg 2
Photo: Gbtimes

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Off-Grid Vaccine Refrigerators Improve Immunization

Immunization
Most vaccines are heat-sensitive and must remain in a cool, controlled environment. However, this is easier said than done when the vaccines must be transported over a great distance, arriving at a remote location with frequent power outages or no electrical grid at all.

Introducing the direct-drive solar refrigerators: a solar-powered fridge that keeps vaccines cool for long periods of time without relying on gas or kerosene. Off-grid refrigerators were introduced in the 1980s in areas without electricity, but recent technological improvements have made them more efficient and accessible than ever before.

The new technology, sponsored by PATH and the World Health Organization, has “direct drive” technology that uses the sun’s energy to freeze water, creating an ice “bank” that the fridge can tap into during the nights and cloudy days.

A direct-drive solar refrigerator could prove to be invaluable to developing countries. Immunizations would be more stable and more accessible, meaning people would get treated faster.

But the fridges are not the simplest of innovations—any given country will need a long-term plan upon making the initial investment for semi-regular maintenance and repair. On top of that, an experienced professional would have to install the fridge to ensure it is done correctly, and then train local technicians to maintain and repair them.

Despite the drawbacks, the direct-drive solar refrigerator is already working. In the Philippines, a solar refrigerator called the Sure Chill is storing vaccines for longer than previously possible, helping rebuild the cold chain infrastructure after the typhoon in 2014. The Sure Chill fridges uses solar and water power and can run without electricity for up to 10 days. These fridges have a big price tag, about $2,600 each, but are already proving to be extremely worthwhile.

– Hannah Resnick

Sources: Alternative Energy, Science Dev, WHO
Photo: Flickr

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Fashion Project: Supports Good Causes

fashion_project
Raising money for charity is a mission that many organizations and movements have, but it is their techniques what makes them different.

Fashion Project has the mission to raise as much money as possible in order to donate it to charity and humanitarian causes. They achieve this through the creation of a community that donates and shops for clothing pieces to support causes these donors and buyers care about.

According to Fashion Project’s official website, this technique has placed them as the industry leader in online clothing donation.

The designer brands that the Fashion Project sells and accepts for donation are Fendi, Balenciaga, Alexander McQueen, Alexander Wang, Bottega Veneta, Burberry, Chanel, Dolce Vita, Elie Saab, Free People, Gucci, Hermes, Lanvin, Prada, Michael Kors and Valentino, among others.

Once donors select the cause they want to support, they can donate their gently used or new designer clothes, shoes and accessories. Fashion Project covers shipping and they also photograph the donated clothing pieces in order to sell them in their online boutique for buyers. In addition, clothing and accessories donors will get a tax receipt.

While their online shop offers sale prices in designer brand items, buyers can take advantage of the savings these items offer and, at the same time, their purchase provides a donation to charity.

Up to 55 percent of the sells of Fashion Project’s online shop are directed to support different charity programs.

As of today, Fashion Project has raised around $700,000 for charity, and is supporting 2,016 charities and organizations.

Some of the charity partners that Fashion Project supports are She’s The First (sponsors girl’s education in developing countries), Neads (dogs to help the deaf and disabled people), Apne Aap Women Worldwide (empowers women to gain independence) and Women’s Global Empowerment Fund (produces programs that reduce poverty and the marginalization of women and their families), among others.

On the other hand, people can also create their own “Fashion Project” as a fundraising campaign.
Fashion Project gives fundraisers the necessary tools to create their fundraising personalized site so they can invite people to donate or shop fashion items for a good cause. Once the fundraiser reaches his goal, Fashion Project will direct their raise to its destination.

This project has been growing with the years to a point in where Fashion Project has partnered with Neiman Marcus, and the Mercedes-Benz Fashion Week. The project has also launched donation programs with Nordstrom, Joie and Elie Tahari, among others.

According to an article published by Forbes, partnerships with retailers have been an important aspect to spread Fashion Project’s mission.

The most popular designer brands on the online shop are Coach, Theory, Kate Spade, Michael Kors and Tory Burch. Most of the donors and buyers are from the United States but they have had donations from Europe countries interested in donating to the cause and supporting the mission of Fashion Project.

– Diana Fernanda Leon

Sources: Forbes, Fashion Project 1, Fashion Project 2, Fashion Project 3
Photo: Boston.com

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Internet Plays Crucial Role in African Job Development

Internet Plays Crucial Role in African Job Development - TBP
The economies of African nations are growing at levels never before seen, but so is the continent’s youth population. As a result, job creation is at a critical point.

For Africa to maintain its current growth trajectory, it’s estimated that 400 million people under 25 will need viable employment by 2050.

Unemployment isn’t a concern solely in Africa, however, as the U.N. reported in 2014 that global unemployment hit over 201 million people, with a large percentage of these people being women and children.

With rising levels of unemployment, the Internet is starting to play a large role in helping create jobs, especially for populations in Africa. One organization, the Rockefeller Foundation, started its own initiative to jumpstart employment opportunities in certain African nations.

The foundation launched its Digital Jobs Africa program in 2013, with the goal of creating sustainable jobs focused on information communications technology for the youth in Africa.

Specifically, the foundation wanted to have a positive effect on at least one million lives in Egypt, Ghana, Kenya, Morocco, Nigeria and South Africa.

Digital Jobs Africa emphasizes three pathways used in its approach: generating digital jobs in assorted sectors by building promising business environments, prioritizing the hiring of youth in the private sector, and partnering with organizations that provide job training to help make sure the youth have the necessary skills for these jobs.

In starting Digital Jobs Africa, the foundation partnered with the World Bank Group. Since doing so, the two organizations have done lots of work to boost digital job creation opportunities in Africa.

The Rockefeller Foundation and the World Bank Group focus on the Internet because of the impact it can have on the traditional ways of working.

Using the Internet in the workforce creates new opportunities; it therefore has the ability to change lives for the better in both developed and developing nations.

By using the Internet, employers can extend jobs and reach talent on any corner of the globe. People can also work from anywhere.

This strategy is a business model referred to as online outsourcing, or online work.

The World Bank Group was the first organization to take a deeper look into online outsourcing, as it carried out the first comprehensive study having to do with this particular business model. It was called “The Global Opportunity in Online Outsourcing.”

The results of the study, which the World Bank Group did in partnership with Dalberg Consulting and with support from The Rockefeller Foundation, were released in June.

The group wanted to help connect governments, companies and people to online outsourcing, which it did by completing the study.

The study was released side-by-side with a web-based toolkit that can, according to the World Bank Group’s website, “diagnose the feasibility for establishing the online outsourcing industry in developing countries, in order to increase access to employment and income-generation opportunities.”

In the study, the group analyzed experiences people had with online outsourcing in different parts of the world and how it could impact job creation, economic growth and social inclusion.

In doing so, the World Bank Group recommended policy ideas for developing countries to allow them to use online outsourcing as leverage for promoting inclusive growth. It also explained what possible tasks could be available through the business model and which skills were necessary to be successful.

The influence of online outsourcing is expected to grow, as estimates say that by 2020 the market size could hit between $15-$25 billion and have the potential to employ 30 million registered workers.

So how can companies and workers benefit from online outsourcing?

For starters, it gives employers wider access to specific skill sets and faster hiring. It also allows for productivity around the clock, as companies can have workers all over the world.

For those seeking digital jobs, online outsourcing gives them international job opportunities and a flexible work atmosphere.

In terms of societal impact, online outsourcing has the ability to push social change for women.

In India, for example, women who take care of children and elderly family members can make money while at home by having an online job. In Egypt, women can use online outsourcing instead of having to go to workplaces dominated by men.

But online outsourcing isn’t a lucrative alternative to the traditional ways of working just because of flexibility – it could also be the more profitable option.

One aspect of the study conducted by the World Bank Group found that in Kenya, Nigeria and India, full-time online workers earned a salary equal to or greater than their counterparts in a traditional workforce.

Not only can online outsourcing lead to higher wages, but through its flexibility, inclusiveness and innovation, it also has the ability to reach women and youth. This is proof that the Internet can boost economic growth and drive social inclusion.

– Matt Wotus

Sources: The Rockefeller Foundation, The World Bank
Photo: The Guardian

The Price to Educate the World

educate_the_world
This past weekend, many international leaders and education advocates met in Oslo to discuss strategies on how to meet the Millennium Goal of education, as well as discuss the price to educate the world. Among the attendees were UN secretary-general Ban Ki-Moon, Malala Yousafzai and former British Prime Minister Gordon Brown.

A high-level panel offered diverse perspectives on financing education. The Indonesian Education Minister, Anies Baswedan pointed out the need to bring down high cost education affecting teaching materials, curriculums and assessment. Rwanda’s Prime Minister Paul Kagame said one of the key factors for successful educational reform was strong partnerships.

Ms. Yousafzai addressed the congregation, urging the international community to spend more money on projects to provide education to those in poverty. She told them, “We will not stop. We will continue to speak out and raise our voices until we see every child in school.”

When the world’s leaders met during the Millennium Summit in September of 2000, they outlined eight core areas of need to reduce extreme poverty in the world. Among those eight core areas, one of the goals was to ensure that, by 2015, children everywhere, boys and girls alike, would be able to complete a full course of primary schooling. To this day, only two of the eight goals have been met, and education is not one of them.

According to the Malala fund, the NGO she helped start, Universal fee-free primary and secondary education for a 12-year period costs an estimated $340 billion per year through 2030. The United States defense budget was $526.6 billion in 2014 alone.

In a July 2015 report released by the United Nations Educational, Scientific and Cultural Organization (UNESCO), the number of out of school students around the world is on the rise, reaching 124 million in 2013. That figure includes 59 million primary students and 65 million young adolescents aged from 12 to 15 years old. This is up from the 122 million that was reported in 2011.

Age is not the only disparity in the fight to educate all children. Efforts to abolish gender gaps have broken down in recent years. Although they are better than in the earlier 2000s when the program was initiated, progression has gone stagnant. According to the 2013 figures, 1 in 10 girls and 1 in 12 boys were out of school in 2013.

The study gives two explanations for the recent decline. First, the sub-Saharan countries are finding it hard to keep up with the rising demand of school education from the school-age population that is experience a surge in population.

Secondly, the old business model that was proposed in the early 2000s is outdated. That model included abolishing tuition fees, the construction of new schools and a system of more teachers, classrooms and textbooks.

The world must come together to pool resources in order to reach the goals set out in the Millennium Development Goals and address the challenges of the UNESCO report. On the fifteenth anniversary of the Millennium Development Goals, the United Nations is expected to adopt a new set of Sustainable Development Goals that will call for universal primary and secondary for all students by 2030.

This is definitely a step in the right direction, but will require more cooperation and resources from the international community and national governments. The World Bank has invested US $4 billion in education alone. This year, they have created a new Results in Education for All Children Trust Fund (REACH). Norway was the first donor followed by USAID. That aid must be used efficiently and with proper strategy.

According to the UNESCO report, what is needed now are “targeted interventions to reach the most marginalised children and youth who are out of school today, including those with disabilities; from ethnic, religious or linguistic minorities; and children affected by armed conflict.” Continuous citizen advocacy is need to make sure U.S. foreign aid stays consistent over the course of the next 15 years in its commitments to universal education, or else the price to educate the world will go even higher.

– Adnan Khalid

Sources: U.S. Department of Defense, Government of Norway, Malala Fund, United Nations, UNESCO, The World Bank
Photo: Flickr

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The Jompy Water Boiler: A Lightweight, Inexpensive Solution

water_boiler
From 1990 to 2011, over 2 billion people gained access to an improved water source—that’s a hugely improved standard of living for more children, families and communities worldwide. However, not all water is clean drinking water, which is exactly what Celsius Global Solutions aimed to fix with the Jompy Water Boiler.

The Jompy Water Boiler is a lightweight, inexpensive device that simultaneously enables people to cook a meal and heat water to bacteria-killing temperatures, making the water safe for drinking and bathing.

The boiler itself is a flat metal disk with a handle connected to a container of water through a tube. The flat disk is placed over the heat source. Its shape allows the user to put cooking tools right on top of it. As the disk gets hot, the heat is transferred through the tube to the water container, which quickly heats up, and the water becomes decontaminated. The Jompy Water Boiler works equally well on stovetops and on open fires, making it useful in urban and rural settings.

In 2006, Glasgow University did a test run of the Jompy Water Boiler in Uganda. The test was conducted with 99 families, 49 of which were given water boilers. The World Health Organization set the objective of this research to have zero water-born diseases, such as E. coli, in the families that used the product.

The results were impressive. Of the 49 families with Water Boilers, only one family had a case of E. coli. Meanwhile, of the 50 families without water boilers, there were several cases of the water-born disease.

On top of reducing the risk of disease, families reported that they saved an average of 3 kg of firewood per day and more than three hours of their time due to reduced cooking times using the Jompy Water Boiler. It saves time and effort, all while consuming less fuel and reducing CO2 emissions.

The Jompy Water Boiler is currently used in India, Kenya and Uganda, but it has the potential to make a serious impact on the lives of those living in developing countries. It is efficient, cheap and worthwhile.

– Hannah Resnick

Sources: Empowering People, Jompy, UNICEF, Venture Beat, Wikia
Photo: Siemens

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Medellín, Colombia’s Urban Transformation

Colombia's_Urban_Transformation
In the 1990s, Medellín, Colombia had the highest murder rate in the world. The city set out to transform itself and lift its poorest sectors out of extreme poverty through architecture, the revitalization of public spaces, education and improved transportation.

Medellín’s new transportation systems are a major component of the city’s transformative project. The Metro Cable, a cable car that travels above the city, connects informal settlements in the upper regions of Medellín to the metro system in the lower regions, enabling much faster access to transportation. The metro system is clean, modern, and efficient. It reduces travel time from an hour to around ten minutes. The cable car system moves tens of thousands of citizens each day.

Medellín’s urban landscape sits upon steep hillsides. Residents used to have to climb hundreds and hundreds of stairs up these hills to commute to work and back. Today, the city has installed an escalator on this hill. It ascends 1,300 feet. For 12,000 residents, what was once a dreaded 30 story climb is now a quick 5 minute ride.

Another fundamental aspect of this urban transformation is the creation of public squares in the poorest areas of Medellín. Architects Horacio Valencia, head of Sustainable Urban Interventions at EPM (Empresas Públicas de Medellín), Carlos Pardo and Nicolás Hermelin, as well as the CEO of EPM (explain), Juan Esteban Calle, looked at images of the city from the air, and saw some unused, wooded areas. These, they thought, would be excellent ways to create public realms and bring a sense of community to impoverished, dangerous sections of the city.

Each public space is specifically adapted to the context and needs of the neighborhood it is situated in. One square, entitled Los Sueños, or The Dreams, “surrounds the solid concrete tank with jets of water, slides, plays of light and a designated area for events. Enclosed rooms are built into the topography to free up the largest possible area of open space, and house two multi-purpose classrooms, an internet café, public toilets and a launderette – a novelty in a city where it is not uncommon to rent a washing machine for half a day, and home-deliver it on a motorbike – describes The Architectural Review. The fresh public spaces have drawn residents out of their homes to interact with the urban fabric of their city.

Other initiatives involved in Medellín’s transformation involve education and the creation of libraries throughout the city. Residents voted to direct government funds towards funding new schools and college scholarships. In 2002, under 20 percent of public school students used to test at the national average. In 2009, over 80 percent do. Futuristic looking libraries enable all classes of citizens access to computers and the infinite information that comes with them.

EPM’s chief of operations, Federico Restrepo, now Medellín’s city planner, said “We took a view that everything is interconnected — education, culture, libraries, safety, public spaces. Obviously it is not just that we built and renovated schools. You have to work on the quality of teaching and nutrition in conjunction with architecture. But the larger point is that the goal of government should be providing rich and poor with the same quality education, transportation and public architecture. In that way you increase the sense of ownership.”

The Empresas Públicas de Medellín supplies the city with water, gas, sanitation, telecommunications and electricity. In Bogotá, the most impoverished slums lack basic needs like water and electricity, but in Medellín the EPM, mandated by the constitution, provides the most remote slums with these basics. The EPM has helped fund many of Medellín’s transformative projects such as schools, public plazas, metros and parks.

– Aaron Andree

Sources: Architecture in Development, Architectural Review, The Guardian, The New York Times, Planetizen
Photo: Flickr

 

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Why Inequality is Bad for Business

Inequality-Is-Bad-For-Business
What do poverty, inequality and economic flexibility have to do with each other? Well, according to a recent report co-authored by consulting firm KPMG and economic think-tank Oxford Economics, these three things are intimately intertwined. The report, called the Change Readiness Index (CRI), ranks 127 countries in order of their ability to resist economic shocks, natural disasters and social unrest. The report measures several indicators such as macroeconomic stability, ease of doing business and rule of law, which reveal the effects that inequality tends to have on each country’s society.

Inequality has traditionally been seen as a by-product of developmental challenges which would disappear with increased growth and poverty reduction efforts. However, inequality is increasingly seen as a problem unto itself which needs to be the focus of international initiatives as the Millennium Development Goals expire. This is because increased economic growth isn’t necessarily evenly dispersed, leaving those at the bottom of the economic ladder behind. Thus, poverty reduction needs to be combined with a more equitable distribution of resources to be effective.

There are certainly ethical and social reasons to favor a more economically equal development model. Societies that have lesser income disparities tend to be more socially and politically stable, and have much lower rates of poverty. However, there are also significant economic reasons why inequality reduction is a pathway to poverty reduction. Simply put, economic inequality and poverty are bad for business.

The big-picture macroeconomics of inequality warrants an explanation.

Plainly put, extreme income inequality, such as the kind found in Sub-Saharan Africa and South Asia, cause economic inefficiency. The relatively wealthy tend to save a much higher proportion of their income than the poor. In order to grow economically, a society must have robust rates of consumption. However, if most of the wealth of a country is owned by a very small percentage of its population, that wealth is saved, not spent. These savings are then invested by individuals and financial institutions.

In recent history, excess savings have fueled speculative investments, exacerbating asset price collapses like real estate bubbles, such as the ones that occurred in Spain, Ireland and the U.S. during the 2008 economic crisis. Furthermore, if consumption rates are low due to excess savings, the central bank of a country may lower interest rates to increase the availability of credit, which can further fuel speculative investment. Inequality peaked just prior to the Great Depression of the 1930s and the 2008 financial crisis, contributing to the underlying economic instability which caused those events.

Instead, if the wealth is more evenly distributed among the lower income earners of a society, who spend much more of their income, consumption goes way up. Thus, the poorest individuals, if they are empowered through greater income equality, may drive consumption, opening up new markets and creating increased economic growth.

So, how would income equality be implemented as a pathway to poverty reduction? According to ActionAid, a U.K.-based poverty-reduction organization, one way would be to empower women in the developing world. Up to 60 percent of the world’s poor are women, and only about half of them participate actively in the labor force. If developing societies became more inclusive of women in the labor market, they would represent a huge capacity to work, earn and spend, driving economic growth. This economic growth would act as a positive feedback mechanism, further increasing economic opportunity and pulling people out of poverty.

Something that the Change Readiness Index reveals is that the countries which have the highest levels of inequality also tend to have more persistent levels of poverty despite growth, and tend to have far less spending on public goods like healthcare and education, which are instrumental in reducing poverty. One example is Nigeria, where incredible oil wealth has reached only a tiny portion of the population, and social, political and economic instability abounds. Oil revenues tend to elude taxation, which limits funds available for public spending. Furthermore, Nigeria ranked 90 out of 127 on the CRI and 79 out of 86 countries in the OECD Social Institutions and Gender Index, which measures gender inequality, revealing the link between disparities in income and the participation of women in economic and political life.

As the Millennium Development Goals expire this year, policy makers are increasingly sensitive to the importance of reducing inequality as a pathway to reducing poverty. In 2013, the U.N. published a comprehensive report on global inequality acknowledging it as the greatest barrier to poverty reduction, emphasizing solutions such as the economic and political inclusion of marginalized groups such as women.

Furthermore, 90 economists, academics and development experts recently submitted a letter to Dr. Homi Kharas, leader of the panel on the post-2015 development agenda for the United Nations. The letter urged increased emphasis on reducing inequality as a set of Sustainable Development Goals are being crafted to replace the Millennium Development Goals.

Prominent economist Joseph Stiglitz suggests a Sustainable Development Goal on inequality which follows the style and spirit of the original eight Millennium Development Goals. The goal consists of two targets; by 2030, reducing “extreme income inequalities in all countries such that the post-tax income of the top 10 percent is no more than the post-transfer income of the bottom 40 percent.” And by 2020, establishing a commission in each country which will track and report the effects of inequality.

It’s clear that inequality needs to be a top priority to achieve effective poverty reduction in the next 30 years. Not only could income equality pull millions out of poverty, it could also open up new markets and be the new driver of global economic growth.

– Derek Marion

Sources: The Guardian 1, KPMG, The Guardian 2, ActionAid, Ethics and International Affairs, Save the Children, UN
Photo: Arts.Mic