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	<title>Citizen Economists &#187; third world</title>
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	<description>Citizen Economists is an online economics magazine written by citizen journalists. These ordinary citizens provide reports and commentary on the current events affecting the economics of the fields they work in.</description>
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		<title>Global Community Efforts That Will Improve the World</title>
		<link>http://www.citizeneconomists.com/blogs/2008/08/28/global-community-efforts-that-will-improve-the-world/</link>
		<comments>http://www.citizeneconomists.com/blogs/2008/08/28/global-community-efforts-that-will-improve-the-world/#comments</comments>
		<pubDate>Thu, 28 Aug 2008 19:53:50 +0000</pubDate>
		<dc:creator>James Ratcliff</dc:creator>
				<category><![CDATA[International Economics]]></category>
		<category><![CDATA[agriculture]]></category>
		<category><![CDATA[charity]]></category>
		<category><![CDATA[technology]]></category>
		<category><![CDATA[third world]]></category>

		<guid isPermaLink="false">http://citizeneconomists.com/blogs/?p=860</guid>
		<description><![CDATA[<p>&#8220;Eat your vegetables,&#8221; my mother told me when I was growing up in America in the 1950s. &#8220;Children are starving in Europe.&#8221;</p> <p>My mother&#8217;s postwar economic geography sounds comically antiquated today; she could never have foreseen a world in which the euro is stronger than the U.S. dollar. But in another sense she was <span style="color:#777"> . . . &#8594; Read More: <a href="http://www.citizeneconomists.com/blogs/2008/08/28/global-community-efforts-that-will-improve-the-world/">Global Community Efforts That Will Improve the World</a></span>]]></description>
			<content:encoded><![CDATA[<p>&#8220;Eat your vegetables,&#8221; my mother told me when I was growing up in America in the 1950s. &#8220;Children are starving in Europe.&#8221;</p>
<p>My mother&#8217;s postwar economic geography sounds comically antiquated today; she could never have foreseen a world in which the euro is stronger than the U.S. dollar. But in another sense she was half a century ahead of her time; her quaint tactics were designed not only to encourage me to finish a meal but—at least in part, I think—to teach me that the destinies of all people on earth are somehow connected. </p>
<p>Although economic geography has undergone changes my mother never would have imagined, one thing remains unchanged: the key to reducing poverty around the world is to build a sense of community at the global level. </p>
<p>When I was a child, of course, I could find no connection between my uneaten vegetables and hungry people in a faraway land. I knew that cleaning my plate had nothing to do with anyone else’s stomach—not directly, at least. But what I didn’t know then—and what my mother must have known all along—is that, when coupled with the necessary resources, a desire to make a difference is a powerful tool for change.</p>
<p>The most ambitious twentieth-century attempt at changing the world—the United Nations—is generally perceived as having failed to improve political, economic and social conditions around the world. Time after time, the UN has failed to prevent genocide, famine and widespread repression of political freedom. If global collaboration is the key to solving the world’s most pressing problems, then in view of the UN’s dismal performance, do we still have a reason to hope?</p>
<p>The <i>World Development Report</i> has been published annually for the last 30 years by the World Bank. The 2008 <i>Report</i> focused on the key role of agriculture as an instrument for development and poverty reduction. All 191 UN member nations have committed to the <a href="http://www.unmillenniumproject.org/goals/index.htm" target="_blank">Millennium Development Goals</a> (MDGs). Goal 1 is to eradicate extreme hunger and poverty.</p>
<p>The nations of the world and the World Bank have thus reached an unusual and perhaps unprecedented consensus; everyone agrees that the key to reducing poverty in the poorest areas of the world is to target more aid money for agricultural development. But as <i>Time</i> recently reported, “This year the U.S. will give more than $800 million to Ethiopia: $460 million for food, $350 million for HIV/AIDS treatment—and just $7 million for agricultural development.” </p>
<p>Spending the bulk of our available resources to treat chronic ills and recurring crises is like treating a cancer patient with band-aids: the deep causes of the patient’s condition go untreated as long as we must respond to one crisis after another, even though we think we know what the root of the problem is and where our money really needs to go.    </p>
<p>According to the 2008 <i>World Development Report</i>, 2.1 billion people live on less than $2 a day; 880 million live on less than $1 a day. Agricultural development isn’t a magic bullet; disease, lack of education, social inequality and political corruption are huge obstacles. But since three of every four poor people in the developing world live in rural areas, targeted investment in agriculture promises to pay the most immediate social and economic dividends.</p>
<p>World Development Goal 1 is to cut worldwide poverty and hunger in half by 2015. Even though the G8 leaders have pledged to increase African aid to $50 billion a year by 2010, “Sub-Saharan Africa is at the greatest risk of not achieving the Goals and is struggling to progress on almost every dimension of poverty, including hunger, lack of education, and prevalent disease,” says the UN.</p>
<p><b>Our Heavy Responsibility</b></p>
<p>It’s hard to picture a scenario in which the affluent nations of the world will be willing to spend even more money to achieve the MDGs. “You will always have the poor with you,” Jesus told his followers two millennia ago. Although 21st-century economic geography suggests that Jesus was an astute economist, he also exhorted his followers to aid the poor to the best of their ability. </p>
<p>Microsoft chairman Bill Gates believes that <a href="http://www.amateureconomists.com./view_articles_detail.php?aid=85">creative capitalism</a> is the best way to reduce grinding poverty in developing nations. In theory, Gates’ proposed “system innovation” would produce a kind of planetary trickle-down effect by stimulating consumption in affluent economies.</p>
<p>But as long as we live on a planet with limited resources, unrestrained consumerism in wealthy nations can only produce the opposite effect. On a global scale—and in a closed system—an increase in consumption in affluent nations is more likely to bring about a decrease in consumption in the poorest areas of the world.    </p>
<p>Wouldn’t it make more economic sense to consume less in rich economies in order to provide more to the world’s poor? As Vic George pointed out two decades ago in <i>Wealth, Poverty and Starvation</i>, “From a rational perspective this would be a desirable trend because most people in affluent countries consume far too much for their own physical and mental health.”</p>
<p>In <i>Development as Freedom</i>, Amartya Sen, winner of the 1998 Nobel Prize in Economic Science, wrote, “With adequate social opportunities, individuals can effectively shape their own destiny and help each other.” </p>
<p>Sen has argued that human capability influences rapid change far more than human capital. In view of Sen’s findings, Nicholas Negroponte’s <a href="http://www.laptop.org" target="_blank">One Laptop per Child Foundation</a> is one of the most exciting ideas in the global marketplace. There are two reasons why it can work:</p>
<p>1. It stimulates direct targeted investment in the world’s poor.<br />
<br />2. It aims to unleash human capability.   </p>
<p>The Mande people of West Africa have a sophisticated belief system. Although primarily an Islamic people, Mande cosmogony hardly sounds foreign to anyone who is familiar with the Old Testament book of Genesis. “When the Everlasting addressed man, He taught him the law by which all the elements of the cosmos were formed and continue to exist. He made man the Guardian and Governor of His universe and charged him with supervision of the maintenance of universal Harmony. That is why being man is a heavy responsibility.”</p>
<p>Our food consumption, to cite one of the most blatant examples of universal disharmony, is out of control. At the beginning of the new millennium, <a href="http://www.amateureconomists.com./view_articles_detail.php?aid=70">the percentage of obese Americans</a> had skyrocketed to 65%. </p>
<p>“We’ll be cutting down on fast food, sweets and other unnecessary calories,” my mother would have said if she were raising children in 2008 instead of 1958. “We’ll eat better and save more. Let’s see how many laptops we can buy for kids in Africa.” Then she might have added, “We’ll all be healthier and happier for it.” </p>
<p>Teaching children about man’s heavy responsibility is the best education we can give them. Can smarter consumption in affluent countries be channeled into exponentially greater levels of targeted investment in the world’s poorest economies? </p>
<p>It couldn’t hurt to give it a try—we’ve tried everything else. Who knows? We might all be healthier and happier for it.</p>
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		<title>Microlending: Foreign Aid of the Future?</title>
		<link>http://www.citizeneconomists.com/blogs/2008/08/22/microlending-foreign-aid-of-the-future/</link>
		<comments>http://www.citizeneconomists.com/blogs/2008/08/22/microlending-foreign-aid-of-the-future/#comments</comments>
		<pubDate>Sat, 23 Aug 2008 04:29:29 +0000</pubDate>
		<dc:creator>Cheryl Grey</dc:creator>
				<category><![CDATA[International Economics]]></category>
		<category><![CDATA[Monetary Policy]]></category>
		<category><![CDATA[banking]]></category>
		<category><![CDATA[lending]]></category>
		<category><![CDATA[third world]]></category>

		<guid isPermaLink="false">http://citizeneconomists.com/blogs/?p=815</guid>
		<description><![CDATA[<p>In many impoverished and economically undeveloped parts of the world, jobs are scarce and people without one must earn their living through some sort of self-employment. Unfortunately these “microbusinesses” often provide barely enough income for a family to survive, without paying for education, healthcare or a higher standard of living, leaving the poverty cycle <span style="color:#777"> . . . &#8594; Read More: <a href="http://www.citizeneconomists.com/blogs/2008/08/22/microlending-foreign-aid-of-the-future/">Microlending: Foreign Aid of the Future?</a></span>]]></description>
			<content:encoded><![CDATA[<p>In many impoverished and economically undeveloped parts of the world, jobs are scarce and people without one must earn their living through some sort of self-employment. Unfortunately these “microbusinesses” often provide barely enough income for a family to survive, without paying for education, healthcare or a higher standard of living, leaving the poverty cycle unbroken.</p>
<p>But a small infusion of capital, sometimes less than US$200, can offer these entrepreneurs a chance to expand their businesses, bring in more money and even hire employees, thus helping other families in the process. Such microloans foster grassroots economic growth and, proponents say, can change the world, one poverty-stricken community at a time.</p>
<p>Microlending is being touted as the next and best wave in foreign aid. With around US$4 billion invested annually around the world, the strategy offers alternatives to those with none, while leaving out such middlemen as usurious moneylenders, despots and their bureaucracies. Produce sellers in Tanzania, grocery store owners in Mexico and dairy farmers in Azerbaijan have all benefited from this concept, and, perhaps most amazing of all, it boasts a repayment rate of 95% or better.</p>
<p><strong>Criticisms</strong></p>
<p>The strategy is not without its critics. Microlending, they say, does not truly help the poorest of the world’s poor. After all, people without food or shelter must manage their survival, their families and their health before they can manage a business or contribute to their community, and in such cases perhaps profits would be more appropriately used to upgrade living standards than repay a loan, no matter how micro. For this reason, Trickle Up, an agency working with the most poverty-stricken people in the world, issues microgrants rather than microloans.</p>
<p>In areas of extreme poverty, such as rural agricultural areas, local businesses have a limited clientele with money to spend, even for the necessities of life. This puts a low cap on earning potential before the business even opens its doors, the so-called “thatched ceiling,” and while a microloan may make all the difference in reducing one family’s poverty, it may not bring about a significant change in the regional economic malaise.</p>
<p>Additionally, microlending can carry high overhead. Some agencies, in addition to small loans, also offer business education, insurance, depository facilities, payment transfers and other financial services, all of which require staff, office space and equipment. For these agencies, according to the International Labour Organization, efficiency becomes extremely important as an overhead-cutting strategy. While it’s true that microlending is generally perceived as more of a poverty-fighting tool than an investment, nevertheless if the cost far exceeds the return then it becomes difficult to maintain the microlending institution as a going concern, never mind a profitable one.</p>
<p>Because of this dual bottom line, many microloans are made to women, and some organizations intentionally target them as clients. The data suggest that men tend to invest their profits in their businesses, but women fund their families—educating, feeding and providing healthcare for their children, thus reducing the effects of poverty and giving the next generation a chance for a better future. Interestingly, women are also seen as more likely to repay their loans than men, another reason they are often preferred as clients.</p>
<p><strong>&#8220;Village Banking&#8221;</strong></p>
<p>To be truly effective, microfinance must be local. An understanding of an area’s culture, needs and infrastructure (or lack thereof) is required before the lender can make knowledgeable decisions regarding the best use of the funds available. One solution to this problem, used with success by FINCA and other international microfinance organizations, is the concept of “village banking,” where loans are made not to individuals but to communities, who decide amongst themselves how best to use the funds and who support each other should one member prove unable to make a scheduled payment for any reason.</p>
<p>With these issues, microfinance is unlikely to completely replace traditional foreign aid anytime soon, and perhaps the absolute best alleviation for world poverty lies in some combination of these strategies. However, microlending’s potential for helping the world’s poor to help themselves is vast and undeniable. Unlike handouts, there’s at least the possibility of a partial return on the investment—sustainability figures for non-profit microfinance institutions currently run around 70%—which can then be used to foster economic growth in other regions. And even after the loan is paid off, what remains is an entrepreneurial spirit, healthy and educated children and a positive sense of accomplishment.</p>
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