Tag Archive for: Economic Growth

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Cuban Economic Growth

Cuban Economic Growth
For decades, Cuba kept itself off the radar and rarely allowed access to the United States. However, Raul Castro, brother to the infamous Fidel Castro and current leader of Cuba, has recently allowed small changes to make an impact on Cuba.

After years of economic isolation and little internal growth, Castro faces a difficult job in making up for lost time. Small programs like the Cuban Emprende make a world of difference as community leaders learn how to grow their small businesses into larger, more modern companies, leading the way for Cuban economic growth.

The distribution of wealth in Cuba is skewed, with the poor representing a large portion of the population. The average Cuban worker earns around $20 a month, and little has changed in the past 50 years. Cuba has now opened the doors to looking into private investments, a monumental step in the direction of globalization.

In the past, Cuba was mostly affiliated with Latin and South America. By allowing other countries, such as the U.S., into the Cuban system, the people of Cuba are looking at a brighter economic future.

However, members of U.S. Congress seem tentative about whether this Cuban economic growth and reform are benefiting the labor rights as well as human rights of the population. Raul Castro has yet to make clear how the people are being affected by this change in internal government, so outsiders are weary of possible retribution. It is unclear as to how the U.S. will react to these changes and opening up foreign investment. Since the revolution of Cuba in the 1960s, the U.S. has not been allied with Cuba.

Chamber President Thomas Donahue recently visited the island for the first time in 15 years. He reports positive change in the direction of free enterprise, fewer government jobs and increased private hiring. Cubans are seeing a better daily life as companies begin to modernize and improve the impoverished neighborhoods as jobs become more readily available.

Raul Castro has recently implemented programs teaching Cubans how to successfully operate small businesses and create meaningful business relationships. Programs such as this offer the lower class an opportunity to support themselves in the realm of business and become potential business partners as foreign investors start to peer into Cuba’s economy.

Cuba is still in the early stages of change as its people adjust to the government’s new approach, but current conditions are looking promising as people find their new niches in a budding economy.

– Elena Lopez

Sources: Reuters, NY Times, TIME
Photo: InterNations

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Rising Global Inequality

Global_Inequality_sucks
Everywhere one looks in the news media, the word inequality is beamed into television sets, either through the banter between detached pundits or through the bullhorns of activists storming littered streets.

Brought to the forefront of policy debates after the full force of the Great Recession was being felt, the rising, global inequality between the rich and the poor has stoked the powerful emotions of the disenfranchised.

And now, a French professor, Thomas Piketty, is ratcheting up the debate even further with a massive tome designed to showcase just how vast the gulf between rich and poor has become.

The book is called “Capital in the 21st Century” and in it Piketty attempts to address the reasons behind the trend of rising inequality throughout the world during the past decade.

And people’s ears are perking up; the book reached number one on Amazon.com shortly after its release.

Oxfam recently released a report detailing the harm global inequality is inflicting on the lives of the poor, as well as its effect on governance. Oxfam notes that 85 people in the world collectively own the same amount of wealth as the bottom half of the world’s population.

They note that stocks and corporate profits are continuously climbing, while wages have stagnated. And one of the most prominent concerns among the public is the over-representation of the wealthy’s concerns in governments around the world.

But has there been no progress? Has the state of those inhabiting the poorer regions of the world not changed at all? In reality, many things have changed for the better in the past several decades.

Between 1981 and 2008, the amount of people living on one dollar a day fell by 750 million. That is astronomical progress, but if one looks between countries rather than within, the inequality gap is as big as ever.

So what can be done? Many people have lost faith due to a perceived shift in political power away from the average voter and toward the wealthy and politically connected. Despite voters heading to the polls again and again, politicians routinely implement policies that do nothing to truly address rising inequality.

This happens despite the fact that most people agree great inequality is undesirable; most view its alleviation as a good thing, so long as the policies are sensible and do not harm the overall economy.

Many individuals complain of vast oligarchies setting policy against the average man, but fail to show up at the voting booth (a problem in America especially).

It’s more important to show support for policies and politicians that will actually implement effective and sensible policies to reduce inequality than to simply bemoan the current state of affairs.

Policies such as the expansion of the Earned Income Tax Credit in the United States, and increasing social spending in poor countries to actually reach those in need are just a couple things that can alleviate inequality.

The policies are there. It is simply up to the public to remain informed and active within their respective societies.

– Zachary Lindberg

Sources: Oxfam, The New Yorker, The Guardian
Photo: Salon

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The Unwanted Women in China

Over the past few years, Chinese media has been portraying the image of an unwanted leftover woman. The term leftover woman, has been used in the media to persuade women to be less career-minded, ambitious and be more centered on matrimony. The prospect of an educated, successful women in her late 20s is made to appear more like a death sentence than a good thing.

There has been a recent backlash over the past few decades against women’s rights in China. Recent gender inequality is beginning to rear its ugly head again and perpetuating the idea that women are not focused on the traditional way, which is marriage and motherhood. Less than half of China’s women are employed and that rate continues to drop each year. The Gender Gap report stated that an average income for women is 67% of men’s income while the nation is ranked 50 out of 137 countries for equal wage. Female employment has gone down over 10% through the past 10 years, due to the gender based view of the unwanted, over-achieving women in China.

A woman facing the business marketplace in China endures discrimination based on her gender and measuring up to the beauty standards placed on women in the professional world. Some Chinese women are told from a young age not to pursue certain careers like those in the medical field, because that would make them seem undesirable to a man. The pressure increases as women finish school and grow into their mid-twenties to settle down and have a family. There is also the pressure to maintain a perfect figure instead of embracing the normalcy of aging. Women that do not fit these molds and instead gain higher education are blamed for the high numbers of unmarried men.

Leta Hong Fincher, author of “Leftover Women,” states that “the image of the left over women is everywhere and in the end it is insulting.” In her book, she explains that the Chinese government is blaming these women for the high number of single adult males. The fear is that those unmarried men will cause problems relating to the social stability in China. Moreover, problems like bride kidnapping and prostitution are increasing each year the marriage crisis continues.

The traditional view of men and women, that men are superior to women, has molded the Chinese culture today. The Chinese government passed the one child law in the 1980s and gender-based abortions have skyrocketed since 1995, when gender-confirming technology was introduced. The fact is that Chinese families prefer a son over a baby girl. This supports the overwhelming number of men under the age of thirty in China today.

China’s rapidly-changing economy is changing how women view their positions in society. Women want access to the same positions as men, and are doing so by obtaining higher degrees such as masters and PhDs. These degree programs require more time spent in school and women are not looking to marry until later in their twenties. The traditional mind-set of these women is fading and marriage is no longer the focal point. The market in China continues to be flooded with men, but the future of  highly-qualified women reaching the same opportunities is changing China’s structure and providing women with more rights.

– Rachel Cannon

Sources: The Telegraph, The Economist
Photo: Ministry of Harmony

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Africa’s Biggest Economy

The largest economy in the world is the U.S. with a GDP of $17.5 trillion, followed by China with $10 trillion. However, Nigeria has now earned bragging rights for being the largest economy in Africa with about $500 billion. It is the 26th largest economy in the world.

With success in telecommunications, information technology, music, agriculture, tourism and “Nollywood” film production, Nigeria’s GDP has increased in the last few years. Although it is the highest economy in Africa, 70 percent of Nigerians still live in poverty.

In comparison, South Africa has a GDP of about $370 billion. With a population three times larger than South Africa, Nigeria may have a larger GDP but its economic output is underperforming for its population size.

Most countries measure GDP every three years, but Nigeria’s last update before April 2014 was in 1990. Even with the previously uncounted industries, Nigeria’s higher GDP is not feeding more people or putting more money in their wallets.

However, there have been many improvements since the 1990 GDP measurements. The country went from having 300,000 phone lines in 1990 to 100 million cell phone users today. Also, in 1990 Nigeria only had one airline. Now the country has many airlines and the tourism industry is growing.

While the recalculation doesn’t provide much benefit for the ordinary Nigerian citizen, it positions the country as one of the world’s best emerging-market investment opportunities. But, the nation remains 121st in the world in income per capita, with an average income of $2,622 per citizen.

Nigeria may attract foreign investors with its new GDP calculation, but after the initial attention, investors will have to base their decision on other factors including the governance system, corruption and infrastructure.

Ordinary citizens are not going to change their behavior because of the rebasing of the Nigerian GDP, but the attention the country will get from investors has the potential to help lift the country out of poverty.

— Haley Sklut

Sources: BBC, USA Today, CNN Money, Investing

Photo: The Gaurdian

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Crisis in Rural Sudan

Conflicts over oil in Sudan, North Africa’s largest country, caused a series of price inflations that have greatly affected the population. As Sudan’s largest natural resource is oil, the country experienced years of turmoil and conflict with bordering countries over the rights to oil fields. The increase in the price of oil is further reflected in transportation, and the isolation gap between urban and more rural areas has grown. As a result of this isolation, rural areas are unable to access necessary resources and economic growth. These areas have experienced low human development and according to the World Bank Sudan ranks 171 out of 187 countries on the human development indicator. In order to better human development the country must focus more on social and economic factors, especially in these rural communities.

Sudan is mostly made up of rural areas, which are drastically affected by drought, famine and conflict. In particular, the region of Darfur has suffered considerably and is currently the poorest area of the country. In fact, the land in Sudan is unfit to farm because of unreliable rainfall and the area faces major drought. Due to these circumstances, more than half of the population of Sudan lives in poverty and isolation.

Sudan also faces inequality and underdevelopment for most people living in these areas. For instance, access to health services is scarce, leaving more than half of the population without access to health resources. Due to the lack of resources in the health sector the child mortality rate in Sudan is extremely high, with  111 child mortality deaths per 1,000 births. In addition to a high child mortality rate, more than half of the population does not have access to safe drinking water. Instead, these communities rely on rivers, wells, and lakes as their drinking source.

In addition to these factors, there is an extreme lack of education in Sudan, especially for young girls. Even if a young girl does have the option to attend school, she becomes at risk of rape and other forms of violence.

There is an obvious need for social and economic development in rural areas to increase Sudan’s overall human development. Children in rural communities must have equal opportunity for a safe education to improve these areas. Also, while there is a substantial focus on oil, the country should instead shift to agriculture so that proper farming practice can be promoted in rural communities. This would foster economic development and lessen the isolation gap that these rural areas currently face.

– Rachel Cannon 

Sources: The Guardian, Rural Poverty Portal
Photo: Energy Forecast 

Jakarta as an Emerging Global City

A.T. Kearney, a United States-based consulting firm, ranked Jakarta, Indonesia’s bustling capital, whose metropolitan area contains roughly 30 million people, as the next Southeast Asian leading city. The Javanese city boasts first among a list of 34 cities in low-income and middle-income countries that will most likely become a global leader in fields ranging from business activity to workforce health and security. The methodology used involves 26 metrics in five categories: business activity, human capital, information exchange, cultural experience and political engagement.

Certainly, Jakarta’s status as the capital of the Association of Southeast Asian Nations (ASEAN) contributes greatly to the city’s rising position. Furthermore, the emergence of the ASEAN Economic Community, a quasi-European Union style economic community minus a common currency due to take off in 2015, is also another factor that helps to make Jakarta an up-and-coming Southeast Asian city.

Jakarta, over the past few years, has invested immensely in improving its once inadequate infrastructure. However, it is the city’s improvements in other fields such as stability and security that has put it on the map. Areas involving Jakarta’s population such as income equality, stability, healthcare cost, minimum wage and security are those that have fared the best.

Jakarta’s improvements also extend to the fields of information exchange and high gross domestic product growth rate. In terms of the city’s once feeble infrastructure, today’s Jakarta has been developing its mass rapid transit system. Its groundbreaking ceremony was held in late 2013. This project will begin operating in 2017-2018 and it will help to facilitate the daily commute of the residents of the city and its surrounding areas.

Furthermore, Bangkok, Thailand, its future appearing promising in 2008, has been experiencing instability for the past few years, thus eliminating Jakarta’s regional competitor. John Kurtz, A.T. Kearney’s Asia-Pacific head, stated that the city’s growing political and economic importance is attracting both domestic and international talents and investments.

The city’s rise in importance and prosperity is certainly a stunning achievement. The city’s transformation into the region’s powerhouse is undoubtedly a testament to development as a tangible and a feasible process, not just an illusive rhetoric.

– Peewara Sapsuwan

Sources: The Jakarta Globe, Wall Street Journal
Photo: Luxury Real Estate Blog

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The Climb Out of Rural Poverty in Sri Lanka

Even before the devastating tsunami on December 2004 in Sri Lanka, over 25 percent of the population – 5 million people – were living below the poverty line. Sri Lanka‘s definition of poverty is slightly different from the common scale, they define the poverty line as an individual living with the equivalent of $12 a month.

There are an additional 3 million people living on less than $15 a month. According to the World Bank, the rural parts of the country are home to over 4 million people, which is nearly one third of the entire population. After the tsunami hit, over 38,000 people were immediately killed and hundreds of thousands more were put in danger of entering the growing levels of poverty in Sri Lanka after having their entire livelihoods wiped out. The tsunami reminded Sri Lanka, and the world, how vulnerable the rural poor are to natural disasters.

Today, Sri Lanka has largely improved in quality of life and reducing poverty. There are 1.8 million identified as impoverished, but the majority, 84.7 percent, live in rural areas. The amount of people living in poverty has more than halved in both rural and urban Sri Lanka, with a reduction from 16.3 percent in 1990 to 5.3 percent today in urban areas and from 29.4 to 9.4 percent in rural areas. Poverty has even reduced in the estate sector as well, going from 20.5 to 11.4 percent. This decline in poverty indicates that up to 2.6 million people have been rescued from poverty over upwards of 20 years.

Currently, nine out of ten people in Sri Lanka live in extremely rural areas and after a 20-year civil war, in the northern part of the country, 800,000 people were displaced from their houses and as a result their means of life have been jeopardized. Thousands of children were orphaned and there has been a drastic increase in the total amount of households headed by single mothers, which experience significantly more hardship earning money than dual-parent households. Over 40 percent of these rural poor are small farmers who are mostly concentrated in the Uva, Central, Sabaragamuwa, and Southern provinces.

Malnutrition is common among children in these regions because of slow-moving agricultural growth. There is a substantial lack of infrastructure such as electricity, roads, communication and irrigation facilities which limit opportunities for people to produce more of an income.

Fortunately, Sri Lanka, as a whole, has an opportunity to bring in foreign aid and investment to further build the economy up for the future. The government has the current goal 8 percent growth per year, which would involve the present 29 percent investment to increase to 35 percent of the GDP and even more in the years to come. Raising foreign direct investment (FDI) is critical because Sri Lanka will be more likely to receive foreign aid if it is a more attractive investment location. In order to get more foreign aid, the government needs to build better institutions as well as strengthen law enforcement so it can create a more business-friendly environment. The country has recently taken the right steps toward improvement and is on the right track to a better economy and removing the presence of poverty.

– Kenneth W. Kliesner

Sources: Daily Mirror, The Island, Rural Poverty Portal
Photo: The Great Generation

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Michelle Bachelet Gives Inaugural Address

Michelle_Bachelet_Gives_Inaugural_Address
Chilean President-elect Michelle Bachelet was inaugurated on March 11 at the presidential palace in Santiago, Chile. This will be the second time Bachelet is sworn in as president after holding the office from 2006 to 2010. Bachelet, a moderate socialist, will be taking the reins from the current president, billionaire businessman Sebastian Piñera.

In a very symbolic ceremony, the head of the Chilean Senate, Isabel Allende, swore in Bachelet. The two female politicians share a past linked to the 1973 coup of the democratically elected Salvador Allende that carried dictator Augusto Pinochet to power. Bachelet is the daughter of an air force officer who was tortured by the Pinochet regime before dying in custody while Allende is the daughter of former Chilean President Salvador Allende, who committed suicide on the day of the coup.

During her inaugural address, Bachelet made inequality the focus of her speech. She said that although the policies of the Piñera administration had generated economic growth and jobs, Chile could and should be a fairer society.

Other solutions to fight inequality include changing the country’s education system by making it entirely state-funded within the next six years, a response to the student protests of 2011 to 2013 that occurred throughout Chile. Currently, the state funds a paltry percentage, leaving poor households to attend underfunded state universities. Bachelet plans to provide full state funding by increasing the corporate tax rate.

Despite promises to reduce inequality, Bachelet will face difficulty in implementing these proposals. Chile’s economy is slowing down from 5.6 percent growth per year in 2012 to just over 4 percent this past year. Moreover, prices of Chile’s primary product, copper, have fallen, which would dip the country’s economic growth even further.

Piñera leaves with a 50 percent approval rating, while at the end of her first term, Bachelet enjoyed an 84 percent approval rating.

Bachelet will not have any issue pushing her policies through the chambers of Congress, as her New Majority coalition enjoys a healthy majority in both the Senate and Chamber of Deputies. Chileans will also be able to monitor her promises closely since the publishing of a list of 50 proposals she intends to complete within her first 100 days in office spread out across 14 different policy areas.

The widely popular Bachelet has promised to create a more egalitarian society through the promise of free education. Though she has come under fire from critics who say the Chilean economy is losing steam, she remains hopeful that her country can construct a more inclusive environment for its people.

– Jeff Meyer

Sources: ABC News, Miami Herald, Slate, Economist
Photo: Khaleej Times

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Happy New Year, Iran

Iran
President Hassan Rouhani of Iran inherited an interesting situation upon entering office last June 2013. Elected under the pretense of repairing and improving a broken economy, Rouhani’s shoulders have had to carry increasingly heavy burdens.

Despite denial by various Iranian leaders, a plethora of scholars and academics attest to the claim that the downtrodden economy resultant of sanctions by the Western world significantly contributed to Rouhani’s willingness to participate seriously in nuclear talks. Such willingness has led to an easing of sanctions, ultimately permitting Iran to do business more freely on an international scale. Since Rouhani’s election, inflation in Iran has dropped from 43 percent to 33 percent and the nation’s currency has begun to revive from losing almost 80 percent of its value over the past two years.

Rouhani has helped to stabilize Iranian currency, started a path toward a nuclear deal and greatly reduced inflation. Yet the slow and steady pace of economic revitalization is not fast enough for the people of Iran. Former president Mahmoud Ahmadinejad left finances in a despicable state, far worse than suspected. In order to undo what was once done and produce long-term results, Rouhani has had to take short-term steps that have unfortunately made current life worse for many Iranians.

Sanctions as experienced under Ahmadinejad’s rule created a society accustomed to drastically higher prices of everyday goods. People learned to leave out the unnecessary goods and buy only those that were utterly indispensable. Now, however, individuals may experience an increase in gasoline prices, perhaps by as much as 30 percent.

And while the government attempts to keep prices at local markets fair for consumers, many shopkeepers and vendors complain that it is not worth it for them to sell their goods in such regulated arenas. No matter how much they sell, one vendor explained, they will end up losing money.

The Iranian New Year is here, welcomed with the sting of disappointment in the air. Rouhani is doing what he can, but patience is a virtue that financial misfortune makes difficult to uphold.

– Jaclyn Stutz

Sources: New York Times, NPR, Times, Washington Post
Photo: Joojoo

Progress in Lagos

In the city of Lagos, Nigeria, progress promises economic growth and reform. Yet, as the ambitious governor Babatunde Fashola regenerates the city, progress also threatens to destabilize the 70% of residents in poverty.

Future plans range from building more than 1,000 additional housing units to constructing a light-rail network across the city. In the financial district, a Porsche dealership recently opened.

Yet, the growing homeless population contrasts with this economic expansion. In its quest for a Lagos “that glitters,” the government forced an estimated 10,000 from the Badia East slum. While men, women and children search through the rubble for any salvageable remnants, most residents feel shocked at the loss, but others direct anger at the governor.

“This is the home I am staying in before Fashola demolished it,” asserts 28-year-old John Momoh.

Badia East continues a 15-year trend, according to activists. In the summer of 2012, the government dispatched machete-carrying men to remove about 30,000 residents of the Makoko neighborhood. Residents report receiving a 20-minute warning before the government backhoes arrived.

The regeneration of slums promises economic growth, but limited protection for those in poverty. As the New York Times notes, “the government had destroyed their present…without making any provision for their future.”

Badia East collapsed a year ago. Today, though, Lagos progresses with plans to benefit every resident.

With more than 21 million residents, this Nigerian city generates an estimated 10,000 metric tons of waste per day. The National Population Commission projects a 3% to 6% annual growth rate. As population rises, the government invests in a more efficient management of waste to provide housing and electricity to its residents.

A severe shortage in electricity led to a reliance on diesel generators, which pollute the air and threaten the health of low-income residents. Those in poverty often live in the more polluted districts and cannot afford healthcare to combat potential health complications.

There is progress, however. A pilot program converts the waste into methane gas, providing the much-needed electricity. At the Olusosun waste site, pipes plunge vertically into the ground to collect the gas.

One day, these pipes will fire boilers to generate electricity, reports Abimbola Jijoho-Ogun of the Lagos State Waste Management Authority. Though not a new innovation, this policy reflects an understanding of the environment. With more than 45% of its waste organic, the city can use this high moisture to provide for its residents.

As chief executive of the waste management program, Ola Oresanya highlights the benefits of this program. It converts “waste to energy, which is in demand, and over time might also be viable as job creation.”

The recycling program offers this solution to unemployment in Lagos. Referred to as “resource providers” by the city, 500 men and women search through the waste and collect items to sell.

“We go through the scraps and look for shoes, iron, plastic, which we sort and sell it to companies,” Samuel Jatel reports.

Jatel, 29, provides for his wife and 3-year-old child as a resource provider. In four years, he can earn about 5,000 naira (roughly $30) per day.

Yet, thousands remain homeless.

Though the city employed residents in its waste management reform, it has not released plans for building new housing units. Those forcibly removed from their neighborhoods cannot afford to return. The Social and Economic Rights Action Center reports Badia residents earn less than $100 a month, adding “there’s not a chance they can afford it.”

Employing these residents in the construction of the new houses. Labor and payment program offers security to those who lost their homes at the hand of progress.

– Ellery Spahr

Sources: Associated Press, New York Times
Photo: Nadim Chidiac