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Economic Growth to Reduce Poverty in Russia

Poverty in RussiaThere are almost 21 million poor people in Russia, constituting 14.3 percent of the population according to the Russian Federal State Statistics Service. The Russian poverty rate is comparable to Western countries’ rates. For example, the official poverty rate in the United States is 11.8 percent. However, while the poverty threshold in the U.S. is $12,490 per year, the minimum subsistence level in Russia is $169 per month, which translates to barely $2,000 per year. Luckily, there are some efforts to reduce poverty in Russia.

Poverty in Russia at the End of the 20th Century

After the U.S.S.R. collapsed, Russia faced huge difficulties leading to economic catastrophe. Finally becoming an independent democratic state in the 1990s, Russia began the transition from a command economy to a market economy. A record level of inflation and default took place in that period where people experienced an aggravated recession, ensuring a drop in income. Russian GDP per capita fell about 39 percent in real terms between 1991 and 1998.

Economic decline and political turbulence led to an increase in a criminogenic culture. Criminals in Russia became powerful and rich at the expense of the economy, all while the majority of the population became more and more impoverished. These obstacles formed exceptional economic inequality in the post-soviet state and impacted the increase of poverty in Russia.

Current Regime and the Economy

The economic situation changed dramatically with the power transition in the 21st century. From the beginning of Putin’s presidency in 2000 to the 2008 financial crisis, economic growth indicators reached impressive levels. For example, the average GDP grew by 26 percent on an annual basis. After the 2008 crisis, the economic situation has yet to regain the growth it once experienced.

One key factor of the Russian economy is oil prices, meaning a shift in price can be catastrophic to the nation. Another crucial factor is sanctions from the U.S. and other Western nations; the sanctions have a hefty impact on the poor economy, ultimately increasing poverty in Russia.

Halving the Poverty Rate

Despite the economic growth in the early 2000s, poverty in Russia remains a crucial issue; to combat poverty in Russia the state should take intense actions. In 2018, Putin signed a decree to reduce poverty in Russia by half by 2024. Today, Russian annual economic growth is at 1.5 percent. The current economic growth would indicate that the government would only be able to reduce the poverty rate by 10.7 percent by 2024. To meet the goal by 2024, the Russian government should strengthen the economy to increase annual GDP growth to at least 4.4 percent. The Russian government aimed to achieve this ambitious goal through a stimulus plan worth $400 billion that builds new infrastructure and investments.

Poverty in Russia is still a huge issue for the state and citizens. After the 2008 crisis, the Russian economy faces new challenges like a decrease in oil prices and economic sanctions. To combat poverty in Russia, the country should aim to strengthen its economy and reduce inequality.

– Elizaveta Naguslaeva
Photo: Piqsels

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Modern Irrigation Technology in Turkmenistan

Modern Irrigation Technology in Turkmenistan
Large swathes of the world still rely on irrigation infrastructure as an integral component of agricultural production. According to the U.N. World Water Development Report of 2015, a global average of 70 percent of water use goes towards agriculture, encompassing both modern and traditional irrigation technology methods. Although modern irrigation technology continues to progress, historical and geographical circumstances remain impediments to the sustainability and efficiency of irrigation in some regions — including Turkmenistan.

The experience of the 20th century left the country with a decaying, unsustainable irrigation system, prompting a scholarly investigation into the subject. However, today, government initiatives — bolstered by international support —  have resulted in creative solutions to the country’s modern irrigation technology crisis.

Soviet Mismanagement

Turkmenistan, which attained independence from the USSR in 1991, lies at the intersection of West, Central and South Asia. Although agricultural land comprises 72 percent of Turkmenistan’s terrain, only 4.1 of that land is arable, while pasture lands encompass 67.8 percent. Irrigated land comprises 19,950 sq km out of the 469,930 sq km of terrain. As the Kara-Kum desert extends through 80 percent of the territory, the country depends heavily on the Amu Darya river as a water source.

Soviet rule initiated unprecedented changes to Turkmenistan‘s traditional irrigation system, the consequences of which would prove environmentally and economically unsustainable. The country is heavily dependent on the Karakum Main Canal, which includes channeled water from the Amu Darya river, leading to waterlogging and salinization. Compounded by poor drainage, this precipitated the abandonment of arable land at a rate of 46,000 hectares per year. The use of unlined irrigation canals and ditches produced loss rates of more than 30 percent, a consequence of neglect by engineers at the design stage.

However, upon independence, Turkmenistan boasted 1.3 million hectares under cultivation, accounting for 40 percent of the GDP. By this time, the clogging of irrigation canals from inadequately drained river sediment became a costly problem that dated equipment and reduced carrying capacity poorly addressed. It also contributed to the formation of uncultivable salt marshes. As of 2007, as much as 73 percent of irrigated land, in excess of 1.6 million hectares, suffered from salinization.

Early Modern Irrigation Technology Strategies

A study published in 2007 proposed several mechanisms by which Turkmenistan could ameliorate the devastation and inefficacy wrought by decades of water overuse and mismanagement. For instance, one proposed solution involves lining ditches with concrete or plastic to mitigate soil salinization, groundwater flooding and waste of water resources. The study also outlined technological advancements in techniques other than furrow irrigation, such as drip, sprinkling and subsoil irrigation. The study’s authors insist that costliness aside, these strategies and technologies would prove highly beneficial, increasing efficient water use, crop productivity and land usage while mitigating environmental harm.

Strategies that the Academy of Sciences of Turkmenistan and the Ministry of Agriculture successfully developed and implemented primarily concern the growth of cotton and wheat crops. Most significantly, by sowing and concentrating water and fertilizer between ridges and at the bottom of irrigation furrows and by rotating crops each year, irrigation is no longer necessary for draining purposes. Though distinct from the ditch lining proposal of the 2007 study, this strategy appears to combat the same leakage issues effectively. This process may save as much as 130 million cubic meters of water, thus ensuring efficient land and water use. Energy, labor and fertilizer expenditures are likewise more efficient under this system.

Recent Modern Irrigation Technology Strategies

The government of Turkmenistan has not worked on modern irrigation technology initiatives alone, but have involved international collaboration. For instance, a climate-resilient farming initiative for Turkmenistan, under the aegis of the UNDP, produced favorable outcomes. In 2014, a new law incorporated the UNDP’s suggested amendments and revisions to Turkmenistan’s Water Code. The same year, progress in community-based adaptation initiatives resulted in the introduction and development of community-oriented water-collecting techniques, water management strategies and irrigation services.

In another transnational initiative in 2017, specialists from Turkmenistan participated in a seminar on irrigation strategies in Israel that explored techniques Israel has employed in attaining agricultural success despite the harsh topography and arid climate. The subject matter of these seminars ranged from irrigation planning and greenhouse versus open irrigation to the use of drip and sprinkling styles of irrigation (the latter in line with the 2007 study above). The application of these techniques will improve efficiency and mitigate the negative externalities of modern irrigation technology in Turkmenistan. Successful administration of these strategies in Turkmenistan likely will, in the long term, increase crop yield, expedite economic development and reduce poverty in a large part of the population, as the example of Israel demonstrated.

Throughout the 20th century, Soviet irrigation practices in Tajikistan precipitated environmental degradation and economic decline. However, the introduction of modern irrigation technology in Tajikistan since independence has improved the economy and mitigated ecological harm. International cooperation and government initiatives now lay the groundwork for a more efficient, productive and environmentally conscious irrigation system. If efforts persist, the future of agriculture is bright for Tajikistan.

– Philip Daniel Glass
Photo: Flickr

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A Look at Credit Access in Moldova

Credit Access in MoldovaThe Republic of Moldova, a small, post-Soviet landlocked country bordering Ukraine to the north and Romania to the south, currently grapples with issues of economic freedom. According to the Index of Economic Freedom, Moldova ranks as the 97th freest economy in the world with Russia at 98th and Burkina Faso at 96th. With 180 countries ranked, the Heritage Foundation categorizes Moldova as a mostly unfree economy. Credit access in Moldova suffers along with its corrupt economic and political culture, affecting the most at-risk individuals in the population.

A Shift Away From the Agricultural Sector

Farming and agriculture once made up the bulk of Moldova’s domestic economy with agriculture accounting for 42 percent of the Moldovan GPD in 2000, according to a multi-national case study including USAID. The CIA World Factbook cites that in 2017, Moldovan agriculture made up only 17.7 percent of the GDP while Services took up 62 percent. In just 19 years, the Moldovan economy has experienced a rapid change. Moldova is transferring from an agrarian economy into a service-based economy, but during this transition, farmers are being left behind and their credit access in Moldova is dismal.

Farmers face the unique challenge of navigating a banking system that is new for their country. Before the year 2000, the Moldovan state owned all agrarian land. A USAID report explains how 800,000 private farmers became landowners and suddenly needed additional financial resources, yet struggled to acquire them since the amounts requested were only a few hundred dollars each–unattractive investments for local banks. The banks refused to work with the burgeoning independent farmer sector, making credit access impossible for many who needed small loans to fund and improve their businesses.

No Access to Investment

Along with the difficulties of learning a new market system, Moldovan farmers also encounter immense corruption in both government and business. The World Bank reports in its Country Partnership Framework (CPF) that “a massive bank fraud in 2013-14 enabled by political interference…led to depreciation of the currency, inflation, financial destabilization and loss of investor confidence.” Those who have no credit access in Moldova also have lower chances of receiving investment from outside the country because the risk of investing in a corrupt country carries too much risk for international investors.

The World Bank CPF explains that “limited access, inefficiency and poor quality have contributed to social exclusion, persistent poverty and vulnerability to shocks, especially in rural areas.” Rural farmers cannot rely on either the state or the banks to offer much-needed investment, and therefore are left without a critical resource essential to operating a thriving business.

The World Bank’s Moldovan Engagement

The World Bank currently sees transparency, accountability and corruption as the most pressing issues to the Moldovan economy. In an effort to stabilize the region and bring economic prosperity, the World Bank has ten active projects in Moldova. The organization cites three objectives: “strengthening the rule of law and accountability, improving access and quality of public services and enhancing the quality and relevance of education and training for job-relevant skills”. The objectives of The World Bank CPF, while broad, would allow for Moldovan farmers to either gain the credit access needed to operate their farms or expand into other sectors of the economy.

Three projects from The World Bank in particular help to solve the issue of credit access in Moldova. To help rural community members that wish to expand their horizons past farming, the World Bank has instituted the Moldova Education Reform Project, which gives out result-based specific loans to certain sectors of Moldovan education to improve the efficiency of the education sector and improve “the ministry of education’s capacity to monitor the reform”.

To help squash corruption and inefficiency, the World Bank also created the Tax Administration Modernization Project which reviews the Moldovan tax code to ensure an equal and comprehensive tax policy that supports the development of small businesses.

In an effort to help all Moldovans, the World Bank’s Moldova Economic Development Policy Operation Project (DPO) helps “to support the government of Moldova in reducing fiscal risks and leveling of the playing field for private sector development [by] strengthening oversight [and supporting] private sector development in access to business opportunities and resources”.

Lessons Learned

While credit access in Moldova is a complex issue, institutions like the World Bank that specialize in economic reform and recovery are getting involved in the country. Supporting institutions such as the World Bank helps the World’s poor help themselves by improving local economies and the governmental and business practices around them.

– Spencer Julian
Photo: Flickr