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Why Is Kuwait Poor?

Kuwait, a small country located in the Middle East, is a country that tends to be stereotypically characterized as stricken with poverty. A common question that is asked is, why is Kuwait poor?

But this stereotype is not necessarily true. Kuwait is indeed small, but its oil reserves have made it one of the richer countries in the region. In terms of purchasing power, Kuwait’s GDP is ranked 55th in the world by the CIA World Factbook.

Due to Kuwait’s small population size, this success directly correlates to its people’s standard of living. As of 2016, Kuwait’s GDP per capita ranked 11th in the world at $71,900. This figure is much higher than many major economies such as the United States, which ranked 20th at $57,400.

Based on these figures alone, Kuwait appears not to be a poor country, but one of the most prosperous in the world. So, why is Kuwait poor? On the international stage, it is not. When one looks further, however, key figures may legitimize that question.

What is interesting about Kuwait is that the country’s poverty rate is extremely difficult to find. Neither the World Bank, the CIA World Factbook nor UNICEF have access to it, which raises a lot of questions. Why do these trusted international organizations not have this information? Is this information being withheld, and if so, for what reason?

Based on other metrics, it is hard to see Kuwait as a stereotypical poor country. The figures mentioned above related to GDP show that the nation as a whole is seeing economic success, and an unemployment rate of 3 percent suggests that its poverty rate must be low.

Still, the lack of specific data in this area is unsettling. If Kuwait is as prosperous as it seems to be, there should be no issue in providing data relevant to its poverty rate and income distribution. In order for the world to know for certain, the international community needs this data.

So, why is Kuwait poor? It technically is not poor, but that is not necessarily the right question to be asking. By asking questions regarding Kuwait’s poverty rate, its income distribution, and the general livelihoods of its people, we can better analyze the country’s successes, its shortcomings and its opportunities for growth long into the future.

John Mirandette

Photo: Flickr

Mauritius Poverty RateThe country of Mauritius is an interesting case study economically. An island nation off the coast of Africa, one would assume that the country’s economy is based primarily on low-wage sectors such as agriculture and tourism. Based on that assumption, it would therefore be relatively safe to conclude that the Mauritius poverty rate is high, given that those industries do not tend to produce much in terms of GDP.

This, however, is not necessarily the case. While Mauritius’ GDP is ranked 137th in the world at $25.89 billion, their GDP per capita is ranked 84th at $20,400 per person, according to the CIA World Factbook. This means that Mauritius has one of the highest GDPs per capita throughout the entirety of Africa.

With numbers this good, the Mauritius poverty rate is relatively low, at just 8 percent as of 2006. Keep in mind that the global poverty rate according to the World Bank is just over 10 percent of the population, meaning that, all things considered, Mauritius is doing relatively well in this aspect.

What is interesting is that these figures could also keep improving. Since its independence in 1968, Mauritius has continuously diversified its economy so that the country can grow its industrial, financial and tourism sectors. These are more capital-intensive industries that have reconstructed Mauritius’ economy into one that is upper-middle-income, rather than low-income.

The numbers are there to back this up as well. Over the last five to six years, Mauritius’ GDP grew by about three to four percent each year, and the World Bank projects that this level of growth will continue well into the future. Foreign investment has increased in Mauritius, and as the country’s economy diversifies, its GDP and GDP per capita will also see tangible increases.

This means that, as the country’s general economy improves, the Mauritius poverty rate could also see an improvement. A further decrease would give Mauritius one of the lowest poverty rates in the world. As foreign investors flock to the island nation and as its economy evolves and diversifies, we will see how Mauritius responds to this new international attention.

John Mirandette

Photo: Flickr

Poverty in Moldova

Over the past decade, Moldova had remarkable progress in the form of economic growth, the reduction of poverty and greater shared prosperity. However, poverty in Moldova is at one of the highest rates in Europe.

The World Bank reports that Moldova’s economy had rapid growth over the past decade, with an average growth rate of 5 percent per year. In addition, the poverty rate dropped from 60 percent to 27 percent between 2000 and 2004, and reached 11.4 percent in 2014. While impressive, these data points fail to demonstrate the instability caused by the very factors that spawned this progress.

Economic growth was largely driven by an increase in private consumption. However, this does not necessarily signal that Moldova’s economic situation improved, as this growth is primarily funded by remittances. In 2014 remittances accounted for 26 percent of Moldova’s GDP and were received by more than 25 percent of households. The decline in employment from 55 percent in 2000 to 40 percent in 2014 further demonstrates that while Moldovans may have more money and are actively participating in the economy, the past decade’s growth was not spurred by internal progress.

Any steps taken to create such progress face significant obstacles due to spatial and cross-group inequalities as access to assets, services and economic opportunities varies greatly across the population. The lack of progress toward expanding economic opportunities within Moldova pushed many to leave the country. The lack of employment opportunities was particularly damaging to rural areas, where the slow-growing farming industry remains the primary sector. Limited access to markets and non-farm jobs fostered a system where residents of rural areas are persistently poorer.

Declining fertility and the increasing emigration of the young population left the state with a rapidly aging population and a shrinking workforce. This means that pensions, which were a significant generator of income growth over the past decade, are no longer a viable tool for lifting households from poverty.

Rural areas are home to most of the poorest 40 percent of Moldova’s population. Residents of these areas have significantly less education and typically have inadequate access to healthcare. Even when health services are physically accessible, many lack insurance and either refuse to pay for care or are driven further into poverty in Moldova by high out-of-pocket costs.

Many believe that the 2014 association agreement with the European Union, which opened up trade opportunities, will stimulate Moldova’s domestic economy in preparation for greater dependency on exports. However, this fails to account for the significance of Moldova’s small scale farming sector which, by design, does not have access to the same opportunities as industrial farms.

Recommendations for leveling these inequalities and avoiding economic stagnation include strengthening the domestic labor market, addressing corruption in the business environment and improving the government’s social assistance scheme. Perhaps most important is the advice of Alex Kremer, World Bank Country Manager for Moldova, who urges that “enhancing the livelihoods of small farmers is paramount” for Moldova to foster internal economic progress.

Given the persistent spatial inequalities in living conditions, and the fact that agriculture accounts for such a large portion of employment, it is important to note that the causes of poverty in Moldova remain much the same as they were a decade ago. To eradicate them once and for all, Moldova must invest in its human capital by improving living conditions across the rural-urban divide and foster quality education and healthcare services.

Alena Zafonte

Photo: Flickr

Causes of Poverty in Turkey
Poverty in Turkey? Despite seeing rapid growth and development as a nation, Turkey continues to face a recurring problem with poverty amongst its citizens. Though the nation’s gross domestic product (GDP) has nearly tripled in the past ten years, according to the United Nations’ Human Development Report, many of Turkey’s citizens are not seeing this growth and are caught by the causes of poverty in Turkey.

The Daily Sabah, a Turkish newspaper based in Istanbul, reported in May that the monthly poverty threshold increased by nearly 500 Turkish liras to reach just shy of 5,000 liras (or $1,400). This threshold delineates the monthly expenses of a family of four. If their household income falls below the threshold they will be unable to afford housing, clothes, food, heat, electricity or other utilities.

 

Poverty in Turkey Data

 

Data released by the Turkish Statistical Institute indicates that the severe material deprivation rate – a statistic similar to the monthly poverty threshold that tracks families’ abilities to afford at least several basic material essentials such as food and heating – increased from 29.4 percent in 2014 to 30.3 percent in 2015 (the last two years with available studies).

The causes of poverty in Turkey, as an opinion piece by Turkish novelist Kaya Genc claims, lay partly on the shoulders of Turkey’s track record of huge income inequality. Genc notes that the top 20 percent of Turkish families hold over 45 percent of the country’s GDP, while the bottom 20 percent have just over six percent of the GDP.

The Rural Poverty Portal notes that, in 2014, the majority of people in poverty in Turkey lived in rural areas, where the rate was over 35 percent below the poverty threshold to merely 22 percent in urban areas. This rural-urban inequality stems from several factors:

  • Average rural family size is nearly double that of urban families.
  • Environmental issues like climate change, soil erosion and continued issues with overgrazing livestock – all of which greatly affect agriculture, which is the livelihood of the vast majority of rural families.
  • Low literacy rates and limited education
  • A continued lack of welfare and social security for the rural poor.

Genc theorizes that this inequality can likely trace its roots back to longstanding negative attitudes of Turkey’s poor, both rural and urban, by its upper classes. Genc writes: “For decades, Turkey’s poor were characterized as backward, conservative, religious-minded people who represented the worst of the society.” Despite the country’s wealth increasing overall, Turkey’s wealth inequalities must be addressed to get at the root causes of poverty in Turkey.

Erik Halberg

Photo: Flickr

Education to the Children of Honduras
Honduras ranks poorly in terms of education among its counterparts in Latin American and the Caribbean. Currently, the country spends the highest percentage of its gross domestic product (GDP) on education of all countries in the region but has the second lowest test scores. Huffington Post notes that in many classrooms, girls and boys alike sit on dirt floors with no blackboards, no desks, no electricity and latrines that serve as unisex bathrooms.

The Foundation for Education in Honduras, or FEIH, is a charitable organization committed to giving education to the children of Honduras.

“The first step in restoring hope in Honduras is to invest in the children’s futures and livelihoods…Non-governmental organizations (NGOs), along with charitable foundations whose efforts are dedicated to improving the state of education, are slowly but surely promoting the necessary changes to make social transformations a reality,” writes Gina Kawas, FEIH’s director of Corporate Relations.

Although the Honduran Constitution formally specifies that minors must have their education taken care of, many enter adulthood without knowing how to read or write at all. Lack of public resources and the extreme poverty that encompasses Honduras is much to blame.

In order to change the status quo, the organization partners directly with local Honduran businesses and groups to renovate rural school buildings and provide school supplies to the children and teachers. In addition, FEIH aims to engage the school in cross-cultural activities in order to foster positive educational outcomes in the community.

More often than not, the necessity of increasing the family earnings forces many Honduran children to leave school for work, usually permanently. FEIH’s approach to this predicament is simple and extremely effective. The organization invests all the money it raises into school construction and educational programs. It helps to build sustainable, community-owned education projects, thereby giving education to the children of Honduras.

FEIH requires 20-25 percent of local labor building these schools to be volunteered by members of the community where the school is being built. This cultivates potential job opportunities to members of the community while simultaneously providing new schools for the communities’ children.

If Honduras is to prosper and provide its children with the education they deserve, it must realize and address how significant the relationship between increased time spent in school and a reduction in criminal activity truly is.

Marked as the “most violent country in the world” by the U.N. back in 2012, Honduras needs to place focus on its younger generations and invest in their futures. FEIH is slowly helping the country tackle one of it’s biggest issues at its root one school at a time.

Keaton McCalla

Photo: Flickr