Poverty in Kazakhstan
In the early 1990s, Kazakhstan gained autonomy from the Soviet Union but was faced with a steeply deteriorating economy and an increasing poverty rate. Over the course of the following two decades, however, the nation’s government has worked with international organizations to successfully reduce poverty in Kazakhstan to acceptable levels.

Experts claim that Kazakhstan’s poor economic performance and high poverty rates during the ’90s was due to the country’s sudden declaration of independence. Kazakhstan simply did not have the infrastructure or stable government needed to smoothly transition into self-governance.

The fledgling country was forced to confront these structural and political problems while dealing with a poverty rate so high that one-third of their population lived on less than two dollars a day.

Though it began in a less-than-ideal circumstance, Kazakhstan made a rapid turn-around. In less than a decade, the poverty rate declined from a 30 percent peak in 2001 to a low of 1.1 percent in 2009. Though the poverty rate has since risen by a number of percentage points, it experienced less major fluctuations. New institutions are also currently being created to eradicate its causes.

The methods used by the Kazakhstani government to eliminate poverty within the country were simple but effective. During the country’s greatest time of need, leaders made the influential decision to adhere to the Millennium Development Goals (MDG’s), which aim to reduce poverty. The country committed to decreasing poverty in the long-run and created a program that lasted for over a decade.

Another key factor that helped reduce poverty in Kazakhstan was the heavy involvement of international humanitarian organizations like the United Nations Development Program (UNDP). Between 2002 and 2007, the UNDP organized a dozen major projects in an effort to bring down poverty rates throughout the nation.

Kazakhstan has shown unwavering dedication to United Nations (UN) improvement programs and policies, especially those that focus on social and economic development. Together with the UN, Kazakhstan has engaged in MDG Plus—a program that extends the Millennium Development Goals. The nation will concentrate specifically on increasing sustainable development and gender equality. They will additionally work to reduce unemployment and poverty.

Economic experts have recently become concerned about Kazakhstan’s high dependency on oil—73 percent of exports from the country come from petroleum products. This fact, combined with falling oil prices, has led authorities to predict that Kazakhstan will register its first annual GDP loss in almost two decades. This is likely to negatively impact poverty and slow the process of social development.

The IMF created a brief report after its regional director, Masood Ahmed, visited various senior officials in Kazakhstan. Ahmed commented on the hard work that the government was putting in, and their determination to make their fiscal plans succeed. Though faced with a recent impediment, Kazakhstani politicians were determined to find new ways to stimulate the economy by selling petroleum.

This speed bump is frustrating, but not debilitating. Poverty in Kazakhstan has decreased and is still decreasing. Furthermore, experts claim that by 2020 the country will experience vast improvements in many social development factors. Kazakhstan’s past and present economic growth illustrates how committed individuals will always find ways to make progress happen.

Preston Rust

Photo: Pixabay

Venezuela PovertyMany oil producers have been hard hit by the fall in oil prices, but perhaps none more so than Venezuela. Oil is Venezuela’s primary source of revenue and the economy is incredibly dependent on oil exports. In fact, oil revenue is thought to account for at least 95 percent of its foreign currency earnings. Within the past six months world oil prices have fallen by over 50 percent, hitting the already faltering economy very hard.

Critics say the crisis is the government’s own making, pointing to a failure to diversify the economy and a series of failed government policies. For over a decade, under Hugo Chavez and Nicolas Maduro, Venezuela developed a generous welfare system financed by oil sales. While cash transfer programs, subsidies and price controls were successful at reducing poverty, they had disastrous effects on the economy.

Manufacturers complain that the price controls have made it very difficult to make a living and have forced them to cut back on production. The number of Venezuelan manufacturers fell by more than a third during the first eight years of Chavez’s presidency. This helped to create an unhealthy economic climate well before the fall in oil prices.

Over the past few months things have gone from bad to worse. Any successes at reducing poverty are about to unravel as Venezuela’s economy deteriorates. Inflation in Venezuela is currently the highest in the world, estimated at close to 80 percent. That is more than four times higher than the inflation rate in Ukraine, another economy facing a major crisis. Its currency is severely overvalued. Government currency controls have kept the official exchange rate at 6.3 bolivars for one U.S. dollar, but the black market rate is more than 200 bolivars for one U.S. dollar and rising.

Venezuela has had to reduce imports by nearly half and the country is now facing widespread food and commodity shortages. Many foods and goods are no longer available in supermarkets. In fact, the Venezuelan government has asked for assistance from neighboring countries to resupply it.

The few goods that are available have become outrageously expensive and shoppers face extremely long lines. A pack of contraceptives costs nearly 800 dollars. This is bad news for a country that has one of the highest rates of HIV/AIDS and teen pregnancy in South America.

The inflated prices have caused the real value of the minimum wage to plummet from 360 dollars a month to 20 dollars a month. This puts it on par with the poorest countries in sub-Saharan Africa and means many Venezuelans are now living below the extreme poverty threshold of one dollar a day.

The economy is expected to contract by at least three percent, but many think this estimate is optimistic, especially since more trouble is on the horizon. The government has failed to explain how it plans to fulfill its debt obligations for 2015 and few expect it will be able to. Economists think it is probable that Venezuela will default on more than 10 billion dollars worth of debt next fall, which will inevitably make the situation worse.

Maduro’s popularity has plummeted; his approval rating is now lower than 25 percent. The government points fingers at the U.S. and opposition parties. The government has also cracked down on businesses and opposition lawmakers. Last month the mayor of Caracas was arrested on allegations of plotting a coup and a major supermarket chain was nationalized. Its CEO was arrested and is being accused of hording goods.

Elections are planned for later this year. Venezuela was once considered one of the most prosperous countries in Latin America, but now it is one of the poorest. While markets may be watching the Eurozone more closely because of its larger size, the worst economic crisis of the year is unfolding in Venezuela.

– Matt Lesso

Sources: BBC 1, BBC 2, CNN, Financial Post 1, Financial Post 2, Forbes 1, Forbes 2, NPR

Photo: Flickr


Earlier this week a two-day strike in Haiti shut down the capital, Port-au-Prince and several other major cities and towns. On Feb. 9 and 10, protesters blocked off all roads leading into the capital. This is one of numerous strikes and protests that have been recurring regularly for over a month. Some of the protests have demanded fresh elections and the resignation of the current president and prime minister, while others, including this one, have focused on the high cost of fuel.

Despite a global fall in oil prices, the cost of fuel in Haiti has remained high. While gas prices in the United States have fallen to roughly $2.44 a gallon, in Haiti they have averaged $4.62 a gallon. Following recent strikes and protests, the government agreed to lower the price to $4.25 a gallon, but this lags well behind the level at which prices have fallen worldwide and protesters remain unsatisfied.

Protesters organized by government opposition leaders and public transit unions are demanding a 50 percent cut in oil prices to $2.13 a gallon. Many complain that the high cost of fuel is driving up the cost of living and is exacerbating poverty in the Western Hemisphere’s poorest country. Bus drivers complain that the high costs are preventing them from earning a living while commuters complain about the high cost of public transport. Additionally, the high cost of transporting goods has led to a rise in the prices of food and other important commodities.

The government has repeatedly claimed that it is unable to meet the protesters’ demands and cannot afford to lower the price of fuel by the amount demanded. Haiti relies heavily on Venezuela for fuel imports and currently owes the country $1.5 billion in debt as part of a preferential treatment deal. The government has been relying on oil sales to raise money to pay off this debt, and for this reason the government has said it cannot lower the price. The Prime Minister has said that “it’s not that we do not want to, it’s because we are not able to.”

But protesters, many of whom are already fed up with the current government which they view as corrupt and oppressive, remain unsatisfied with this explanation. It remains to be seen whether the two sides can reach an agreement.

– Matt Lesso

Sources: Reuters, International Business Times, Haiti Libre, BBC News, Global Research
Photo: Flickr

oil prices
Decreasing oil prices directly correlates with the price of food. Fuel transports food and with lowered oil prices, the cost of food is dropping. The price of fuel is important to the global market, because it dictates how imports and exports are priced.

The cost of petroleum determines the cost of agricultural products, like corn and wheat. The price of these crops includes the cost of transportation, chemicals and pesticides – all of which are made from petroleum.

Impoverished citizens will often spend over 50 percent of their budget on food. For instance, in Vietnam, parents will spend 65 percent of their budget on food for themselves and their families. With decreased prices in food, families living in developing countries will be able to purchase larger quantities.

While many living in developing countries are benefiting from the fall in oil prices, there is a population who is not benefiting from lowered oil prices. The fall in oil prices negatively affects independent farmers and crop growers.

These farmers do not use large amounts of pesticides or fuel to transport their goods. Therefore, the decreasing price in oil does not affect their cost in production and distribution. These farmers transport their food only a short distance. Disconnected from the global market, these small-holder farmers are at a disadvantage.

Overall, developing countries are benefiting from the decrease in oil prices, with the exception of small-holder farmers.

Lower oil prices can potentially benefit developing countries in another way, through investment. With lower oil prices, investment is possible because high oil importing countries have the opportunity to invest increased amounts into improving rural infrastructure and social services.

Maxine Gordon

Sources: Yahoo, New York Times, Reuters
Photo: Inquisiter