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Lao PDR: Poverty Continues to Decline but Progress under Threat

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Lao PDR has made remarkable progress in reducing poverty over the past 25 years, with the proportion of the population living in poverty falling by more than half, from 46 percent in 1993 to 18 percent in 2019. The finding comes from two reports just released by the Lao Statistics Bureau and the World Bank. But the good news comes with a caveat: some of the gains made against poverty could be erased by the impact of the COVID-19 pandemic on the Lao economy.

The Poverty Profile in Lao PDR is based on the latest Lao Expenditure and Consumption Survey (LECS), carried out nationwide in 2018-19. The report was launched along with the Poverty Assessment 2020: Catching Up and Falling Behind, which analyses thesurvey data in more depth and explores the factors behind emerging trends. Data from the LECS shows that the national poverty headcount rate declined by 6.3 percent over six years, from 24.6 percent in 2013 to 18.3 percent in 2019. This means, however, that almost a fifth of Lao people are still living on incomes below the 2019 national poverty rate of 9,364 kip (US$1) per day.

Rising farm incomes and remittances have helped people in different parts of the country escape poverty”, says Mme Phonesaly Souksavath, Head of the Lao Statistics Bureau. “Rural areas have narrowed the poverty gap with urban areas, where poverty has fallen less quickly. Poverty declined notably in the south, thanks to cash crop production, and in the north, where employment opportunities have become more common”.

At the same time, several factors have slowed down poverty reduction in different regions, with a scarcity of jobs outside the agricultural sector leading to an overall increase in inequality. Wages have increased by almost 60 percent for those with jobs, but many people have not been able to access the opportunities provided by employment. This is especially true in the central provinces, where poverty reduction has stalled.  

“The data shows that most of the families under the poverty line share one or more characteristics: their head of household is from an ethnic minority group, has a low level of education, or has no access to employment,” says Nicola Pontara, World Bank Country Manager for Lao PDR. “Government policies have helped narrow geographical income gaps. However, not enough jobs are being created to distribute the benefits of economic growth equitably”.

According to both the Statistics Bureau and the World Bank, the economic effects of COVID-19 pose a severe challenge to efforts to end poverty in Laos. The pandemic has brought an unprecedented employment shock, putting pressure on an already-weak job market. At the same time the return of migrant workers, particularly from Thailand, has led to a substantial fall in remittances. The Poverty Assessment report estimates that poverty will increase by 1.4 to 3.1 percent in 2020, compared to the 0.6 percent decline that would have been expected with no COVID-19. Given these challenges, a broad set of interventions, targeting different groups of the poor, will be required to restore poverty reduction momentum in Lao PDR.

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Development

Vaccination, Jobs, and Social Assistance are All Key to Reducing Poverty in Central Asia

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As the pace of economic recovery picks up, countries in Central Asia have an opportunity to return to pre-pandemic levels of poverty reduction – if they put in place the right policies. This was the overall message shared by World Bank economists today at a regional online event “Overcoming the Pandemic and Ending Poverty in Central Asia”.

In the early 2000s, Central Asian countries were among the world’s best performers in poverty reduction. Starting in 2009, however, the pace of progress began to slow and even stagnated in some of the countries. The COVID-19 pandemic impacted a region already struggling to generate inclusive growth and end extreme poverty. Now in the second year of the pandemic, poverty rates in Central Asia are falling again, but with high inflation and low vaccination rates, the poor and the most vulnerable continue to suffer from food insecurity, uncertainty, and limited employment opportunities, especially for women.

“Central Asia is recovering from the first shocks of the pandemic, albeit in uneven ways,” said Will Seitz, World Bank Senior Economist in Central Asia. “Migration and remittances, key drivers of poverty reduction in the Kyrgyz Republic, Tajikistan, and Uzbekistan, are quickly returning to 2019 levels. Labor markets are also recovering, and work disruptions are much less common. However, the region is yet to get on a stable poverty reduction path.”

Among policy priorities to reduce poverty, the World Bank is focused on three key areas: widespread vaccination, increasing employment and wages, and strengthening social assistance programs to support the most vulnerable. To support labor market recovery, the World Bank economists outlined short-term and medium-term measures, including the need to invest in green jobs and encouraging the creation and growth of firms.

It was also stressed that employment alone will not address all drivers of poverty, and strong safety nets are essential to protect the most vulnerable. Compared with other middle-income countries, Central Asian governments typically provide smaller shares of their populations with social assistance.

“Along with ensuring fair, broad access to effective and safe COVID-19 vaccines, Central Asian countries need to urgently address vaccination hesitancy, as it threatens to slow down the recovery,” said Tatiana Proskuryakova, World Bank Regional Director for Central Asia. “For every million people vaccinated, global GDP recovers on average nearly $8 billion. We are expecting advanced economies with relatively high vaccination rates to demonstrate much better growth rates than developing economies with low vaccination rates.”

Among the main reasons behind vaccine hesitancy in Central Asian countries are worries about vaccine contraindication and safety. While people with pre-existing health conditions in other countries are usually prioritized for vaccination, in the Central Asia region they are more likely to be hesitant to get vaccinated. Providing the public with accurate information on the safety of vaccines and encouraging people with pre-existing health conditions to be vaccinated may help address hesitancy issues.

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Vietnam’s Development Agenda Receives Additional Boost

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Vietnam’s push to enhance competitiveness, reduce its carbon footprint, and improve lives and livelihoods has been given a boost with the approval of an AUD 5 million grant by the Australian Government.

This grant represents additional funding to the ongoing Australia – Bank Partnership in Vietnam (ABP), which focuses on a wide range of policy areas designed to support the country’s development agenda.

“The COVID-19 pandemic continues to have a significant impact on Vietnam’s reform agenda and exacerbate inequalities, which are more pronounced and harder to close for ethnic minorities, for women and for other marginalized groups. Responding to this, Australia’s extended collaboration with the World Bank will continue to support Vietnam’s quick economic recovery and help achieve its development goals,” said Australia’s Ambassador to Vietnam HE Robyn Mudie.

The ABP will continue its work on gender equality and the sustainable development of the Mekong Delta. In addition, it will also help address new priorities set out in the country’s recently adopted Socio-Economic Development Strategy and Socio-Economic Development Plan, including the transition to a low carbon economy, social equity and inclusion, and innovation-driven growth.

“The ABP will continue providing high-quality advisory work, enabling Vietnamese policymakers to pursue substantive reforms,” said Carolyn Turk, World Bank Country Director for Vietnam. “These reforms are needed both for recovery from the economic costs of COVID, but also to set a solid basis for the pathway to higher income status.”

The ABP was established in 2017 with an initial funding amount of AUD 25 million. During the COVID-19 pandemic, the ABP responded quickly and provided an additional AUD 5 million to support Vietnam to respond to, and recover from, the pandemic. The program leverages expertise from Australia and the World Bank Group to support the Government of Vietnam in strengthening its development policies and programs.

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Cotton sustains more than 100 million families worldwide

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Women workers clean cotton in Multan city in Pakistan. © FAO/Aamir Qureshi

A single metric tonne of cotton provides jobs for five people on average, often in some of the world’s most impoverished regions; that adds up around 100 million families across the globe. 

To recognize these and other contributions, the United Nations is marking World Cotton Day, this Thursday. 

Cotton is an important means of livelihood for millions of smallholders and attracts export revenues to some of the poorest countries. This makes the sector a key contributor to reaching the 2030 Agenda for Sustainable Development. 

For the UN, this natural fabric “represents so much more than just a commodity”, it is “a life-changing product.” 

Important source 

Cotton is a major source of income for many rural laborers, including women. With this World Day, the UN wants to raise awareness of the critical role that cotton plays in economic development, international trade and poverty alleviation. 

The initiative also wants to highlight the importance of sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all. 

Resilient and multipurpose 

As a crop resistant to climatic changes, cotton can be planted in dry and arid zones. It occupies just 2.1 per cent of the world’s arable land, but it meets 27 per cent of the world’s textile needs. 

Around 80 per cent of cotton is used in the clothing industry, 15 per cent in home furnishings and the remaining 5 per cent mostly accounts for non-woven applications, such as filters and padding. 

Almost nothing from cotton is wasted. In addition to textiles and apparel, food products can be derived from it, such as edible oil and animal feed from the seed. 

Other uses have been developed recently, like using cotton-based filaments in 3D printers, because they conduct heat well, become stronger when wet, and are more scalable than materials like wood. 

The ‘Cotton Four’ 

The idea for the World Day was born in 2019, when four cotton producers in sub-Saharan Africa – Benin, Burkina Faso, Chad and Mali, known as the Cotton Four -proposed a celebration on October 7, to the World Trade Organization

With the UN officially recognizing the date, it became an opportunity to create awareness of the need of market access from least developed countries, to foster sustainable trade policies and to enable developing countries to benefit more from every step of the value chain. 

For years, UN agencies have worked towards this goal. 

For instance, since 2003, the International Trade Centre (ITC) and the World Trade Organization have helped the Cotton Four to improve production local processing capacity, as well as to discuss the trade reforms needed to address high trade barriers.  

Another UN agency, FAO, has long offered developing countries technical and policy support. One example is the +Cotton project, a cooperation initiative with Brazil that helps Latin American producers with innovative farming methods.

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