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September 19, 2017
19 Sep 2017

Income Inequality: One of the Causes of Poverty in Costa Rica

Causes of Poverty in Costa Rica
Costa Rica is known for its sunny seaside beaches and tourist attractions. It is arguably the most stable and most prosperous country out of all its Latin American neighbors. A large part of this is due to government spending. Nearly 20 percent of Costa Rica’s GDP goes toward social spending. Because of this, the Costa Rican economy has boomed. The infant mortality rate has decreased, while healthcare and sanitation have improved. But in recent years, Costa Rica’s poverty rate has stagnated at roughly 20 percent. This begs the question: what are the causes of poverty in Costa Rica? Why, despite all the government’s spending, does it still persist?

A large part of the answer is income inequality. There is extensive research showing that income inequality is correlated with higher levels of poverty. And without a doubt, income inequality is one of the main causes of poverty in Costa Rica.

Urban Costa Ricans are largely outpacing rural Costa Ricans when it comes to income. The top 20 percent of earners make an average of $4,650 per month, while the bottom twenty percent make only $360. In other words, wealthy Costa Ricans are making nearly 13 times as much money as poor Costa Ricans.

This can have dire consequences. The Organization for Economic Cooperation and Development (OECD) has found that income inequality can cause the economy to slow down. In addition, it prevents poorer people from finding high-paying jobs.

However, Costa Rica is not doomed to an eternity of inequality. The OECD shows that inequality can be reduced simply by encouraging women to join the workforce and providing better access to higher-quality jobs. Costa Rica’s government is already working hard to eradicate poverty, and the future looks bright. Income inequality may be one of the main causes of poverty in Costa Rica, but it does not have to stay that way.

– Adesuwa Agbonile

Photo: Flickr

in Costa Rica, Economics, Poverty /by /#permalink
September 19, 2017
19 Sep 2017

Why the Malaysia Poverty Rate is So Low

Malaysia Poverty RateAccording to one of the most recent reports by the World Bank, Malaysia has had an inclusive economic growth rate of about 7 percent annually for the past 25 years. Since this growth has been inclusive, Malaysia has been successful at nearly eradicating poverty in the country. This makes the Malaysia poverty rate comparatively low—less than 1 percent of Malaysians live in extreme poverty.

How is it that the Malaysia poverty rate can be so low?

The answer to that question is multifaceted.

Diversifying the Economy

Firstly, it has to do with the economy. In the 1970s, the industry in Malaysia shifted from being based in the production of raw natural materials to a more diversified economy. Malaysia started to export electronic appliances and parts, palm oil and natural gas.

This diversified economy in turn called for a more diversified and specialized labor force. In 2015 alone, Malaysia witnessed a labor force growth of 1.8 percent and a labor participation rate of 67.9 percent—up about 0.3 percent from 2014. Decreases in unemployment rate have followed economic growth. As of June 2017, the unemployment rate is at 3.2 percent. Comparatively, the U.S. currently has an unemployment rate of 4.4 percent.

Helping the Right Population

The second reason why the Malaysia poverty rate is low is because of the population that has benefited the most from the recent economic growth. The Malaysian government has shifted its focus to address the households in the lowest 40 percent. These “bottom 40” households saw a growth of 11.4 percent from 2009 to 2014. That is compared to the 7.9 percent growth of the total population of Malaysia.

However, because of the focus on the lower income households, many people in the middle class have been left out. According to an article by Malaymail Online, some have even fallen into what is considered poverty. Much of this is due to the high inflation rates per year versus the lack in increase in household income.

In the past, the rising incomes and low cost of living allowed the middle class to thrive in Malaysia. However, as of 2012, inflation started to increase. Thankfully, in the past year the inflation has dropped from around 5 percent to 3 percent.

The future goal of Malaysia as a nation is to reach high income status by 2020. With an economic growth of 7 percent annually for the past 25 years and the Malaysia poverty rate at an all-time low, this number seems realistic and attainable.

– Sydney Roeder

Photo: Flickr

in Economics, Malaysia, Poverty /by /#permalink
September 19, 2017
19 Sep 2017

Causes of Poverty in Seychelles

Causes of Poverty in SeychellesAlthough only around one percent of citizens in Seychelles live in extreme poverty, the country hopes to assist those living in that condition and eventually bring them out of poverty. Here are some of the causes of poverty in Seychelles and how the government is responding to it.

One of the causes of poverty in Seychelles is its dependence on tourism. When the global economy is struggling, tourism is a luxury that many people give up. When tourism declines, this severely affects the majority of Seychelles’ economy. Beyond that, Seychelles is uncomfortable with raising the cost of tourism to make the country more competitive with other tourist destinations; the country strongly values their reputation as an inexpensive place to visit.

Both of these factors culminate into a strong economy that nevertheless cannot sustain its growth. eTurbo News discusses how Seychelles maintains a decent gross domestic product. Unfortunately, a lack of national or international competition prevents the country from soliciting economic improvement.

The stagnant economy exacerbates other causes of poverty in Seychelles, one of which is the incredibly high cost of living. One of many reasons for this is a value-added tax on many items, which makes buying and selling those items very expensive for both the consumer and the producer.

Another of the causes of poverty in Seychelles is the lack of basic needs for the poorer citizens of the country. A study explored in Seychelles News Agency highlights how a large number of Seychellois people lack clean water, food and electricity. The survey also highlights the effects of drug abuse on poverty in Seychelles. In turn, this drug use leads to a lot of ineffective crime punishment.

Because of the causes of poverty in Seychelles, the government is developing programs to assist the poor in the country. Already, the government of Seychelles has implemented short-term intervention programs aimed at making sure families have access to water, food and all-around adequate living conditions. These programs are a fantastic first step aimed at alleviating poverty for Seychelles’ poorest citizens and hopefully they will continue to help even more people.

– Cortney Rowe

Photo: Flickr

in Economics, Poverty, Seychelles /by /#permalink
September 17, 2017
17 Sep 2017

Why Is Chad Poor?

Why is Chad PoorChad is a landlocked nation within Africa and one of the world’s poorest countries. As 87 percent of the rural population lives below the poverty line, many raise the question, “Why is Chad poor?” While the answer is multidimensional, the following are three major reasons for poverty in Chad.

1. Climatic Variations
As Chad’s climatic conditions can change drastically from droughts to torrential rains and flooding, the nation lacks reliable production of harvests, which is the main answer to the question, “Why is Chad poor?” Because the amount of rainfall varies drastically from one year to the next, harvests of staple foods such as millet and maize are often put in jeopardy. When a period of drought lasting over a year is followed by heavy rains that bring floods and destroy crops, food insecurity becomes a consistent threat and ongoing problem. According to the World Food Programme, Chad ranks 73rd out of 78 countries on the Global Hunger Index.

2. Poor Public Services
While there are a few hospitals and health centers within the country, the facilities within them are poor and understaffed. According to the World Health Organization (WHO), there were only 345 doctors working in the country between 2000 and 2010, which equates to just 0.4 physicians for every 10,000 people. Along with a lack of access to proper healthcare, underdeveloped infrastructure and limited human resources serve as major obstacles towards the education of those within Chad, as only one-third of adults are literate and just two-thirds of youths are enrolled in basic schooling.

3. Economic Misfortune
Another critical area in need of assessing in order to answer the question “Why is Chad poor?” is the recent oil crisis. Since joining the list of oil-producing countries in 2003, Chad’s economy has been heavily dependent on oil. With the plunge in oil prices in 2014, the nation has faced a continuing recession, leading to projected cuts in public services as well as an expected rise in poverty.

While the question “Why is Chad poor?” may seem too complicated to determine, reducing poverty within the nation, as well as globally, is a highly achievable task. Through the assistance of foreign aid, developing nations are able to increase the accessibility of productive public services, and for Chad, this would mean a major increase in the amount of citizens able to experience the empowerment of an education and good health in their future.

– Kendra Richardson

Photo: Flickr

in Chad, Economics, Poverty /by /#permalink
September 17, 2017
17 Sep 2017

5 Myths About Developing Countries

Myths About Developing CountriesIt’s easy to make assumptions about a “developing” country from the comfort and privilege of a “developed” one. It’s hard to truly understand what it might actually be like to live in a country without everything a developed country is used to. Treading the murky waters of stereotypes, assumptions and clichés, here are some common misconceptions and myths about developing countries:

  1. Africa is a country/is the entire developing world
    Africa is a continent with many countries of different backgrounds and diverse cultures. However, Africa is often the subject of sweeping generalizations and assumptions; for example, every person in Africa is poor and living in a rural area. This disregards the 54 nations in Africa with different histories, cultures and traditions, as well as countries on every other continent that might struggle with poverty.
  2. Developed nations spend a lot of their budgets on foreign aid
    The Borgen Project works specifically to debunk this particular misconception, as the United States spends less than 1% of its federal budget on foreign aid. Norway, the most generous nation, spends 3%. Everyone can do better.
  3. Developing countries are technologically backward
    Not only is this untrue, it disregards all of the middle-class working citizens who have found success in developing countries. The rise of technology use includes the rise of accessibility. Nigeria, for example, is one of many African countries that has embraced new technology and encouraged its spread with a Smart Cities Initiative.
  4. Developing countries are corrupt
    The cause-effect relationship in this misconception is backwards. In terms of myths about developing countries, this one disregards all the corruption present in developed countries. It assumes that corrupt policies and practices are inherently rampant in developing countries, continuing to limit them. However, corruption happens everywhere; it is simply highlighted in developing nations. Furthermore, foreign aid makes developing countries less vulnerable to corruption, not more corrupt.
  5. People are poor because they have too many kids they can’t afford
    “Too many” is a matter of opinion, and the opinion in developed countries is not inherently superior. Because of poverty, families do not have access to sex education or contraception, meaning the decision to have more kids is not really a decision.

These are just a few of the common misconceptions surrounding the developing world. However, all of them are due to be changed.

– Ellen Ray

Photo: Flickr

in Developing Countries, Economics, Poverty, Poverty Myths /by /#permalink
September 17, 2017
17 Sep 2017

Poverty in Libya

Poverty in LibyaPoverty in Libya is notoriously hard to define. An estimate based on surveys of sub-groups puts about one-third of Libya’s population below the poverty line. However, no specific figure exists.

Libya’s economy is directly dependent on its political stability, as most countries are. The country struggled with a civil war starting in 2014 which impacted Libya’s economy greatly, due to its dependence on oil and gas exports. Armed conflict between rival forces over control of the largest oil terminals in 2015 caused a decline in crude oil production which has yet to recover. In fact, production today is only at one-third of what it was before this political conflict.

While the government of Libya is officially “in transition,” its leaders historically have not used its financial resources to develop the national infrastructure. As a result, poverty in Libya persists in the form of widespread power outages, limited access to clean drinking water, medical services and safe housing, as well as decreased security due to political instability.

An added threat is the presence of extremists associated with the Islamic State of Iraq and the Levant (ISIL), who attack Libyan oilfields, further detracting from future government revenue.

The GDP in Libya is estimated to have declined by 10 percent along with a per capita income of less than $4,500. Inflation runs rampant due to high food prices and the tendency of some citizens to stockpile food.

In order to combat poverty in Libya, organizations like the World Bank have committed to supporting Libya’s economic recovery. As of spring 2016, support includes technical assistance, analytical services and trust fund/grant financing.

The World Bank has created threemedium-termm objectives for promoting economic growth in Libya: increasing accountability and transparency, improving the delivery of services and creating jobs. Hopefully these will be accomplished in the near future by partnering with donor agencies and people from different parts of Libya to make sure the plan for recovery is Libyan-owned.

– Ellen Ray

Photo: Flickr

in Economics, Libya, Poverty, War and Violence /by /#permalink
September 16, 2017
16 Sep 2017

Why Namibia Is Poor

Why Namibia Is PoorNamibia is a country located in the southwestern part of Africa, just north of South Africa, and has one of the largest income gaps between the rich and the poor in the world.

There are a few reasons why Namibia is poor. Many of the causes stem from the social and economic imbalances of the apartheid system that was introduced in 1964 under South African rule. This resulted in a deep divide in Namibian society. Much of the black African population was denied proper access to basic productive resources and infrastructure, while white settlers had exclusive access to vast areas of land as well as a tremendous amount of support from the government for their farming.

Some of the poorest people are located in the northern regions of Namibia. The majority of its indigenous population is located in the north, and many of the poorest households are those headed by women. This amounts to around 43 percent of all the households located in rural areas, which are the most likely to be dependent on farming.

These families’ dependency on farming is problematic due to a veterinary cordon fence that runs east to west across the country south of the Angola border, used to block the southern movement of livestock diseases. However, this fence also divides the poorer north, where their primary source of income comes from farming, from the richer south with its commercial ranchers.

Severely poor people in Namibia are those who are not able to spend at least N$389.30 per month on necessities to live, according to the Namibia Household Income and Expenditure. If they cannot spend more than N$520.80 per month, they are just considered poor. The average life expectancy in the country is just 62 years, and is even lower in marginalized communities.

The government of the country has been committed to solving the problems of Namibia’s poverty and large income gap. They have adopted quite a few policies since their independence and have noticed how poverty has endangered the social harmony of their country. A few plans for addressing these issues include Vision 2030 as well as other national development plans.

Hopefully, in the coming years, the people of Namibia will continue to make strides in combating the reasons why Namibia is poor and will be able to close the income gap.

– Sara Venusti

Photo: Unsplash

in Africa, Economics, Namibia, Poverty /by /#permalink
September 16, 2017
16 Sep 2017

Debating Disparity: Panama Poverty Rate Declining

Panama Poverty RatePanama is a country of sharp contrasts. Despite recent economic growth that has benefitted some, many Panamanians still suffer from poor living conditions as the Panama poverty rate remains high, especially in rural areas.

According to the World Bank, 18.7 percent of Panamanians live in poverty. However, it is important to note the decrease in poverty that has taken place over recent years. Between 2008 and 2014, poverty was reduced from 26.2 percent to 18.7 percent and extreme poverty was reduced from 14.5 percent to 10.2 percent.

Much of this poverty is manifested in rural areas where the benefits of Panama’s dramatic economic growth have failed to reach. Those that live in rural areas of Panama often suffer from a greater rate of poverty. Extreme poverty in rural areas reaches 27 percent, in sharp contrast to urban areas where only four percent live in extreme poverty.

Poverty is even worse in indigenous areas—known as “comarcas”—where 70 percent of Panamanians live in poverty. In these areas, many lack access to clean water and sanitation, contributing to a poor quality of life outside of the bustling urban centers.

The economic growth that has benefited Panama recently is newsworthy. Compared to other countries in Central America, Panama’s GDP has grown twice as fast. This is due, at least in part, to the expansion of the Panama Canal, a thriving banking industry and an outflow of cash from Venezuela. As Panama’s economy grows, however, so does its income inequality.

This economic growth has not created better living conditions for all and has only exacerbated the disparity between the wealthy and the poor of Panama. According to a CIA analysis, Panama has the second-worst income distribution among Latin American countries, despite its reputation as one of the world’s fastest growing economies.

Perhaps the key to continuing to lower the Panama poverty rate is addressing the inequality in income distribution. While Panama’s economy is expected to continue growing in the future—the forecast in 2017 is 5.4 percent—it is important to determine how this growth can be used to benefit those that still live below the poverty line.

– Jennifer Faulkner

in Economics, Panama, Poverty /by /#permalink
September 16, 2017
16 Sep 2017

Facts About the Yemen Poverty Rate

Yemen Poverty RateYemen is one of the poorest countries in the Arab Region and is home to ongoing civil conflict – which turned to Civil War in 2015. Of Yemen’s 26.8 million people, half of the population lives in areas directly affected by conflict. Basic services like healthcare and education are on the verge of collapse.

This unrest has taken a toll on the Yemen poverty rate. Before 2015, nearly half of Yemenis lived below the poverty line. As of 2017, the World Bank estimates that number has increased to 62 percent. Nearly 60 percent of Yemenis are food insecure. Since 2015, malnutrition has increased by 57 percent. About 14.4 million Yemenis do not have access to safe drinking water or sanitation.

As of early 2017, seven million people in Yemen were on the brink of famine. About 90 percent of Yemen’s food is imported, but it is difficult to get food into the country because there are few commercial importers willing to face the financial difficulties of doing so. The food crisis and increased Yemen poverty rate are partially driven by rising food prices and reduction in purchasing power.

Cholera is on the rise in Yemen. Cholera is a bacterial infection spread by water contaminated by feces – for most of the world, a disease that ended with modern sanitation. Today, it is still easily treatable with rehydration solutions and antibiotics. However, the government stopped paying civil servants in 2016, and sanitation strikes led to septic backups and garbage pileups that allowed the disease to spread in Yemen. The governmental healthcare system disbanded. Now, cholera has spread to 21 out of 22 of Yemen’s provinces. As of July 2017, the disease has infected at least 269,608 people and killed at least 1,614.

In January 2017, the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) announced the death toll in the Yemen conflict had surpassed 10,000. The OCHA’s Jamie McGoldrick released another statement saying that up to 10 million people need “urgent assistance to protect their safety, dignity, and basic rights.”

With continuing violence and infrastructure breaking down, prospects for the Yemen poverty rate are grim. More than 70 humanitarian organizations have been working to help but are facing challenges due to lack of accessibility and poor infrastructure within the country. Lack of funds is also an issue; the U.N. appealed for $2.1 billion to assist people in Yemen, but only 7 percent of that appeal was met. For those who want to donate to humanitarian efforts, organizations like UNICEF, UNHCR, Doctors Without Borders, Oxfam and Save the Children are also doing essential work for the people of Yemen.

– Hannah Seitz

Photo: Flickr

in Economics, Middle East, Poverty, Yemen /by /#permalink
September 16, 2017
16 Sep 2017

How Recovery Lending Helps Poor Communities Bounce Back

Recovery Lending Helps Poor CommunitiesFor farmers living in East Africa, an extreme weather pattern is all it takes to put you out of business. The prospect of losing one’s livelihood became a real threat to many farmers in Kenya, Malawi and Zambia as the El Niño climate pattern brought heavy rains and floods to the region in 2015. After disaster struck, many farmers and their surrounding communities were able to quickly rebound thanks to a practice known as “recovery lending” which VisionFund, a branch of World Vision International, used to provide relief in the region.

Recovery lending is a microfinancing practice used to provide small loans to people after a disaster has wiped out their business. The program aims to defy traditional microfinancing practices, which view loans to disaster-stricken communities as high-risk and unlikely to be paid back. While this has the effect of preventing people from becoming more indebted, it also prevents money from coming into communities when they are in need of funds to rebuild.

In 2013, VisionFund first experimented to see if recovery lending could help poor communities after the Philippines was struck by Typhoon Haiyan. The organization provided more than 4,800 loans and found that 8 weeks after the typhoon, less than 5 percemt of clients felt like they would be unable to pay off their loans. 20 months after the disaster, 96 percent of clients reported that the loans had supported their recovery and just 3 percent reported challenges in paying off their loans. Because of these successes, VisionFund expanded the use of recovery lending to Kenya, Malawi, Zambia and Ecuador.

VisionFund’s Global Insurance Director Stewart McCulloch believes recovery lending can be a powerful tool when used in conjunction with direct foreign aid and other forms of disaster relief. “We have seen the benefits provided by aid and recovery lending working together,” says McCulloch. “Aid supports people at their most vulnerable, whilst the recovery lending stimulates productive economic activity. The continued provision of financial services to vulnerable communities is important to their ability to be economically sustainable and to build in resilience to future shocks.”

So far, the experiences of VisionFund have shown that recovery lending helps poor communities in developing countries. Hopefully, its continued use will prove its efficacy as a tool to help communities come back from disaster.

– Carson Hughes

Photo: Google

in Developing Countries, Economics, Poverty /by /#permalink