Posts

Low-income pakistanis
The COVID-19 pandemic has led to a major healthcare crisis in Pakistan and reversed years of efforts to eliminate poverty. The pandemic has also disproportionately affected low-income Pakistanis. The poverty rate in Pakistan declined from 64% to 24% in 2015 — after 20 years of progress. However, with the arrival of COVID-19, the International Monetary Fund (IMF) predicts that the poverty rate will increase to 40%, reversing years of progress.

Who is Most Vulnerable?

The IMF also expects Pakistan’s GDP growth slow by 3% as a result of the pandemic. Agriculture accounts for 20% of Pakistan’s GDP and 43% of its labor force. The continuation of lockdowns with no end in sight is negatively affecting transportation, labor and the consumer market — which in turn, affects the millions of people working in the agriculture industry.

Children and youth amounting to 17 million are missing important vaccinations for diseases such as polio. Moreover, the pandemic has increased the number of people that suffer from food insecurity by several million, bringing up the total to 43 million. Those most at risk are the people that already exist below the poverty line including women, children, senior citizens, the disabled and minorities.

As more and more of these people fall below the poverty line, Pakistan is coming up with different digital solutions that can cater to the millions of people experiencing multidimensional poverty. Here are three digital solutions helping low-income Pakistanis.

3 Digital Tools Helping Low-income Pakistanis

  1.  The Ehsaas Program is a Pakistani government-launched scheme in 2019, to fight the nation’s prevailing poverty levels. With the coronavirus and lockdowns stifling the income of millions of daily wagers — the program quickly implemented a new project known as the Ehsaas Emergency Cash Program. Under this program, low-income Pakistanis can gain access to financial assistance through text messaging. As of right now, the program is helping 12 million families throughout the country — providing stipends of 12,000 PKR each, which families are using to buy food rations.
  2. The Benazir Income Support Programme (BISP) is a federal scheme launched in 2008. Its purpose was to provide unconditional cash support to help alleviate struggling families living in poverty, in Pakistan. It remains the largest support program in Pakistan — distributing approximately 90 billion PKR to 5 million low-income Pakistanis. The program uses tools such as its BISP debit cards to make cash transfers convenient. The program notably helps women and low-income Pakistanis from minority groups gain access to financial assistance.
  3. The Kamyab Jawan Program is the first of its kind in Pakistan. Launched by Prime Minister Imran Khan and his government, it is a program to provide assistance and resources to youth, on a national level. This platform provides opportunities to the country’s youth, ages 15–29. Some of the schemes that are under the Kamyab Jawan Program include youth empowerment programs, loans for youth entrepreneurs and startups, youth legislations as well as youth councils. Through this program, Pakistani youth are finally experiencing integration into civil institutions and capturing opportunities designed to lift them out of poverty.

A Need for Non-Digital Solutions

Collectively, these digital solutions, as well as other solutions implemented by NGOs and separate companies, help many low-income Pakistanis gain access to the necessary resources and assistance they require. This assistance enables low-income Pakistanis to help themselves, specifically during this time of need. However, Pakistan cannot solely rely on digital solutions to combat their poverty crisis. Many of its population do not have access to the necessary digital devices to access these solutions. People who lack internet access, as well as computers and smartphones, are at an obvious disadvantage when it comes to accessing these digital resources. Therefore, Pakistan must also look toward digital-alternative solutions for people who are not able to access these digital ones.

Abbas Raza
Photo: Flickr

Poverty in Equatorial Guinea
Mariano Ebana Edu’s hit single, “Carta Al Presidente,” made big waves in 2013 for speaking up about poverty in Equatorial Guinea. In this passionate rap song, Edu, who performs under the name Negro Bey, criticizes President Teodoro Obiang Nguema Mbasogo’s oppressive government for keeping its citizens in poverty. Although the oil-rich country has experienced rapid economic growth since the 1990s, rampant corruption and wealth inequality prevent large populations from reaping the benefits. Here is some information about poverty in Equatorial Guinea.

Wealth Inequality

The Republic of Equatorial Guinea is a small country with a population of approximately 1.3 million located on the west coast of Central Africa. Although the country has become one of sub-Saharan Africa’s top five oil producers, poverty in Equatorial Guinea remains a major issue. Oil revenues have funded the luxurious lifestyle of President Obiang and his political elite while large populations still lack access to clean water and healthcare.

Human Development Report

Information about poverty in Equatorial Guinea can be difficult to find since Obiang’s government strictly controls the country’s media. In 2019, the United Nations Development Programme ranked Equatorial Guinea 144 out of 189 countries in its Human Development Report, combining life expectancy, education and per-capita income data. According to the U.N., more than half of Equatorial Guinea’s population still lacks access to clean water. UNICEF has found that 26% of the population uses unimproved drinking water sources, and only 66% have access to basic sanitation services.

Healthcare

Healthcare remains a major issue for people living in poverty in Equatorial Guinea, where diseases like malaria and HIV/AIDS continue to be a threat. UNICEF estimates that in 2019, there were approximately 900 new cases of HIV in people ages 0-19 and 1,200 new cases in adolescents and young adults ages 15-24. Insecticide-treated nets (ITNs) are protective gear to help prevent the spread of malaria, but only 38% of households in Equatorial Guinea have at least one ITN. Meanwhile, 20% of children born in Equatorial Guinea die before the age of 5.

Aid and Progress

Enterprise for Development (EfD) is a U.K.-based organization working to eliminate poverty in Equatorial Guinea. EfD provides grants to poor farmers to help improve irrigation and ultimately create sustainable local enterprises with pro-poor benefits. 

The Joint United Nations Programme on HIV/AIDS is a leader in global coordination and advocacy to help end AIDS as a public health threat. Data from UNAIDS shows that in 2019, 23,000 people living with HIV in Equatorial Guinea had access to antiretroviral therapy (ART), and hundreds of expecting parents received prevention of mother-to-child transmission services (PMTCT).

In 2019, the International Monetary Fund approved a $280 million bailout to Equatorial Guinea. However, after credible accusations of high-level corruption President Obiang and his senior officials must reveal their private assets before the country can receive the full amount. Equatorial Guinea must also join the Extractive Industries Transparency Initiative in an effort to fight corruption in its oil and gas industries. These reforms can help ensure that foreign aid goes directly to improving the lives of Equatorial Guinea’s poor.

– Stephanie Williams
Photo: Flickr

9 Facts About the Informal Economy in Latin America
The informal economy is a fluid area of work that people may drift in and out of. Certain companies may live in both the formal and informal job sector as well. The International Labor Organization (ILO) distinguishes between the informal sector and informal employment, stating that the former is an “enterprise-based concept and is defined by the characteristics of the enterprise in which workers are engaged” while the latter occurs on a case-by-case basis regarding the employee’s relationship to the enterprise. For example, some companies operate within the formal sector but hire certain employees “informally.”  In other words, one can define the informal economy as “firms and workers that stand outside a country’s tax and regulatory systems.

It is important to note that the informal economy is not synonymous with the black market or the underground economy. Additionally, the informal market is not necessarily illegal. However, many countries do not mandate the social benefits and protections included in the formal economy. Informal work can include a variety of jobs including street vendors, subsistence farmers, seasonal workers, industrial workers and others. Given this characterization, below are nine facts about the informal economy in Latin America.

9 Facts About the Informal Economy in Latin America

  1. A total of 140 million people work in occupations involving social vulnerability, limited rights and precarious conditions. According to the ILO, this number translates to roughly 50 percent of total employment in the region. It is a little less than the global average but more than double for the developed region.
  2. The percent of informally employed workers varies greatly across the region. Costa Rica had the lowest rate of informally employed workers as of 2013 at 30.7 percent. In addition, Guatemala had the highest at 73.6 percent.
  3. An International Monetary Fund study found four main contributing factors to the expansive informal economy in Latin America. Some of these factors include the heavy tax burden on corporations and individuals as well as minimum wage constraints. Another factor is the importance of agriculture because informal employment is much higher in the agricultural sector.
  4. Although there are poor and non-poor alike across the informal and formal sectors, empirical research has displayed that those working in the informal economy may be at a higher risk of poverty than those employed in the formal economy. The exact relationship between the informal economy and poverty is difficult to determine. This is due to a variety of circumstances that can affect poor households. For instance, the income an individual brings home may not technically be below the poverty line, however, it may not be sufficient to support five people. Regardless, informal employment is often unstable due to inconsistent wage earnings and a lack of social protection.
  5. The informal economy affects youth in Latin America. According to the International Labor Organization, there are an estimated 56 million Latin Americans in the age range of 15 to 24 in the workforce. A little over 7 million are jobless and 27 million are working informal jobs. Many quit without much of a choice as six out of the 10 jobs available to them are in the informal economy.
  6. In 2013, 44.5 percent of the non-agricultural informal employment in Latin America was male while 49.7 percent was female. However, globally males make up a higher percentage because they make up a larger portion of the workforce. In contrast, when looking across developing countries, 92 percent of all women have informal employment compared to 87 percent of all men.
  7. The informal economy in Latin America represented 34 percent of its average gross domestic product (GDP) from 2010-2017, which is higher than any other region in the world. This is true despite Latin America being in possession of one of the lower percentages of informal work, 40 percent compared to the 85.8 percent of employment in Africa.
  8. The informal economy has been reducing in Latin America and the rest of the world for the past 30 years. This could partly be due to a reduction in the challenges to register a business.
  9. Improving transit infrastructure and access to education can reduce the size of a country’s informal economy. A case study of Mexico City found that high transit costs can lead to an increase in the percentage of workers on the outskirts of cities choosing informal work. Furthermore, by improving access to cheaper and more efficient transit services, informal employment can decrease. Meanwhile, a case study in Peru showed that it is easier to obtain formal employment if one has higher education. This was true even for indigenous groups in the country who often face discrimination when entering the formal sector.

Informal work remains an ambiguous topic requiring more research. Nonetheless, it is important to keep in mind that the informal economy is not inherently bad. While many struggle because of their informal work, they often cannot afford the costs of transitioning to the formal sector. For instance, one may deem small businesses that have under 10 workers as informal, and therefore, they would not have to pay social benefits, thus saving them money. In other words, in some circumstances, informal workers may require additional support, but would not necessarily benefit from transitioning into the formal sector.

Scott Boyce
Photo: Wikimedia Commons

Bolivia's Poverty Reduction
Bolivia is a South American country that continues to reduce its high poverty rate. Poverty lowered substantially from 66 percent in 2000 to 35 percent in 2018. The government of Bolivia took direct action to develop its economy, reduce its poverty and income inequality and increase foreign investment. The Latin American country still has a high poverty rate, yet its progress in the past 20 years shows promise that Bolivia’s poverty reduction and economic development will continue.

Government’s Direct Involvement in Poverty Reduction

The Bolivian government approved the National Economic and Social Development Plan 2016-2020 to bring about change in its country. Former President Evo Morales fought for income equality and higher wages as Bolivia’s president, and the country is still fighting for his goals. The country intends to help its people live a prosperous life without worrying about the effects of poverty, such as hunger and an inability to afford health care. The main objectives of the plan include eliminating extreme poverty, granting basic services to the entire population and diversifying its economy. The plan set forth a continuation of Bolivia’s poverty reduction progress since 2000 while also lowering income inequality.

Poverty almost reduced by half from 2000 to 2018, which economic growth partly drove after Bolivia transitioned into a democratic society during the 1990s. Income inequality lowered as the Gini coefficient demonstrated. If the Gini coefficient is zero, then income inequality is zero. This income inequality indicator showed a reduction from .62 in 2000 to .49 in 2014. For reference, the U.S. Gini coefficient in 2017 was .39. The 2016-2020 plan sought to continue its efforts in reducing income inequality. Although the Gini coefficient lowered, income inequality still remains an issue in Bolivia.

Poverty Reduction Through Economic Growth

Economic growth is another factor that helped with Bolivia’s poverty reduction efforts. Bolivia’s GDP growth hovered around 4 percent since the early 2000s. From 2000 to 2012, Bolivia increased its exports that consisted mainly of minerals and hydrocarbons. Although hydrocarbons grew controversial in Bolivia, hydrocarbons and minerals accounted for 81 percent of all exports in 2014. In 2000, its exports accounted for only 18 percent of GDP, yet exports grew to 47 percent in 2012. Bolivia’s decision to focus on exports helped grow its economy, add jobs and reduce income inequality. In time, Bolivia may transition to cleaner sources of energy for its future.

Economic growth led to wage increases for many Bolivians, which expressed the idea of poverty reduction through economic growth. Bolivia’s GDP grew by a massive 80 percent from 2000 to 2014, and there were various positive side effects of this growth. Salaries increased after the government took direct involvement in income inequality. The real minimum wage increased by 122 percent in the years 2000-2015. The average labor income also increased by 36 percent during 2000-2013.

The International Monetary Fund (IMF) came to the conclusion that labor income was the number one factor that led to reductions in poverty and income inequality from 2007 to 2013. Nonlabor income such as remittances, rents and transfers contributed a small amount to these reductions. Nonlabor income was an important aid for the elderly though.

Bolivia’s Progress in Income Inequality and Economic Development

Bolivia is an excellent model for what is possible through a government’s direct involvement in poverty reduction. Economic growth helped fuel Bolivia’s objectives in reducing poverty and bringing income equality to its people. Although poverty remains high, Bolivia’s progress in the past 20 years shows promise that poverty will continue to lower. Income inequality remains an issue, and as shown from the IMF’s research, wage increases are key to Bolivia’s poverty reduction.

Lucas Schmidt
Photo: Flickr

economic growth in Guyana
Guyana discovered oil off its coast in 2015 and is on the brink of major economic growth. According to the International Monetary Fund (IMF), the projected economic growth in Guyana for 2020 is 86 percent. The projected growth rate is high for 2020 due to ExxonMobil’s oil find in the Caribbean Sea in 2015, which brought hope for change to poor Guyanese. For 2019, GDP growth was 4.4 percent, almost double from the previous year, and the 86 percent projected growth by the IMF shows an increased interest in the development of Guyana. Oil production in 2020 and in the future could bring economic growth in Guyana and add thousands of jobs.

A Potential Future in Oil

Guyana found an estimated 3.2 billion barrels of oil off its coast, with oil production beginning in late December 2019. More than 1,700 Exxon employees are working on extracting oil from Stabroek Block, the oil reservoir, and transporting oil to the Liza Destiny, a storage and offloading vessel. About 50 percent of the 1,700 workers are Guyanese. Exxon expects to produce 120,000 barrels of oil a day in 2020 and estimates 750,000 barrels a day by 2025. The 2025 estimated production would position the South American country in the top 30 countries for oil production. The 750,000 barrels a day estimate would be more oil than India produced daily in 2018. This is one reason for the IMF’s projection of a high growth rate for Guyana, as oil could transform the economy.

Uses of Future Revenue

Oil production in 2020 is exciting Guyanese about the possibilities of changing the country and its people. President David Granger commented, “Every Guyanese will benefit from petroleum production. No one will be left behind.” Guyana’s GDP per capita is about $8,100, which ranks among the lowest in the world. With oil now in production, there is potential to improve its lagging infrastructure and low income. Guyana only has about 500 miles of paved roads, yet almost 2,000 miles of unpaved roads. The President stated that oil could transform the developing country and improve life for hundreds of thousands of Guyanese.

Guyana’s government expects oil revenue of $300 million in 2020 and $5 billion for 2025. This could further enhance economic growth in Guyana and bring the possibility of distributing the money to lagging sectors. In 2019, the government spent $2 billion in its infrastructure. This included constructing or upgrading roads, bridges, highway lights and drains. The East Coast of Demerara Road Widening Project affects more than 100,000 of Guyana’s 777,000 population. Guyana approved about $500 million for the project that focuses on upgrading roadways along the coast. Most of the population resides near the coast and along the Demerara River. Guyana could not only use oil revenue to further develop Guyana but also to add jobs, as the ExxonMobil operation is already showing.

The Impact of Guyanese Oil Revenue

There is steady economic growth in Guyana, as one can witness from its GDP rising from 2.1 percent in 2018 to 4.4 percent in 2019. The IMF’s projected 86 percent growth rate for Guyana in 2020 expresses big expectations for the South American country. Although Guyana’s potential future wealth is good news, the developing country will need support in transforming its newfound wealth into positive change for its people. Every poor country that strikes oil does not always manage natural resources well, yet with the right tools and guidance, Guyana could reduce its 35 percent poverty rate by adding jobs and transforming into a developed economy.

– Lucas Schmidt
Photo: Wikipedia Commons

Living Conditions in Angola
Angola, the seventh-largest country in Africa, has one of the fastest-growing economies in the world. Since 2013, its economy has been booming and both international and domestic investments have been on the rise. Although Angola’s economy has the potential to become an economic powerhouse in Africa, the international community has become concerned with the poverty rates and overall income inequality in Angola. Despite Angola’s rapidly growing economy, it has a 26 percent unemployment rate and 36 percent of the Angolan population lives below the poverty line. The living conditions in Angola are indicative of an economy that is not yet diversified and a country with extreme income inequality. Here are 10 facts about the living conditions in Angola.

10 Facts About Living Conditions in Angola

  1. Low Life Expectancy and Causes: Angola has a very low life expectancy. The life expectancy in Angola is one of the lowest in the world, and Angola has the 12th highest number of infant mortalities every year. The leading causes of death revealed that the low life expectancy is a result of preventable causes like diarrhoeal diseases, malaria, neonatal disorders and influenza.
  2. Literacy: A third of all Angolans are illiterate. Although primary education is compulsory in Angola, 33.97 percent of Angolans are illiterate and literacy rates have been on a steady decline since 2001. Very few individuals go on to college, leaving their economy stagnated with a brain drain and a lack of available employees for white-collar jobs that require a deep understanding of their field.
  3. Clean Water Availability: Angola has a lack of clean water resources. Forty-four percent of Angolans do not have access to clean water, according to the United Nations Children’s Agency. The Public Water Company in the capital of Angola, Luanda, reports that although the daily need for water is well over a million cubic meters of clean water per day, the public water company EPAL can only supply 540,000 cubic meters of clean water per day. This leaves many without clean water. Even if EPAL were to have the capacity to supply all residents with clean water, it does not have the infrastructure to do so.
  4. Access to Electricity: Few Angolans have access to electricity. In rural areas, only 6 percent of Angolans have access to electricity. In urban areas, 34 percent of Angolans have electricity, leaving 3.4 million homes without power.
  5. Income Inequality: There is a severe gap between wealth in urban and rural areas. Income inequality in Angola is one of the highest in the world at 28.9 percent. Poverty is highest in rural areas where 94 percent of the population qualifies as poor. This is contrasted by the fact that only 29.9 percent of the urban population qualifies as poor.
  6. Public School Enrollment: There is low enrollment in public schools and UNESCO reports that enrollment has been on a steady decline since 2009. The low enrollment rate may be because many schools and roads suffered during Angola’s civil war and because many schools are located in inconvenient and rural locations with poor sanitation and untrained teachers.
  7. Unemployment: Unemployment is very high in Angola. Angolan unemployment has increased by 1.7 percent since 2018, growing to 30.7 percent. The youth unemployment rate is at an all-time high of 56.1 percent.
  8. Oil-based Economy: The economy is not very diversified. Angola is an oil-rich country and as such, more than one-third of the Angolan economy comes from oil and over 90 percent of Angolan exports are oil. Because the oil sector has been public for so long, the economy was prone to contractions and inflations along with global fluctuation in oil prices. This has left the stability of the Angolan economy at the mercy of oil prices, which have been rapidly fluctuating, destabilizing the economy.
  9. Food Insecurity: Many Angolans suffer from severe food insecurity. In fact, 2.3 million Angolan citizens are food insecure, and over 1 million of those individuals are children under 5 years old. Because of government redistribution of land, many farmers have lost their best grazing land and their arable land for crops, leading to a lack of meat and produce.
  10. Unpaid Debts: Unpaid debts threaten to dampen economic growth. After a long economic slump, the Angolan economy has further suffered due to unpaid loans. Twenty-seven percent of total Angolan credits are loans that are defaulted or close to being defaulted, and 16 percent of the largest bank in Angola, BIA, are not being reimbursed.

Although Angola has a multiplicity of problems related to poverty to solve, the country is not beyond help. Angola’s new President has secured loans from China, garnered aid from the International Monetary Fund and promised to allow local businesses to partner with international customers and trade partners to increase macroeconomic growth. As Angola diversifies its economy in 2020, the President of Angola states that economic growth and stability is on the horizon. Angola’s economy is receiving aid from a number of nations, including China, the International Monetary Fund, the World Bank and the African Development Bank, which will no doubt prove to be a successful investment.

Denise Sprimont
Photo: Flickr

The World Economic Forum and Global Poverty
In the realm of international relations, there are countless organizations that have complex acronyms and unclear operations. The biggest and best-known organizations are the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO) and Organization for Economic Cooperation and Development (OECD) which often obfuscate lesser-known organizations, such as the World Economic Forum. The World Economic Forum and global poverty link which this article will explore while addressing the organization’s purpose.

What is The World Economic Forum?

The World Economic Forum is an international organization that emerged in 1971, congregating leaders in politics, business, culture and society to address issues and facilitate solutions on a global, regional and industrial scale. The pinnacle of the organization occurs every January in the form of an annual meeting in Davos, Switzerland at the organization’s headquarters. Global elites gather at the Swiss ski resort and discuss all manner of topics, ranging from the latest in technology and innovation to critical issues like rising global income inequality and global poverty generally.

Despite its standing as an independent nonprofit, people often confuse or associate the World Economic Forum with the United Nations, partially due to its focus on the U.N.’s Sustainable Development Goals (SDGs). These ambitious objectives range from broad, borderline idealistic ones such as No Poverty and End Hunger to Industry, Innovation and Infrastructure and Reduced Inequalities.

What Does The World Economic Forum Do?

In places like the World Economic Forum, world leaders and officials access the progress of the SDGs and evaluate what their statuses are and what they need for the future. For instance, a September 2018 article emphasized the success of the World Economic Forum’s initiative in reducing poverty, reducing the total amount of people living on less than $1.90 a day to 655 million people, or about 9 percent of the world’s population. The article cautions against too much hope, however, forecasting that the goal of ending poverty by 2030 will fall 480 million people short, or about 6 percent of the population. These figures come from a World Bank report portioning some of the blame on many countries failing to meet a U.N. target of 0.7 percent of economic output on aid, a sentiment that the London-based Overseas Development Institute supports.

How does the World Economic Forum intend to combat this shortcoming? In an October 2019 announcement, the forum proclaimed a theme for the January 21-24, 2020 meeting: Stakeholders in a Cohesive and Sustainable World. Reinforcing its commitment to the SDGs and the Paris agreement of 2015, participants will solidify a meaning to ‘stakeholder capitalism,’ a principle that companies should meet the needs and requirements of all of its stakeholders, including the general public. The World Economic Forum will emphasize six areas including Ecology, Economy, Technology, Society, Geopolitics and Industry, in an application of this philosophy. All of this will align with the forthcoming Davos Manifesto 2020, mirroring the Davos Manifesto of 1973, which founder and Chairman Klaus Schwab believes will “reimagine the purpose and scorecards for governments and businesses.”

Conclusion

Some criticize the World Economic Forum for being an aloof, exclusive assortment of billionaires and powerful people, exactly the kind of people global inequality directly benefited. Participants at Davos do seem to be aware of this, identifying rising inequality, protectionism and nationalism as byproducts of the globalization that they supported. Klaus Schwab, The World Economic Forum’s founder, realizes that globalization created many winners, himself included, but that the losers now need recognition and assistance. It can be difficult to attribute any direct action to the World Economic Forum, as its participants act mostly independently of it, though informed by discussions and insights gained at it. However, given the overall rhetoric and specific support of the Paris Agreement and Sustainable Development Goals, the World Economic Forum and global poverty clearly intertwine as the organization positions itself as a beneficial actor for the entire globe.

– Alex Meyers
Photo: Flickr

10 Facts About Corruption in Greece
When the Greek economy began to publicly collapse in 2009, it started to drown in a depression the likes of which many could not handle. Instead, the European Union and the International Monetary Fund stepped in with the largest bailout in the history of global economics. Greece got a second chance for a price of 240 billion euros. Many expected this to mark an end to illicit financial practices in Greece, however, in the past decade, corruption has managed to stay alive and well in a country with a new lease on life. These are 10 facts about corruption in Greece to help better understand what is happening and why.

10 Facts About Corruption in Greece

  1. The Price One Pays for a Civilized Society: Oliver Wendell Holmes was an American Supreme Court Justice and not an expert on the Greek economy, however, his definition of taxes shall be important in these 10 facts about Greek corruption. It expresses the importance of paying taxes to maintain a civilized society. Tax fraud is rampant in Greece. When millions of citizens lie about their income to get away with spending next to nothing on taxes and large corporations do the same (albeit on a larger scale), the tax burden often shifts to the middle class. When life in the middle class becomes unaffordable, poverty grows and the problem seems increasingly unsolvable, eroding the public’s trust in its own institutions. Former U.N. special rapporteur on extreme poverty, Magdalena Carmona, stated that “Tax fraud perpetuates income inequality. A government that does not do everything it can to fight tax fraud is a government that is not doing everything it can for economic equality.”
  2. Crime and Lack of Punishment: Millions of Greeks take no issue with lying about their income due to the fact that there are little to no consequences for it. Greek citizens and officials expect their names to disappear in a void of red tape and missing files, and it works more often than not. However, despite the general sentiment that corrupt officials can get away with their crimes, former Prime Minister Antonis Samaras, leader of the New Democracy Party, began actively pursuing financial corruption in his government. Perhaps the most notable of his achievements was the arrest of former defense minister Akis Tsochatzopoulos. Prosecutors had reportedly given him a 20-year prison sentence after they determined that he might have stolen close to a billion euros from defense contracts.
  3. Fakelakia: Corruption thrives in places that have normalized it. Generally, bribes in Greece happen through small envelopes stuffed with cash to expedite services from household utility maintenance to hospital care. The practice is so common that fakelakia, meaning little envelopes in Greek, has become shorthand for bribes. Anyone can do it in Greece, from high-level officials to everyday citizens. In an effort to combat this, a young woman named Kristina Tremonti started an anonymous whistleblower website in 2012 for people to call out corruption without risking persecution. According to Tremonti, “names are not revealed for the whistleblower’s protection. Once a significant number of complaints have been lodged against a particular clinic or doctor the authorities are promptly notified.”
  4. Justice is for Sale: It is not just everyday Greek citizens who have become all too familiar with bribery. According to the Council of Europe’s anti-corruption group, the Greek judicial system needs more clearly defined rules concerning professional conduct and integrity for judges and prosecutors in the judicial system. As the system is now, it does not resolve corporate regulation cases in an efficient manner. When it does, “over a third of companies perceive the independence of courts as fairly or very bad.” In addition, almost half of all Greek citizens believe corruption to be a common practice in Greek courts.
  5. Corruption is Classic: While overhauling a nation’s government to root out corruption is certainly a victory, as Samaras began doing in 2014, the process can be a bit messier than most people might want to deal with. When a corrupt system is the only system with which people are familiar and it goes away, the immediate aftermath is a nation of citizens who do not know what to do next or how they should do it. Older generations suffer frustration that they can no longer fully utilize a system they have known all their lives. A Greek senior citizen reported to the Guardian that, “Nothing gets done anymore because it’s so much more difficult to bribe civil servants… Now nothing works.”
  6. Expectance of Failure Can Ensure Failure: The desire to hold on to as much money as possible is not the sole motivation for the tax fraud crisis in Greece, it is also about withholding that tax money so that a government the people perceive as untrustworthy cannot spend it. Without public funds to spend on health care, social security and school systems, all public services suffer as a result, thus reinforcing the public’s belief that the government doesn’t have what it takes to help them. In the early years after the financial crisis, under-the-table payments to doctors and clinics totaled 300 million euros or $334,949,950.66 U.S. Greece has made some progress in recent years, though, and now dental and health care costs have reduced by half.
  7. Many are Guilty of Corruption: Tax dodgers or corporations are not the only offenders of bribery in Greece. Corruption is so widespread in Greece that even rehab networks and humanitarian organizations have a history of doing things under the table for the sake of efficiency. The former president of Kethea, the largest rehab network in Greece, even went on the record saying, “Even agencies like Okana, dealing with the very sensitive issue of drug addiction, have been found to have abused funds on a massive scale.”
  8. For the Record, There is not Always a Record: When people do not include economic activities in national records to avoid paying indirect taxes to the proper authorities, they are part of a country’s shadow economy. Obviously, funds that go into a shadow economy are nearly impossible to track, but the majority of funds in the shadow economy are the result of undeclared employment. Getting payment under the table means fewer taxes for everyone involved. The issue may not seem too pressing, however “various studies have calculated that the shadow economy makes up between 20 to 30 percent of GDP [in Greece], an unusually high percentage for a developed country.” To put that into solid numbers, the shadow economy took up 22.4 percent of the total economy in 2015. That means 40 billion euros went unaccounted for that year.
  9. Holding Greece’s Corruption Accountable: Through these are 10 facts about corruption in Greece, financial and political corruption are prevalent all over the world. That is why a bipartisan bill sponsored by Senators Ben Cardin (D-MD) and Sen. Todd Young (R-IN) called The Combating Global Corruption Act proposes requiring the U.S. State Department to rank countries on a three-tier system. Countries compliant with anti-corruption regulations would rank as a first-tier country whereas countries like Greece with a history of apathy towards rooting out corruption would rank as a third-tier country. This bill would let U.S. officials put money into anti-corruption policies with seized resources. Essentially, those who helped perpetuate global poverty would have to pay to clean up their own mess.
  10. Ninety Years of Financial Instability and Still Going Strong: Greece gained independence from the Ottoman Empire in 1830. The Greece that the world knows today is almost two centuries old and for 90 years of that time, it was either in the middle of restructuring debt or in default.

Despite Greece’s challenges with corruption, it is slowly moving in the right direction through Kristina Tremonti’s whistleblower website, government efforts and the reduction of costs for health care services. With the implementation of The Combating Global Corruption Act in the U.S. and Greece’s internal efforts to reduce corruption, these 10 facts about corruption in Greece may disappear into the past.

 – Nicholas Smith
Photo: Flickr

The Fall of Venezuela’s Oil-Based Economy
Currently, Venezuela is in an economic crisis. According to the International Monetary Fund (IMF), Venezuela’s inflation rate will exceed 10 million percent by the end of 2019. This high inflation has destroyed Venezuela’s economy, causing poverty and unemployment rates to rise. In turn, it has also created mass food and medical supply shortages across the nation. Venezuela was not always in a state of crisis; it was once a thriving country backed by a booming oil-based economy. If one understands the fall of Venezuela’s oil-based economy, they will know how Venezuela’s current crisis came to be.

Fruitful Origins

Back in the 1920s, people found some of the world’s largest deposits of oil in Venezuela. Upon this discovery, Venezuela embarked on the path of a petrostate. As a petrostate, Venezuela’s economy relies almost entirely on oil exports. The government overlooked domestic manufacturing and agriculture, choosing to import basic goods instead of producing them within Venezuela. With strong support for an oil-based economy, Venezuela rode on its economic boom until the end of the worldwide energy crisis of the 1970s.

The 1970s energy crisis involved international oil shortages due to interrupted supplies from the Middle East. In place of the Middle East, Venezuela became one of the top oil suppliers worldwide. Oil prices thus skyrocketed due to limited suppliers and oil production in Venezuela increased to meet rising demand. Venezuela added about $10 billion to its economy during the energy crisis, providing enough wealth to cover the importation of basic goods. It was even able to begin more social welfare programs.

The Fall

Once the energy crisis ended in the early 1980s and oil prices stabilized again, Venezuela’s economy saw its first notable decline. Oil production did not decrease in spite of lowered oil prices and demand, resulting in a capital loss for Venezuela’s economy. The production of oil is an expensive endeavor which requires high capital investment in the hopes of that even higher sales can offset the investment. Therefore, while oil production remained high, Venezuela failed to build off of the investment, losing capital immediately.

This loss of capital marked Venezuela’s oil-based economy’s initial fall, as Venezuela risked its well-being on the unstable oil market. Just prior to the drop in oil prices, Venezuela went into debt from purchasing foreign oil refineries. Without investing in domestic agriculture or manufacturing, the Venezuelan government became economically strapped; it could no longer pay for its imports and programs, and especially not its new refineries.

In order to pay for its expenses, Venezuela had to rely on foreign investors and remaining national bank reserves. Inflation soared as the country drilled itself further into debt. It was not until the early 2000s that oil prices began to rise again and Venezuela could once more become a profitable petrostate — in theory. Under the regime of Hugo Chávez, social welfare programs and suspected embezzlement negated the billions of dollars in revenue from peaked oil exports.

By 2014, when oil prices took another harsh drop worldwide, Venezuela did not reserve enough funds from its brief resurgence of prosperity. Ultimately, the country fell back into a spiral of debt and inflation.

Lasting Effects

The fall of Venezuela’s oil-based economy sent shockwaves throughout its population, affecting poverty and unemployment rates and causing mass food and medical shortages. Estimates determined that in April 2019, Venezuela’s poverty rate reached nearly 90 percent nationwide. A notable factor of its widespread poverty, some suggest that Venezuela’s unemployment rate was 44.3 percent at the start of 2019.

Unemployment is rapidly increasing in Venezuela as both domestic and foreign companies lay off workers — with some companies offering buyouts or pension packages, and others just firing workers without warning. As Venezuela falls further into debt and its inflation rises, there is not enough demand within the country for foreign companies to stay there.

As previously mentioned, the earlier Venezuelan government chose to rely on imports rather than domestic production for its basic goods. Now, in 2019, the country suffers from its past mistakes. Unable to afford its imports, food and medical supply shortages are rampant across Venezuela. According to recent United Nations reports, over a 10th of the nation’s population is suffering from malnourishment. In addition, malaria — which the country virtually eliminated several decades prior — is reappearing as there are more than 400,000 cases nationwide.

A Way Out

While the fall of Venezuela’s oil-based economy may be detrimental to the nation’s overall stability, there is a way out of ruin: the International Monetary Fund, an international agency that exists to financially aid countries in crisis. In the fight against global poverty, the IMF is a vital tool that can prevent countries from reaching an irreparable state.

If Venezuela defaults on its debt and seeks funding from the IMF, Venezuela would be able to invest in domestic agriculture and other infrastructure. Therefore, if the oil industry continues to decline, there will be a fallback for supplies and potential exports. While this is not a panacea to the fall of Venezuela’s oil-based economy, it is a way for the nation to prepare for any future declines in oil prices and begin to work toward prosperity.

– Suzette Shultz
Photo: Flickr

Save the State Protests

Liberia, or officially the Republic of Liberia, is a small country located on the western coast of Africa. Coming from a rich history of international involvement, the nation holds the title of the first African state to declare independence and, therefore, is the oldest African modern republic. The Save the State protests are currently gripping Liberia.

On June 7, 2019, in the capital city of Monrovia, ongoing tensions and disappointment in the current regime reached a head, resulting in the largest anti-government protest since the end of the civil war in 2003. This was the first of the Save the State protests, which a coalition of politicians, professionals, students and regular citizens called the Council of Patriots organized.

The main goal of the demonstration was to protest high inflation rates and governmental corruption. These two points of frustration have been amplified during the current presidential administration, as these were the two major campaign promises behind the 2018 election of President George Weah. However, these issues merely represent the breaking point of decades-long tensions and it is necessary to understand the socio-economic situation in Liberia which has caused so much unrest, especially as protests continue.

A Damaged Economy

Liberia has continued to feel the effects of two civil wars that took place between 1989 and 2003 and resulted in the death of a quarter of a million people. The wars crippled the Liberian economy by 90 percent and the economy has struggled to fully recover ever since. It suffered another blow with the outbreak of Ebola from 2014 to 2015 that claimed the lives of thousands.

After these crises, foreign aid flowed into the country to help in the restoration of the economy and offer assistance to those struggling in the aftermath. But, as international funding began to dissipate – most recently with the withdrawal of the U.N. peacekeeping mission in 2018 – the country has struggled to develop on its own.

The country continues to rank among the poorest nations in the world, according to the Central Intelligence Agency’s World Factbook. The fact that inflation reached a record high of 28.5 percent in 2018 and an International Monetary Fund growth rate projection of only 0.4 percent in 2019 compounds this.

Disillusioned Voters

The socio-economic situation of sustained, long-term poverty and poor living conditions due to rising prices and financial mismanagement have escalated since the election of President Weah. This is as a result of the lack of changes he made following his campaign promises. His connection to the people of Liberia as a former football star who achieved international acclaim initially spurred people’s excitement for his presidency.

However, hope for improvement has soured as prices continue to rise, fiscal growth continues to slow and the president’s personal wealth appears to be growing. This dissatisfaction brewed alongside a huge scandal where $102 million in new banknotes was allegedly missing. Although no one found evidence to support this claim in an investigation, people cited accuracy and completeness as major issues in the central bank’s records.

As 64 percent of Liberians continue to live below the poverty line and the people have planned more Save the State for the coming months, it is clear that long-term poverty engenders long-term instability and, therefore, a constant state of tension. This kind of unstable environment becomes a powder keg for tensions to erupt, making the future of these peaceful protests uncertain.

Despite President Weah’s opposition to the demands of the protestors thus far, their message remains clear: they want to save their state and improve the lives of their compatriots. It is a prime example of citizens wanting their voices be heard.

– Alexandra Schulman
Photo: Flickr