Inflammation and stories on trade

Trade Partnership Between The EU And India
The European Union and India have recently agreed to resume trade negotiations since 2013. The European Union has acknowledged that trade leads to the reduction of national poverty, a huge benefit. The trade partnership between the E.U. and India is strategic to the E.U. in terms of India’s geographical location and natural resources.

National Poverty in India

In India, 30% of the population lives under extreme poverty, meaning that individuals earn less than $1.25 per day. India is one of the subcontinents with the highest toll of poverty in the world. The lack of resources creates a chain reaction, leading to unemployment, child labor and lack of education. Similarly, the poverty rate in India is concerning, alarming other nations to develop impactful relations with India. The economy in India bases on exporting spices, coffee, tea, tobacco, iron and steel. The current COVID-19 pandemic struck India with the lowest economic growth in years. It affected rural areas in India the most. People are reducing spending due to the crisis and financial situation. The European Union has agreed to trade with India to pursue common interests.

Trade Agreements Between the EU and India

The European Union agreed on trading with India for better development and strategic commerce. Europe and India froze their relationship in 2013. This decision strongly affected India’s financial situation. Trade partnership between both nations creates impactful relationships and empowers women. Strengthening the relationship between both countries strengthens human rights and reduces the poverty index, helping civil society. The trade deal between nations is 8.5 billion euros. The European Union and India agreed to build infrastructure projects to increase cooperation.

Both nations have compromised to reduce carbon emissions and increase renewable energy. The pledge between both will improve citizens living conditions and minimize national poverty. According to the European Commission, India is amongst one of the fastest-growing economies in the world. The trade partnership with the European Union could potentially grow India’s GDP up to 6%. The European Union will exhaust available channels to work with India to ensure a transparent market and respect multilateral obligations.

Trade Drives International Development

Open trade policies enable economic development in countries. The cooperation of international trade will benefit the importer and exporter in numerous ways. For instance, trade is critical when it comes to ending global poverty. Multilateral relationships create a win-win scenario, improving productivity and innovation. Poverty means the concentration of individuals deprived of basic needs, often disconnected from global or even regional markets. Consequently, increasing trade creates jobs and grows the exporting sector.

Improving Living Standards in India

In conclusion, emphasizing trade partnership is a national growth strategy. With the collaboration and agreement, India could increase up to 6% of its annual GDP. According to the World Bank, trade-open markets help create an inclusive and integrated environment. The European Union will help India significantly reduce national poverty levels. All sectors in India benefit from bilateral and multilateral negotiations. Above all, it is essential to have an equitable economy to ensure growth in society. The United Nations has prioritized poverty as a millennium development goal emphasizing MDG 8, which corresponds to international trade as a growth strategy to reduce poverty. Thus, the trade partnership between the E.U. and India is conducive to India’s future economic success.

Ainara Ruano Cervan
Photo: Flickr

The AfCFTA Lays the Groundwork
There is a continental shift happening in Africa by the name of the AfCFTA or the African Continental Free Trade Area. While this shift may not be like the literal seismic ones, it is no less earth-shaking. Here is how the AfCFTA is laying the groundwork to battle poverty.

About the AfCFTA

As of January 1, 2021, the AfCFTA is the largest free trade conglomerate in the world. Fifty-five countries entered the AfCFTA, connecting 1.3 billion people across the African continent and resulting in a combined gross domestic product (GDP) of $3.4 trillion. Expectations have determined that 30 million Africans will be able to improve their income, thus allowing them to leave poverty. It is a daunting task, but the promise could turn Africa’s relationship with the world on end.

The dramatic shift is finally coming to fruition after the AfCFTA began in 2018. The novel Coronavirus pushed the progressive agenda back to a 2021 release date. However, in order to make the area the world-changing force it can be, experts have noted that the AfCFTA has some obstacles.

How the AfCFTA is Laying the Groundwork to Aid Business

Simply put, the AfCFTA is an agreement among African governments to greatly reduce or eliminate tariffs on trade within the continent. This shot in the arm for African industry opens up trade within Africa and also makes goods and services available to off-continent markets more attractive.

Within 20 years, predictions have determined that the AfCFTA will bring $34.6 billion and a further $85 billion in trade facilitation across African borders without any sign of letting up. Further analysis suggests there is a notable connection between positive trade facilitation and industrial growth.

A Case Study

For example, the regional coffee trade has always had to compete with European products that have greatly reduced tariffs. Many are hopeful the AfCFTA will level, if not enhance, the playing field for local producers, such as Meron Dagnew. Dagnew has lived with the tariffs her whole professional career as a coffee producer and knows the benefits the AfCFTA should bring.

Dagnew said that “I am hoping to not pay as much as 35% tariffs on my goods; I am hoping that soon I can take my value-added cocoa and coffee to [other] African countries without problems… [and] then make more profit, expand my business and hire more people.” As a result, she is a prime example of AfCFTA’s efficacy.

The AfCFTA effectively eliminates 90% of the tariffs, opening up entirely new trade possibilities for the 55 nations involved in AfCFTA. This will allow coffee-producing countries, like Ghana and Côte d’Ivoire, to be competitive with their European counterparts, such as Nescafé. Despite the promise of rosier days for the continent, a number of concerns have experts warning of developmental concerns.

Infrastructure

Infrastructure equals connectivity. In order for Africa to experience proper industrialization, raw materials need to go in and finished products need to go out safely and efficiently. Additionally, for Africa to achieve connectivity, everything from physical roads to electricity needs attention.

Many refer to this combination of industrial needs as an “infrastructure deficit.” It is one of the biggest challenges to industrial growth itself.

The Politics of Growth

Supply-side constraints have rattled Africa with the continent currently needing to import basic-needs goods and rely on foreign production. In response, government policies have aimed to support a shift to more domestic production and restructure rules (and aid) to further new industries.

The COVID-19 pandemic has laid these inefficiencies bare, making the continent even more reliant on non-domestic goods. African banking also intends to extend credit incentives to new businesses that alleviate this dependency and foster intra-continental trade.

For example, the AfCFTA could raise intra-continental trade in agricultural products by 20% to 30%, improving the balance of payments. Food import bills have become a major driver of these external imbalances and policy needs to positively favor Africa.

Elimination of Tariff and Non-Tariff Obstacles

In a sense, this is the literal logistics of the issue, and it combines the previous two. Through policy and infrastructure, the trade disparity improves along with bettering logistics.

Removing tariff and non-tariff obstacles improves the movement of goods and services across regional borders, along with the transfer of the objects. The enforcement of non-tariff agreements also becomes crucial.

For example, the Single Customs Territory (SCT) in the East African Community has helped the area improve its logistics and shipping times. Ultimately, the end customer benefits as well, driving up exports between 30%-50%. This idea thrives predominantly in regions that are landlocked.

Synopsis

The African Continental Free Trade Area has the potential to be a game-changer. However, there are palpable concerns that need solving for the area to achieve its full potential. All-in-all, these are exciting times for a continent marred with troubles.

The AfCFTA may hold the key to the industrialization, development, modernization and reconfiguration of the continent’s politics. Furthermore, the AfCFTA is laying the groundwork to lift billions out of poverty.

Christopher Millard
Photo: Flickr

the AfCFTATrading within the African Continental Free Trade Area (AfCFTA) finally took effect on January 1, 2021. The AfCFTA is the world’s largest trading area since the establishment of the World Trade Organization with 54 of the 55 countries of the African Union (AU). The AfCFTA was established by the African Continental Free Trade Agreement signed in March 2018 by 44 AU countries. Over time, other AU countries signed on as the official start of trading under the provisions of the agreement approached. The AfCTFA is projected to create opportunities and boost the African economy. By facilitating this intra-African trade area, the international community expects sustainable growth and increased economic development.

The Implementation and Benefits of the AfCFTA

  1. Creating a Single Market. The main objective is to create a single market for goods and services to increase trading among African nations. The AfCFTA is tasked to implement protocols to eliminate trade barriers and cooperate with member states on investment and competition policies, intellectual property rights, settlement of disputes and other trade-liberating strategies.
  1. Expected Economic Boost and Trade Diversity. UNECA estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The AfCFTA will cover a GDP of $2.5 trillion of the market. The trade initiative will also diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources. Historically, more than 75% of African exports outside of the continent consisted of extractive commodities whereas only 40% of intra-African trade were extractive.
  1. Collaborative Structure and Enforcement. All decisions of the AfCFTA institutions are reached by a simple majority vote. There are several key AfCFTA institutions. The AU Assembly provides oversight, guidance and interpretations of the Agreement. The Council of Ministers is designated by state parties and report to the Assembly. The Council makes the decisions that pertain to the Agreement. The Committee of Senior Trade Officials implements the decisions of the Council and monitors the development of the provisions of the AfCFTA. The Secretariat is established as an autonomous institution whose roles and responsibilities are determined by the Council.
  1. Eliminating Tariffs. State parties will progressively eliminate import duties and apply preferential tariffs to imports from other state parties. If state parties are a part of regional trade arrangements that have preferential tariffs already in place, state parties must maintain and improve on them.
  1. Settling Trade Disputes. Multilateral trading systems can bring about disputes when a state party implements a trade policy that another state party considers a breach of the Agreement. The AfCFTA has the Dispute Settlement Mechanism in place for such occasions which offers mediated consultations between disputing parties. The mechanism is only available to state parties, not private enterprises.
  1. Protecting Women Traders. According to UNECA and the African Trade Policy Centre, women are estimated to account for around 70% of informal cross-border traders. Informal trading can make women vulnerable to harassment and violence. With the reduced tariffs, it will be more affordable for women to trade through formal channels where women traders will not have to put themselves in dangerous situations.
  1. Growing Small and Medium-Sized Businesses. The elimination of import duties also opens up trading activities to small businesses in the regional markets. Small and medium-sized businesses make up 80% of the region’s businesses. Increased trading also facilitates small business products to be traded as inputs for larger enterprises in the region.
  1. Encouraging Industrialization. The AfCFTA fosters competitive manufacturing. With a successful implementation of this new trade initiative, there is potential for Africa’s manufacturing sector to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
  1. Contributing to Sustainable Growth. The United Nations 2030 Agenda for Sustainable Development includes goals that the AfCFTA contributes to. For example, Goal 8 of the Agenda is decent work and economic growth and Goal 9 is the promotion of industry. The AfCFTA initiative also contributes to Goal 17 of the Agenda as it reduces the continent’s reliance on external resources, encouraging independent financing and development.

AfCFTA: A Trade Milestone for Reducing Poverty in Africa

The establishment of the AfCFTA marks a key milestone for Africa’s continental trade system. The size of the trade area presents promising economic development and sustainable growth that reaches all market sectors and participants. Additionally, the timing of the initiative launch is expected to contribute to the alleviation of the pandemic’s economic damages.

Malala Raharisoa Lin
Photo: Flickr

prosper africaAfrican markets claim six out of 10 of the fastest-growing economies in the world. Africa’s middle-class is likely to have an annual household consumption of $2 trillion before 2030, and by 2050, the U.N. predicts that Africa will be home to one-quarter of the world’s population. Prosper Africa is an initiative that strengthens U.S. investment in Africa.

US-Africa Ties

Nations such as Germany and China are competing for investments in Africa in preparation for its burgeoning role in the global economy. In the past 20 years, the United States has also attempted a number of initiatives to expand U.S.-Africa economic ties. Unfortunately, results have been modest because the focus has been on Africa as a foreign aid recipient rather than a strong future trading partner. However, Prosper Africa’s latest initiative, set to launch in 2021, offers hope for a more engaged economic partnership between the U.S. and Africa.

Prosper Africa

Prosper Africa was launched in December 2018 to “vastly accelerate” U.S.-Africa trade and investment through the coordination of 17 U.S. agencies and departments. This mutually beneficial endeavor not only opens market opportunities and grows Africa’s economic sustainability, but also protects the United States’ interests in the competition against other nations’ involvement in Africa.

Far from being a foreign aid program, Prosper Africa’s official website acts as a one-stop-shop for U.S. and African businesses and investors. It offers toolkits for African businesses and investors seeking to export or invest in the United States and vice versa for U.S. businesses and investors seeking to become involved in Africa. According to the website, Prosper Africa represents “a new way of doing business” through its portfolio of support services. To date, the initiative has serviced more than 280 deals valued at more than $22 billion. In keeping with its expanding ambitions, Prosper Africa’s budget request for the 2021 fiscal year rose from FY2020’s $50 million to $75 million.

Prosper Africa: 2021 Plans

On Nov. 17, 2020, USAID announced a new Prosper Africa trade and investment program for 2021. Valued at $500 million over five years, its goal is to expand Prosper Africa’s services. The four project objectives are increased trade, increased investment, improved business environment and providing support for USAID and Prosper Africa. A strong emphasis will be placed on private investment. By 2026, the program is expected to raise billions of dollars and create hundreds of thousands of jobs in both Africa and the United States.

It is still uncertain exactly what this program will look like. The program’s blueprints from Feb. 2020 describe its implementation approach fairly loosely. It aims to be flexible in shaping private sector demands concerning the facilitation and brokering of deals. Most of its transactions will take place directly through the firms and actors involved.

In addition to Prosper Africa’s website toolkits, local offices and trade hubs will provide further customizable services to align with the needs of different sectors. Some examples of services include investor matchmaking, transaction facilitation, targeted reforms and export support. Resource allocation will be determined by impact potential. Opportunities within the private sector will comprise the majority of activities and projects may be funded by grants or subcontracts. Throughout its services, Prosper Africa encourages African states to support economic transparency and rule of law.

Prosper Africa’s Chances of Success

Because Prosper Africa is effectively a harmonization of 17 U.S. agencies and departments, success largely comes down to effective cooperation. However, the initiative’s goals vary in difficulty. For example, Prosper Africa has already made impressive strides in streamlining its toolkits and providing specific U.S. services to aid transactions. However, more long-range goals, such as procedural reform and transparency, sector expansion, the rule of law and improving business environments may prove more challenging to achieve. However, from an economic standpoint, it is certainly encouraging to see Prosper Africa approach U.S.-Africa relations as an equal, viable trade partnership rather than merely an aid recipient.

Andria Pressel
Photo: Flickr

coffee in vietnamThe comforting routine of having a rich cup of coffee in the morning is a habit shared by numerous people around the world. Unique flavors and distinctive brews come from various countries such as Brazil, Colombia and Indonesia. Vietnam, once an underdog in the coffee industry, has now become one of the top coffee exporters in the world. As a new major contender in the international coffee trade, Vietnam faces new economic opportunities moving forward. Importantly, coffee in Vietnam has the potential for reducing poverty.

How Coffee in Vietnam Took Root

French colonists introduced coffee in Vietnam in 1857. The central highlands region, Buon Ma Thuot, had ideal growing conditions for the crop. Accordingly, it became a target region for coffee cultivation. Growing coffee in Vietnam proved to be difficult yet promising. The government encouraged citizen migration to rural regions such as Buon Ma Thot, which gained a 265% increase in the overall population. By the end of 2000, over 4 million people settled in this area, which created a new and expansive workforce for the coffee industry. This new workforce, combined with the government’s coffee-growing program and the increased demand for coffee worldwide, created a boom in Vietnam’s economy.

In the span of just two decades, Vietnam became one of the most competitive coffee producers in the world. It now ranks as the 2nd largest coffee exporter behind Brazil. Starting with 8,400 tons of coffee produced in 1980, production numbers skyrocketed to 900,000 by 2000. Coffee production has contributed to Vietnam’s GDP increasing by 7.7% within the past few years. Unexpectedly, coffee became an important player in the Vietnamese economy.

Challenges Brewing Within the Industry

Two main types of coffee beans, Robusta and Arabica, compose most of the beans exported by countries worldwide. Currently, 95% of Vietnamese coffee exports are Robusta, known as lower quality beans. As a result, the success of Robusta in the market depends on fluctuations in global demand. Vietnam’s coffee industry must account for this variable by improving the flavor and quality of beans harvested in Buon Ma Thuot to remain competitive in the worldwide market.

But remaining competitive in the market is no easy task. Unlike globally known brands such as 100% Colombian coffee, Vietnam still needs to establish its trademark in the international market. Currently, processed coffee accounts for only 7% of Vietnam’s exports. Increasing coffee processing by establishing joint ventures with known retailers and roasters could create new opportunities for the industry. If Vietnamese brands become household names, Vietnamese coffee can garner substantially greater profit margins in the global market.

In addition to increasing coffee quality and ameliorating marketing tactics, Vietnam’s farming strategies must improve. Though Robusta is typically more resilient to environmental stressors, such as hot climates, pests and disease, this coffee crop is still susceptible to the dangers of unsustainable farming practices. Farming strategies that rely on intensive irrigation and the overuse of fertilizers can exhaust soil quality.

To combat land degradation, Vietnam’s government collaborates with global companies such as Kraft Foods and Nestlé. It also works with conservation organizations such as the 4C Association, Rainforest Alliance and Fairtrade Foundation. Together, they educate farmers, improve farming practices and establish an agricultural standard. This works to effectively and sustainably increase the production of coffee in Vietnam.

Solving Poverty One Cup at a Time

The significant surge in coffee production in Vietnam also means countless farmers and citizens gain a newfound source of income. With only 6% of total coffee production used domestically, coffee has become Vietnam’s key export. Coffee production provides a livelihood for around 2.6 million people. Importantly, 600,000 of these individuals are small-scale farmers, many of whom belong to underrepresented social groups.

This emerging industry has allowed Vietnam’s economy to vastly improve within a short span of time. Economic growth continuously boosts Vietnamese citizens’ quality of life. In 1994, Vietnam’s poverty rate was at 90%. As of 2020, the poverty rate has lowered to 23%.

Global corporations also take part in developing Vietnam’s coffee industry and helping farmers. Nestlé and Mondelez International have each invested more than $200 million in training farmers to distribute stable supplies of coffee. In 2015, Starbucks introduced Vietnam Da Lat, its first single-origin coffee from Vietnam, to its locations in more than 50 countries. Altogether, more than 21,000 farmers benefited from foreign investments in this booming industry.

Overall, coffee in Vietnam is a growing industry with many future possibilities. With the right policies and guidance, Vietnam’s coffee industry can further improve its economy, provide income opportunities and increase standards of living for countless communities nationwide.

-Vanna Figueroa
Photo: flicker

Innovations in the PhilippinesOver the past decade, there have been drastic innovations in the Philippines. The country has experienced dramatic economic growth and development. In 2019, the Global Innovation Index (GII) found that the country improved on all metrics used to calculate advancement.

Economic Growth

In 2019, the Philippines appeared for the first time in the “innovation achievers group.” The country outperformed many other countries in the area.  Some of the metrics used to calculate these scores included increased levels of creative exports, trademarks, high-tech imports and employed, highly educated women.

As a country, the Philippines has risen 19 spots in the ranking since 2018, to 54th out of 129 participating countries. This indicates a significant increase in the standard of living for many Filipinos. This is apparent in the significant decrease in the poverty rate over the past few years. From 2015 to 2018, the national poverty rate dropped a total of 6.7%, or by 5.9 million people.

Prosperity is largely due to the success of local business owners and entrepreneurs. They have used their influence and prosperity to help those in need in their communities and countries, especially in the health sector. Coincidingly, there was a significant increase in global trade. Both factors have propelled the Philippines into the global economy as an important emerging market to keep an eye on.

Global Benefits

In 2018, the Philippines and the United States trade relationship developed significantly. The total goods trade was $21.4 billion collectively, in the petroleum and coal, aerospace and computer software, motor vehicles and travel/hospitality sectors. This is beneficial to the U.S. because international trade employs over 39.8 million Americans. As the Philippines becomes more prosperous, more Filipinos are able to pour money and resources into helping marginalized communities across the country. As such, there has been an increase in innovations in the Philippines, notably in the health and medical sectors.

RxBox

A distinct industry on the frontlines of innovations in the Philippines is the health sector. Increased health for a population is directly related to better access to opportunity and a higher standard of living overall. One company doing this important work in the Philippines is RxBox.

RxBox was developed by the country’s Department of Science and Technology. It is a biomedical telehealth system that provides health care and diagnoses to people in communities that are remote, difficult to access. The service is additionally available for people who do not have access or the ability to travel for health care.

It is a game-changer for disadvantaged people who would otherwise not be able to get fast, effective medical care. RxBox reduces costly hospital and medical visits, which facilitates better health for people. Communities are then better able to care for themselves and for their families, providing greater opportunities for everybody.

Biotek M

There is another player in the innovations in the Philippines: Biotek M. It is a revolutionary diagnostic kit for Dengue. A local team at the University of the Philippines-Diliman were the creators of this new technology.

Traditionally, the Polymerase Chain Reaction (PCR) test is used to confirm the disease but can cost up to $8,000 and takes 24 hours to get results. That is inaccessible to lower-income people who are oftentimes the demographic most commonly afflicted by the dengue infection. The kit helps reduce resource usage for both medical centers and patients by making the diagnosis process significantly more streamlined.

In 2017, 131,827 cases of Dengue were recorded with 732 deaths, mostly affecting young children aged 5 to 9-years-old. Being able to quickly diagnose and treat people who contract this illness makes a huge impact on people living in poverty.

When people spend less time, energy and money on being healthy, they are able to use their resources more efficiently. In this way, medical innovations in Philippines and a growing economy directly increased the standard of living for people living in poverty within the country.

Noelle Nelson
Photo: Flickr

Hunger in GuadeloupeGuadeloupe, a territory of France, is a small archipelago found in the Caribbean. Food poverty in Guadeloupe has a complicated history involving the archipelago’s relationship with France.

In 2008, Guadeloupeans began to fear a major food crisis was on the horizon. This fear was due to its neighboring countries like Haiti experiencing the effect of rising food prices. With the archipelago’s long history as an overseas region of France, Guadeloupe depends on food imports from the European country. Suddenly, people in Guadeloupe feared that French imports would follow suit in rising food prices.

Fortunately for Guadeloupe, the archipelago’s long-standing trading relations with France actually became a major source of relief for the French-Caribbean territory. France was able to provide Guadeloupe with food imports that helped them avoid a food crisis like in Haiti. In fact, the prevalence of malnourishment within the Caribbean actively decreased from 19.9% in 2010 to 17.7% by 2016. By all means, this is seen as a major victory in the eyes of many, especially for the people of Guadeloupe.

Reliance on French Imports

Yet, such news only signified a greater ongoing problem within Guadeloupe. France’s role in warding off food poverty in Guadeloupe showed just how powerful and influential the European country still was to the French-Caribbean territory. In fact, around 90% of Guadeloupe’s food in 2013 came from imports, a majority of which have historically been from France.

In terms of what this means for food poverty in Guadeloupe, it has now led to a reliance on food imports that have negatively affected Guadeloupeans’ nutrition and diet. In addition, as Guadeloupe is trading away much of their healthier crops, the archipelago must accept unhealthier and more processed food in return. As a result, the problems Western countries have faced in recent years regarding diabetes have translated into Guadeloupean society.

According to Rapid City Journal, by 2017, Guadeloupe was listed 38th in countries with the highest diabetes rates. The prevalence of diabetes from ages 20 to 79 was at 13.56%. While such a number may not seem like very much, it is in fact 42.58% above the global prevalence for diabetes. Hunger in Guadeloupe has, as a result, become an issue of diet rather than malnourishment. Such is the state of food in Guadeloupe. Many have now accepted these westernized diets into their cultures and backgrounds. This makes changing to a healthier lifestyle much harder.

Food Sovereignty

Fortunately, there is a glimmer of hope. Many Guadeloupeans have begun to advocate for their fellow citizens to utilize the diverse and healthy natural agriculture found in their own territory. Unfortunately, many Guadeloupeans seem to have grown out of touch with the traditional food of their own territory. This is evident since Guadeloupeans export much of their crop. Yet, this new move toward what some call “food sovereignty” could signal a monumental change for Guadeloupe’s future. Such a move would not only help to improve diet and lower diabetes rates for Guadeloupe but also be a symbolic gesture of independence from France’s economic and cultural grasp on the small archipelago.

Though the territory seems to be doing well on the outside, Guadeloupe still finds struggles with hunger and diet. A great trading relationship with France has covered the cracks over the archipelago’s issues with health and diet. In fact, much of the problem comes from such a reliance on France for food imports. The reliance on imports has caused Guadeloupeans to fall into unhealthy dietary habits. Yet, there is still hope with the food sovereignty movement. In the end, Guadeloupe shows how global poverty and struggle can take shape in many forms.

– Colin Park
Photo: Flickr

women in developing countriesInternational trade is arguably the most significant economic development of the last century. Its growth has been roughly exponential due to technological advancements and specialization, and exports today are more than 40 times the amount they were in 1913. Although this growth contributes to higher wealth and more stable economic systems for many countries, it simultaneously can exasperate already-existing inequalities, particularly those concerning women. International trade has contributed to the creation of new workforces containing more women. However, the employment opportunities in developing countries are typically low-paying positions with little prospects for skill development. Women in developing countries are limited to such positions due to social and cultural dynamics, policies and other country-specific contexts.

Employment of Women in Developing Countries

Women in developing countries oftent act as a cheap source of labor for firms. In manufacturing, women are mainly employed in jobs involving the production of goods, rather than higher-paying jobs involving management positions. If an economy is predominantly agricultural, women are often subsistence farmers or members of family businesses. In these situations, many women in developing countries do not get paid for their work. In service-based economies, women occupy low-skill positions such as street vendors. However, increasing the pay women receive for these jobs and successfully closing the gender gap could add about $28 trillion to global GDP.

The tendency of women to work in low-skilled jobs results from ingrained social norms designed to limit women’s economic mobility. Societies that expect women to assume the full responsibility of childcare often give them few opportunities to receive education or reduce the burden of their domestic labor. Consequently, these women are less likely to have the same access men do to land, credit and labor markets.

Little Access to Opportunities

Women in developing countries often also experience disproportionate rates of unemployment or remain in low-paying positions because they are unable to learn more about job opportunities in other locations. Robert Jensen, a former professor from the University of Texas at Austin, examined this phenomenon. He concluded that women living in rural areas in India who were contacted by recruitment campaigns providing information about job opportunities in urban areas ultimately participated more in the labor force. As a result, they experienced increased mobility.

Current Trade and Employment Policies

In 2016, the U.N. Conference on Trade and Development released a report stating that gender-blind trading policies exacerbate the inequalities women experience in developing countries. These gender-blind trading policies do not create equal opportunities. Instead, they allow men in the workforce to further benefit from existing economic advantages they enjoy.

However, the U.N. proposed two new global development frameworks to promote gender equality and women’s empowerment through trade. The 2030 Agenda for Sustainable Development focuses on combating gender issues. It links economic, social and environmental factors to address power structures and social dynamics that contribute to gender inequality. The Addis Ababa Agenda on Financing for Development requests equal gender inclusion into the formulation and implementation of financial, economic, environmental and social policies. It also aims to ensure women’s equal rights through access to economic activities that would combat gender-based violence and discrimination.

Together, these development plans are a holistic, firm course of action in the fight against women’s economic inequality. The U.S. Council on Foreign Relations recently reported on the progress nations have made in adopting plans, allocating funds and formulating policies. It found higher numbers of trade agreements with gender-related provisions in the last three decades. Although the global economic impact of COVID-19 may disrupt this progress, comprehensive plans and agendas will ensure that the pursuit of gender equality in trade continues.

Isabel Serrano
Photo: Unsplash

Global MarketAfter ten years of negotiation, the European Union Vietnam Free Trade Agreement (EVFTA) came into action on August 1, 2020. The deal will reduce tariffs by 99% over the next 10 years and will provide relief from the economic drops caused by COVID-19. The market contains over 500 million individuals and is valued at 18 trillion USD. The trade relationship will enable Vietnam to compete in the global market better, especially against markets like Japan and South Korea. Currently, out of all of the countries in the Association of Southeast Asian Nations (ASEAN), Vietnam is the European Union’s (EU) second-largest trade partner behind Singapore. Compared to its regional rivals of Indonesia and Thailand, Vietnam has a stronger trade relationship and involvement in the global market.

Vietnam and the EU Ties

For exports, Vietnam relies on the EU as its largest partner. Vietnam’s exports to the EU are larger than any other ASEAN country. A World Bank study found that from 2001 to 2018, Vietnam’s exports to the EU have grown annually at an average rate of 16%, gaining it a trade surplus over the EU. According to the European Commission, these exports are mostly textiles and clothing, agriculture products like coffee, rice, seafood, electronic products, telephone sets and more.

As the agreement is implemented, both countries could see a rise in GDP and new job opportunities, amongst other positive effects. More immediately, Vietnam’s GDP will increase by 2.18-3.25%, said the Ministry of Planning and Investment. Unlike most countries, Vietnam will see positive economic growth this year – estimated to be up by 4.8%, according to a study by the World Bank. In 2030, Vietnam will see a 6.8% growth in its GDP.

Both countries will have large growths in their exports. The EU could see a $16.9 billion per year increase in exports by 2025. Vietnam is expected to increase exports by 42.7% in the first five years of the deal, mostly in farm produce, manufacturing and services. Additional domestic reforms by Vietnam could raise productivity and further increase GDP by 6.8% in the next 10 years.

Vietnam’s Participation in Global Value Chains

As Vietnam increases trade with other countries through agreements, it will become more involved in the global market. Further globalization will also push Vietnam to participate more in global value chains (GVCs), shifting away from the manufacturing market from China. The bilateral treaty signed between Vietnam and the EU will also ensure that electronics and electrical equipment (a large portion of current imports) comes to Vietnam exclusively from the EU.

Due to this shift, the EU has increased its foreign direct investment in Vietnam. The EU already was the largest foreign investor in Vietnam, with a total of 6.1 billion euros endowed as of 2017, mostly into processing and manufacturing. This investment will go towards new jobs and increased productivity by reducing the number of imports to Vietnam and shifting towards in-house production for higher gains.

To be eligible to avoid tariffs, Vietnamese products must not contain imports from other countries. In addition, agriculture must meet requirements for sanitation, meaning farmers will have to refine their growth system. The deal places especially tight regulations on the quality of agricultural and manufactured products shipped by Vietnam, pushing technological developments in order to avoid drops in efficiency.

Poverty Reduction

Over the past two decades, Vietnam has made steady progress in reducing extreme poverty. From 1992 to 2018, Vietnam’s GDP per capita increased by more than four times, pulling extreme poverty rates from 52.9% down to 2% of the population. EVFTA will continue this trend. A World Bank Study found that EVFTA is expected to reduce extreme poverty (less than $1.90 per day) by 0.1-0.8 million people by 2030, 0.7% more than the poverty-reduction rate without the agreement. Overall, this will amount to an 11.9% decrease. In addition, poverty at $3.20 per day is expected to reduce from 8% to 3.5%.

Vietnam has now broadened its poverty baseline from $1.90 to $5.50. From 2016 to 2030, developments caused by EVFTA will influence this poverty rate to drop from 29% to 12.6%, allowing Vietnam to achieve upper-middle-class status. In addition, the income gap between genders will be decreased by 0.15 percent. This difference affects low-income families the most, as they are traditionally involved in manual labor jobs where this is most prevalently seen.

This agreement will open up new territories for both the EU and Vietnam to expand into. Vietnam’s primarily agricultural economy might see large shifts into one of manufacturing and processing. This agreement is a stepping stone for Vietnam’s involvement in the global market, and it might be a sign of large changes to come.

Nitya Marimuthu
Photo: Pixabay

hunger in turkmenistanThis time last year, the London-based Foreign Policy Centre reported that Turkmenistan was “a country teetering on the edge of catastrophe.” An economic crisis has exacerbated hunger in Turkmenistan. Additionally, Human Rights Watch calls Turkmenistan “an isolated and repressive country.” Without freedom of speech or information, the authoritarian government leaves no room for economic autonomy, thus resulting in hunger among citizens.

Economic Crisis and Hunger in Turkmenistan

Turkmenistan sits on 9.9% of the world’s gas reserves, with 19.5 trillion cubic meters. Statistics like these attract foreign investors, which in theory should boost the nation’s economy. However, in 2019 Turkmenistan entered its worst economic crisis since its independence from the Soviet Union in 1991. The state heavily controls the economy, and the European Bank for Reconstruction and Development (EBRD) lists Turkmenistan as the “least competitive economy among the EBRDS’s countries of operations,” meaning that economic autonomy is essentially nonexistent. The Foreign Policy Centre’s report labeled Turkmenistan’s economy as a “Potemkin economy,” meaning its public record of ordinary, satisfactory GDP figures — a result of strictly regulated state companies — hides a crumbling economy.

In 2018, a video of a Turkmen student cutting up his debit card, salting it and cooking it for dinner circulated around media sites. The student, who was studying abroad in Ukraine, spoke on the matter, saying that “the [bank] cards stopped working and, as a result, I’ve lost 15 kilograms.” While the banks never released explanations, economists suggest that the debit card failures may be a result of Turkmenistan’s active black market. Officially, the exchange rate is three and a half Turkmen manats to one U.S. dollar. But the black-market rate is closer to 22 manats to one U.S. dollar. The government would lose large sums of money with students trying to withdraw from their banks in foreign countries.

The Turkmen government lacks transparency about its crop supply as well; in 2018, Deputy Chairman Esenmyrat Orazgeldiev released data stating that Turkmenistan had overshot its yearly harvest goal, and had harvested 1.099 million tons of cotton. However, reports from the Agriculture and Water Resources Ministry and the International Cotton Advisory Committee said that the country had harvested between 300 and 450 thousand tons. A similar inconsistency in reports occurred for the wheat harvest. These economic and agricultural struggles have led to widespread hunger in Turkmenistan, particularly in the form of major food shortages across the country.

Food Shortages

For the past three years, hunger in Turkmenistan has resulted from dire food shortages. The Diplomat conducted an interview with Turkmen “activist-in-exile” Fareed Tukhbatullin in 2018, and Tukhbatullin recalled fights breaking out among citizens waiting to purchase necessities such as bread, flour, vegetable oil and eggs, all of which are in short supply despite being government-regulated foods. Inflation and the disparity between the official manat’s value and the black-market manat’s value have made importing ingredients and farming equipment nearly impossible. In the interview, Tukhbatullin emphasized that there are no official news coverings or statistics released in Turkmenistan about this crisis, but he estimated that 60% of the population is unemployed and living with food insecurity. Last month, Turkmenistan increased its regulation of subsidized foods by enforcing the use of registration books by individual households. Families are instructed to bring their books, which have a certificate containing their address and the number of people in their household, to food stores, where their purchases will be documented.

Foreign Aid Reducing Hunger in Turkmenistan

Currently, the U.S. Agency for International Development (USAID) is working to stabilize Turkmenistan’s economy and strengthen its international connection around Central and South Asia. USAID also provides assistance to dairy and meat-producing livestock farmers to keep their livestock healthy, and it works to connect the farmers to local and international markets. In July 2020, USAID announced the launch of its hotline for Turkmen farmers. The hotline is accessible over email and telephone, and it offers necessary advice on the exportation of goods to foreign markets. USAID claims that this extra support will help the Turkmen farmers “maximize their revenues, stabilize seasonal sales, and expand the markets for quality Turkmen products.” USAID also worked between 2010 and 2019 to introduce Turkmenistan into the International Financial Reporting Standards, which allows the country more access to the global economy.

Turkmenistan has not known peace or stability since its independence in 1991. Inflation, food shortages and disconnect from the rest of the world have plagued the country for almost 30 years, and government officials worry that this instability will soon lead to catastrophe. Helping the citizens of a highly isolated country is extremely difficult, but organizations like USAID are doing what they can to end hunger in Turkmenistan.

— Anya Chung
Photo: Flickr