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What Causes Poverty in San Marino?

What Causes Poverty in San Marino?San Marino, which is said to be the world’s oldest republic, is a tiny country landlocked by Italy. At only 23.6 square miles, San Marino is the fifth smallest country in the world, only larger than Vatican City, Monaco, Nauru and Tuvalu. It is also one of the richest countries in the world, with an estimated 2016 GDP per capita of $59,500. Despite its wealthy status, the 2008 recession, from which the country is still recovering, has significantly increased poverty in San Marino.

San Marino‘s main economic activities are tourism, banking and the manufacture and export of different goods such as clothing, ceramics, fabric, wine and spirits. As it is surrounded by Italy, most of San Marino’s economic sectors are highly supported by this nation; in fact, 90 percent of San Marino’s export market is supported by Italy. As Italy also suffered from the 2008 recession, its demand for imports from San Marino has lessened, which has in turn weakened San Marino’s economy.

After the recession, San Marino’s strong economy took a downward turn. Unemployment – which had been at its lowest in 2007 at three percent – jumped to 4.5 percent by 2009 and reached its peak of 9.2 percent in 2015. While poverty is not a major issue in San Marino compared to many other countries, the recession certainly caused a notable increase.

Although San Marino’s poverty rate is low enough that it is not necessarily significant enough to be recorded, it is likely that such a rapid increase in unemployment led to hardship for a significant portion of San Marino’s population. Increases in unemployment cause greater stress for the individual and strain the government, as it puts more pressure on the government to support those who are unemployed. Additionally, it weakens the economy further, as those who are unemployed lose purchasing power. Since San Marino’s peak unemployment in 2015, unemployment has started to drop, with the unemployment rate in 2016 at 8.6 percent.

Although the recession caused an increase in poverty, the government of San Marino has been working to curb the effects of the recession by eliminating its status as a tax haven. As other countries have bounced back from the recession, demand for goods from San Marino has increased as well. Hopefully, as more countries start recovering, this will also help San Marino’s economy recover so that progress can be made regarding its poverty rate.

– Mary Kate Luft

Photo: Flickr

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InSight: Generating Micro-Business Financial Identity

InSight: Generating Micro-Business Financial Identity
A common obstacle for any business owner, regardless of which country they live and work in, is access to credit.

The twenty-first century has brought with it increasing dependence on loans and financial institutions for basic individual purchasing power – let alone entrepreneurial success.

An emergent non-profit organization has taken advantage of cell phones – a technology available to a growing percentage of the global population- to create wide spread access to these vital financial services.

For micro-business owners in the less developed world, there is an abundance of informal transactions and very little access to financial identity. Providing financial identity is something Shivani Siroya, a 2013 TED fellow, CEO and founder of InVenture, describes as the most important objective of her latest venture.

According to InVenture, 400 million people lack access to financial services due to insufficient credit scores, which means that they do not have a clear idea of how much they earn, spend or need to save. In other words? They lack financial identity.

Without financial identity it is not only challenging to manage a business, it is almost impossible to secure loans and credit lines needed to grow a business.

Siroya invented InSight, an accounting tool that enables individuals and small-business owners in the less developed world to keep track of their finances and build a financial identity for themselves. InSight is operated through SMS and compatible with any cell phone, it allows individuals to input their daily earnings and expenses, and utilize financial tracking tools. This process provides proof of growing businesses and the data collected is made available to financial institutions; making connections between those in need and those able to provide large-scale loans.

Siroya was inspired to connect micro-business owners to the credit market by creating a cell phone operated credit scoring service due to the misconception that divided the two worlds.

According to Siroya’s research, financial institutions largely disregard micro-business owners as potential credit recipients due to their “untrustworthiness,” a judgment passed based on the amount of their transactions comprised of cash, which is inevitable without access to financial institutions.

Siroya wants to change this perception and decrease the percentage of micro-businesses that currently operate under considerable credit constraints, which is currently an estimated 85 percent.

This is a dream that is being realized. As micro-business owners in the less developed world start to utilize InSight, their “buckets of receipts” are replaced with income statements on their cell phones.

Perhaps the biggest impact of all, has been for some InSight users who have reported doubling their savings for the first time.

– Zoë Dean

Sources: TED Blog, InVenture
Photo: Vintage 3D

Italy’s Economy is Taking a Beating

Immigration. Poverty. Men eating. Free meal from Caritas

With the global recession lasting over two years now, many countries have been highly affected by the current state of the global economy. One of the countries that has been hit the hardest is Italy. Many people do not think of Italy as a poor country by any means. However, the number of people that live in seriously deprived families in Italy has soared up to 8.6 million.

The unemployment rate in Italy for the younger generation has recently hit 40 percent. Italians’ purchasing power fell by 4.8 percent in this last year.

To put the drastic rate at which the poverty level in Italy is increasing into perspective, here are a few figures: The percentage of families that could not afford to eat a protein based meal such as meat every two days, rose to 16.6 percent in 2012. The year before, this percentage was only at 12.4 percent. In 2010 this percentage was at 6.7 percent. In two years, the percentage of families that could not eat a nutritious meal for a period longer than two days rose by 9.9 percent.

While all of this may seem grim, there is still hope for Italy. Prime Minister Enrico Letta stated that he believes Italy can stage an economic recovery without increasing its huge public debt. After meeting with his advisors, he concluded Italy’s economy may get slightly worse before there is improvement, but in the next few years improvements are expected in Italy’s fiscal state.

– Matthew Jackoski

Sources: Huffington Post, Reuters
Photo: Didier Ruef

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What Can $5 Buy Around The World?


A recent video created by BuzzFeed compares the buying power of $5 in 13 different countries. Of the 13 countries mentioned, Ethiopia, being the only third world country, represented the developing world among the other developed nations comparing the cost of everything from beer to beef around the world.

As the video shows, the buying power of $5 in the developing world is much stronger than in developed nations. This stark contrast led to comments such as “I [should] start shopping in China” and “I would be eating good in Ethiopia.” However, the video leaves out certain factors such as the average household income of each country and the cost of living. For example, in the United States, it takes the average person about twenty minutes to make $5. In Ethiopia, it takes between 2-3 work days to make that same amount.

Although global poverty is dropping, according to the World Bank, 40.7 percent of people in world live on less than $2 a day. This means that after two days of work two-fifths of the world still could not purchase the items shown in BuzzFeed’s video.

Entertaining and enlightening, BuzzFeed’s video goes to show how incredibly helpful small amount of aid can be to countries which desperately need it.

– Pete Grapentien

Source: World Bank