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Bolivia Minimum Wage
In the wake of recent national economic gains, Bolivian President Evo Morales has promised that the nation’s minimum wage will increase by 10 percent.  The move is a hotly debated one concerning Bolivian unions, and the employer federation has been embroiled in the debate for some time.  The labor unions applaud it, saying it would equalize things between the “haves and have-nots,” while the Confederation of Private Entrepreneurs (CEPB) spurned it and contended that it would increase taxation.  A BBC report also notes that President Morales is in an election year and may have had political reasons for siding with union wishes.

The same BBC piece also points out that “Bolivia’s gross domestic product tripled to $27 [billion] in 2012 since Mr. Morales took office in January 2006, according to World Bank figures.”  Changes to the national Constitution and increasing the role of the state contributed to the gains, along with “high commodity prices and a prudent macroeconomic policy.”  The World Bank also states that public debt dropped vastly, bolstering the banks in the process and alleviating national poverty to a great degree.

However, despite the gains nearly half of all Bolivians still live in poverty.  The unpredictability of commodity pricing can affect and potentially reverse positive gains, so private industry must play a more substantial economic role.  Bolivia’s informal economy, where a large portion of the population finds work, “results in lower productivity” according to the World Bank.  Lagging infrastructure is also a deterrent to further and faster progress.

The International Monetary Fund (IMF) is projecting slower economic growth in Latin America in 2014.  “Weak investment and subdued demand for the region’s exports held back activity in 2013… For 2015, the IMF projects a modest pickup, to 3 percent. The key risk is a sharper decline in commodity prices caused by weaker demand.”  More specifically, growth in Bolivia “is projected to fall sharply in 2014, to about 2.75 percent  from nearly 6 percent in 2013.”

President Morales may be trying to draw support from his political base with his pledge to increase the Bolivian minimum wage.  In 2013, Morales was publicly inveighed when per diems paid to the families of Morales and his vice president were worth “more than twice the minimum monthly wage,” according to an AFP report.  The money covered travel expenses when the families accompanied the leaders on official trips.  Political rival Adrian Oliva likened the per diems to stealing and contended that Morales had abandoned his socialist roots.

The science behind hiking minimum wage rates is contentious to say the least, often crossing the proverbial bridge from impartial observation to political overtones.  However, the work of UC Irvine economist David Neumark and William Wascher of the Federal Reserve Board can’t be easily disputed.  A Forbes report said they “determined that 85 percent of the best research points to a loss of jobs following a minimum wage increase.”  Empirically, the wage increases aimed at eliminating poverty also quash private sector employment and hiring; a study in the Journal of Human Resources posits that higher minimum wage can increase poverty.

What lies ahead for Bolivia and the rest of the Latin American region remains to be seen as outside economic forces control the commodity rates that are so woven into recent economic gains.  In a race for political power and reelection, Bolivia’s Evo Morales has evidently chosen to adhere to the populist vision that won him initial favor, but at what cost?

Do large-scale informal economic gains qualify as a national victory when nearly half of all Bolivians are still considered poor?  Does alienating the private sector through a push for more reforms mean greater prosperity and long-term economic growth and stabilization?  What is clear is empirical evidence suggesting that minimum wage hikes do more harm than good, even in a strong commodities market.  President Morales may be best served to explore other options that appeal not only to national unions and workers but to the firms who employ them, thereby increasing private investment and paving the proverbial road out of Bolivian poverty.

– Dave Smith

Sources: BBC, WorldBank, Free Malaysia Today, Global Post, Forbes
Photo: Interet General Info

Bolivia_Raises_Minimum_Wage
Following recent labor union protests in Bolivia, demanding an increase in the minimum wage, President Evo Morales has acquiesced to their demands by increasing the Bolivian minimum wage 20 percent from 1,200 Bolivianos (around $175) to 1,488 Bolivianos (about $215). This increase in the minimum wage has come as a result of a small but concerted effort on behalf of the Bolivian Central Labor Union to agitate for change. Workers were concerned that their wages were not keeping up with inflation, which is currently sitting at 6.5 percent.

Morales explained the reason for the increase in the minimum wage is the economic growth Bolivia has experienced recently, which grew at a rate of 5.2 percent in 2012.

The leader of the Bolivian Central Labor Union, Juan Carlos Trujillo, stated that he asked Morales to recognize “the need and the obligation to create a salary structure which is based on the country’s growth and the recognition that the riches of Bolivia have to be shared between the haves and the have-nots in equal measure.”

Other groups were not so pleased with the announced rise in the minimum wage, saying that the move would simply result in workers paying more through taxes. Moreover, the move can also be seen as political maneuvering and as an attempt to curry favor amongst the workers in time for presidential elections in October, when Morales is going to run for a third term.

The original proposal by the government was for the minimum wage to be increased by 10 percent, until trade unions negotiated a higher rise. Analysts have noted that the increase in the minimum wage would not affect the majority of workers since most people earn above 1,400 Bolivianos (about $203.) The rise would affect house workers and trash men.

Morales himself was a notable leader in the cocalero trade union movement for indigenous coca growers prior to being elected president. Since being elected president in 2006, Morales has helped triple Bolivia’s gross domestic product to $27 billion.

– Jeff Meyer

Sources: La Razon, BBC, Bolivia Information Forum
Photo: Nation of Change

Financial Reform Law in Bolivia
Last August, Bolivian President Evo Morales signed a bill that would reform the country’s financial sector. The reform bill has more than 550 articles and is expected to force the private sector banks in the country to become more competitive as interest rate ceilings and mandatory-lending quotas are implemented. The law will boost the competitiveness of state-owned bank Banco Unión and the many microfinance institutions operating in the region.

The reform is also intended to focus on financial inclusion and reducing economic inequality, an issue that is extremely important for Morales and his large indigenous following. The private banks in the region will need to become more efficient as well, but fortunately for the banks the Bolivian government has been implementing the changes gradually. It is unknown how much the reform will cut into the bank’s profitability.

During the last few years, however, Bolivia has enacted harsh taxes designed to reduce its “excess” profitability. The private banks’ average return on equity fell from 21% in 2007 to 17.5% in 2012, then to 14% in 2013. This latest dip came from the imposition of additional taxes on extraordinary earnings and a tax on exchanges related to foreign exchange.

The law also states that at least 60% of a bank’s loan portfolio should go to financing the productive and social sectors. This will be difficult for Bolivia’s banks, however, as they are currently focused on specific markets. Despite this new requirement, the government is giving the banks a period of two years to four years to implement it.

Another requirement states that the interest rate ceiling on loans for houses to be set at 5.5 to 6.5%, a figure that depends on the value of the house. Banks currently set the loan ceiling to a figure of 7 to 8%. This loan ceiling is designed to allow more people to be able to better afford a house and is a part of the movement towards more financial inclusion in Bolivia.

Bolivia’s private banks should be able to weather this new reform with continued profitability as the Bolivian economy is buoyed by its 6.5% growth rate in 2013 and its credit growth of 20%.

– Jeff Meyer

Sources: BNamericas, BNamericas, laRazon
Photo: The Telegraph

Bolivia
Bolivian President Evo Morales has announced the first steps towards building the first nuclear reactor in the country during his annual state of the union address to the Bolivian Congress. Morales stressed that the nuclear program will be developed for peaceful purposes with the help of France, Iran and Argentina.

Evo Morales called the nuclear development project a priority for Bolivia and stressed that the South American country “will not remain excluded from this technology, which belongs to all humankind.”

If Bolivia follows through on its claims, it will join the ranks of only three other Latin American nations with functioning nuclear programs. Argentina, Brazil and Mexico have had nuclear programs for peaceful purposes ever since the Treaty of Tlateloco in 1967 established a nuclear-weapon-free zone across Latin America.

Bolivia stated that Iran, France and Argentina had agreed to aid the country in its efforts to establish a nuclear weapons program.

Evo Morales is the first indigenous president of Bolivia and is known as a bombastic critic of the United States and its policies throughout Latin America. He expelled the US Drug Enforcement Agency (DEA) in 2011 and the US Agency for International Development (USAID) in 2013 as an effort to reduce subversive US influence in the country.

Earlier this year, Bolivia became one of the last states in South America to have its own telecommunications satellite when China stepped in to help with the launch of the satellite, named after Tupak Katari, an indigenous folk hero who fought against Spanish colonialism.

The telecommunications satellite will help reduce the cost of communications and improve access to the Internet for many Bolivians living in rural areas. The move is also a further step towards increased independence from the West that President Morales would like to see more of.

In spite of these campaigns, Bolivia is expected to continue on a path of energy diversification by investing in explorations for oil and uranium reserves in Potosí.

Jeff Meyer

Sources: BBC, Latin Post, BBC, UPI
Photo: Polygrafi

Bolivia
The South-American country of Bolivia has struggled as on the poorest countries in South America. Wealth inequality is a critical issue for the country of 10 million. 65 percent of the population resides in poverty, with “nearly 40 percent” of the population in extreme poverty.

Bolivia boasts a elevated population of indigenous South Americans, who are the most dangerously affected by poverty. Bolivians of Spanish descent dominate the political and economic life of the nation, depriving the indigenous population of many economic opportunities. Many of the impoverished residents of Bolivia subside on “subsistence” farming, and working as “miners, small traders or artisans.”

Bolivia is home to a well-built informal economy, which has distressed the primary economy of Bolivia. The indigenous population which is perilously unemployed, survive through their own means, not effectively participating in the national economic structure.

The nation is habitat to countless natural resources, chiefly natural gas. Despite the abundance of natural resources, the nation is more often than not exploited by foreign corporations and by it’s own political elites. The profits from such ventures rarely make it back to the poorer residents, allowing for a widening gap in income inequality.

The rural population which are primarily American Indians are critically malnourished, unable to access adequate health-care, less enrolled in education, and suffer from a lack of infrastructure. Urban areas suffer less from poverty, while rural areas such as Pando and Chuquisaca have the highest rates of poverty. Urban areas are not free of poverty though.

Urban populations suffer from “low quality employment” and the downward spiral of income levels. People are finding it complicated to find work, and those who work, are making less capital. Bolivia has struggled with employing its population.

The country remains primarily invested in “natural resource-based” exports as its economic crutch. This has led to many people unemployed as this economic base does not require many people to function properly.

Few educational opportunities for poorer residents have prevented many citizens from escaping extreme poverty. The country has not taken advantage of it’s ‘human capital.” With many residents not gaining proper higher education, or even primary education, has resulted in a poorly trained populace who can not work in many sectors besides the labor sector.

With many jobs not available in that sector, employment opportunities remain few and far in-between.

The country remains stifled by not adjusting it’s infrastructure to improve the amount of job opportunities. Bolivia has not made many attempts to modernize much of the nation, allowing unemployment to persist. Many observers argue Bolivia modernizing its economic approach is the only “necessary condition to reduce poverty and inequality” in the nation, and supporting new economic policies will help “improve labor productivity” and help curb unemployment.

Joseph Abay

Sources: BBC, UNICEF, World Bank, BBC , World Bank
Photo: The Guardian

flooding_bolivia
The deluge Bolivia is experiencing since November 2013 has claimed 38 lives from nonstop flooding. Medicine, food and other supplies have recently been delivered. Humanitarian packages are meant to alleviate hunger and provide warmth while combating the disease that floods bring. Malaria and infections that result in diarrhea and topical infections have been reported.

The Ministry of Defense’s aid convoy and evacuation of the local populace in hard-hit regions cannot hinder the continued problems of the flood-filled country. One of South America’s poorest nations, Bolivia has taken a huge hit in infrastructure, roads and most importantly of all, homes. The continuing inundation has disrupted and displaced over 150,000 lives.

Beni, a region taking the brunt of the storm, has over 4,000 displaced families. Livelihoods of farmers have also taken a huge hit. Agricultural products such as corn and wheat are ruined by the torrential season.

Bolivian President Evo Morales has declared a state of emergency for his storm-stricken nation.The charismatic leader has otherwise high hopes and plans for Bolivia. In early January, Morales announced that he plans on building a nuclear reactor, the first in his country.

Before the start of the 2014, Bolivia launched Tupak Katara, its first telecommunications satellite, which was named for a national hero who combated Spaniards during colonial times. The satellite, according to Morales, represented the country’s movement away from foreign assistance regarding communications. Despite such claims, China aided the country in its venture.

Moreover, the coca leaf, the source of cocaine, has been an important platform in Morales’ presidency, particularly its removal from the international list of banned drugs. The coca leaf is a primary product in the livelihood of 40,000 Bolivians—a large part of Morales’ constituency. Since recently assuming the chairman of the Group of 77 nations, Morales vows to reinstate the coca leaf.

Among such accomplishments and claims is the never-ending stream of flooding, with weather reports stating that heavier rainfall will most likely continue for weeks to come. With climate change an ever-present feature in many countries, Bolivia, too, is far from unaffected.

– Miles Abadilla

Sources: BBC, Crossmatch Christian Post, Fox News, Fox News, Reuters, Thomson Reuters Foundation
Photo: The Guardian

 

Latin_American_Female_Politicians
Chileans are choosing between a former president who aims to increase accessibility to higher education and a right wing politician wanting to keep taxes low are the candidates in the December 2013 presidential election. What is secondary, but notable, about these candidates is that both are also women.

The Chilean election is indicative of a larger trend in Latin America and the Caribbean of the ascension of female political leaders.

Eight of roughly 29 female presidents worldwide since the 1970s have headed countries in Latin America and the Caribbean, with half elected in the last eight years.

Quotas for women in government explain part of this progress. Argentina pioneered the quota system in the early 1990s with a law requiring that 30 percent of legislative candidates be women. As of 2006, 50 countries have adopted the quota system, including many in Latin America.

In Costa Rica, Ecuador, and Bolivia, every other candidate on a party’s election list is required to be a woman.

In North and South America, with the noteworthy exception of the United States, women are being elected to the highest offices of government.

In Latin America’s largest nation of Brazil, Dilma Rousseff was elected president in 2010 and will run again in 2014.  She previously held the position of energy minister and was ranked #20 in Forbes’ Most Powerful People list in 2013 and second on its list of Most Powerful Women.

Argentina’s Cristina Fernández de Kirchner is serving her second term as the country’s first elected female president, and Laura Chinchilla is Costa Rica’s first female president.

Jamaica’s Prime Minister Portia Simpson-Miller is the island nation’s first female Prime Minister and has fought for full rights for LGBT Jamaicans. Time Magazine put her on the 100 World’s Most Influential People List in 2012, and U.S. Congresswoman Yvette D. Clarke has said that Simpson-Miller is “inspiring a new generation of women, particularly from the Caribbean diaspora, to get involved in public service and make a difference.”

Also in the Caribbean region is Kamla Persad-Bissessar, Trinidad and Tobago’s first female Prime Minister.

According to polls, a substantial shift is taking place in the minds of people in Latin America. Roughly 80 percent of people in the region now believe that women should participate in politics.  That figure contrasts sharply to the 30% who believed this in the 1990s.

Progress for women in some parts of Latin American politics has been relatively recent, with El Salvador allowing women to run for office only since 1961 and Paraguay’s constitution giving women the right to vote that same year.

Despite women rising to the highest levels of government, participation in parliaments is still low even in countries with female heads of state.

Latin America nonetheless boasts the second highest average number of women in the lower houses of congress with 24 percent, only less than Scandinavian and Nordic countries, which both have 42 percent.

Rwanda is the only country in the world where more women than men serve in the lower house of parliament, with Andorra coming in second at 50 percent. In Latin America, Nicaragua has the highest number of female politicians in the lower house at 40 percent.

While these numbers are promising, no country in the region has therefore achieved gender parity, and experts worry that progress for women in government could be reversed. Ingrained sexism, income gaps between the sexes and male dominance in corporations still persist.

In Chile, the income gap between men and women has gotten greater in recent years, with men earning $1,172 per month compared to women’s $811.

Each region and country in the world struggles to bring about political, social, and economic equality of the sexes, but Farida Jalalzai, a gender politics scholar at the University of Missouri-St. Louis asserts, “Latin America is really ahead of the pack. This is interesting because it had seemed to stall by the early 2000s, but no more.”

Kaylie Cordingley

Sources: New York Times, Time Magazine, Forbes, The Quota Project, The Guardian
Photo: AARP

Unite to End Violence Against Women UN Program Evo Morales Bolivia
Last week, Bolivian president Evo Morales and a variety of governmental and UN officials met on the Roosevelt Island Soccer Field in New York City to campaign for the UN-based initiative UNiTE to End Violence Against Women. The campaign, which has high international aims, focuses specifically on Latin America and the Caribbean, two regions with abnormally high instances of gender-based crime.

The match had a diverse group of players, influential both on the football field and in the broader context of development: the Minister of Foreign Affairs of the former Yugoslav Republic of Macedonia, Nicola Poposki, and two female members of parliament from Norway, Karin Andersen and Lene Vågslid. Diplomats from Bosnia and Herzegovina, Brazil, Liechtenstein, Austria, and the U.S. rallied on the other side.

In conversation with the UN, Assistant Secretary-General and UNDP director for Latin America, Heraldo Muñoz, explained: “Football is a global passion and a great way to win hearts and minds, conveying the message that ‘real men don’t hit’.”

The larger program beyond the pitch deals mainly with governmental reform. Too often, cases of gender-based violence are overlooked. Instead, the UN urges governments to lead by example, exhibiting solely intolerance in regards to such violence and oppression. Criminals must be punished in order to protect the women and girls of the world.

UN global statistics reveal the urgency of this situation: globally, around 50 percent of sexual assaults are committed against girls under the age of 16. Furthermore, statistics show that problematic regions must be addressed. Over half of the countries with the highest rates of female murder are within Latin America and the Caribbean. Tellingly, such statistics exhibit the fatal consequences of tolerance.

Secretary-General Ban Ki-moon created the “UNiTE to End Violence Against Women” in 2008. The initiative addresses all governments, demanding the implementation of strict laws, action strategies, and overall, a larger systematic address of sexual violence by 2015.

Ultimately, football serves as a common ground between us all. Yet, so should our women and girls—for their futures are ours.

– Anna Purcell

Sources: United Nations, Global Times
Photo: Flickr

quino market
In recent years, international interest in quinoa has exploded—knowledge of the grain’s nutritional dynamism has proliferated, making it a desirable choice in an increasingly health-conscious world. In light of its recent popularity, the UN named 2013 “the international year of quinoa.”

The West, with its new market for quinoa, has largely turned to Bolivia, where the grain has been growing for over 7,000 years in the steppes of the Andes. Originally, the newfound demand for quinoa portended great things for the national economy, which would stand to accrue significant wealth through exporting the super-crop.

However, unforeseen implications of the international quinoa market have engendered a new problem for the Bolivian people: namely, the crop is becoming so expensive that many Bolivians no longer have access to it. In 2000, before the international market for quinoa took off, 100kg of quinoa cost about 80 Bolivianos ($11.60 USD). Today, prices have risen nearly ten-fold: 100 kg of quinoa now costs around 800 Bolivianos ($115 USD), and prices continue to rise.

Tellingly, losing a national dietary staple—particularly one with such prodiguous nutritional value—has devastating effects on local health. Bolivia must work towards intitiatives to subsidize crops for locals, providing them with the invaluable nutritional benefits of quinoa.

– Anna Purcell

Sources: NYTimes , Al Jazeera
Photo: PhotoPin

 child-sponsorship-works-borgen-project-compassion-international_opt
When people ask how to help the poor, child sponsorship often is suggested. Indeed, for a small amount of money each month, organizations allow individuals to sponsor a child and help to provide education, food, and clothing for them. In return, the sponsors get a picture of the child and quarterly or annual updates from the organization regarding their child.  It has long seemed like an easy way to make an impact. The question many people ask, however, is does it really work? One development economist decided he was going to find out.

It seemed no one had ever been interested in finding the answer despite the fact that 9 million children are sponsored worldwide and more than $5 billion dollars per year is invested in child sponsorship programs. For organizations, obviously the stakes were high. If they allowed researchers to study the effectiveness of their programs, what would they do if they came back ineffective? After several years, one organization decided to allow themselves to be studied under one condition: anonymity.

The study initially looked at individuals in Uganda, studying 809 individuals including 188 who were sponsored as children. The results from the first study were any economist’s dream. The data clearly showed large and statistically significant impacts on the educational outcomes of sponsored children. It appeared the program was actually working! To solidify the results, the study was conducted in six other countries: Uganda, Guatemala, the Philippines, India, Kenya and Bolivia. Data was obtained on 10,144 individuals and the results were consistent with the first study. 27 to 40% more sponsored children complete secondary school and 50 to 80% more complete a college education. In addition to effects on education, the study found that sponsored children were also more likely to gain meaningful employment.

As a result of the study, the sponsorship organization removed the anonymity clause. Compassion International was the organization that allowed its program to be scrutinized; the results were clear that child sponsorship works. It helps lift kids and families out of poverty and provides them with hope. For more information about child sponsorship, visit Compassion International at www.compassion.com.

– Amanda Kloeppel
Sources: Christianity Today, Compassion International