To see what other people thought of various poverty-related issues, our team created a blog (in essence an online journal that allows users to comment on the entries) at http://adollaraday.blogspot.com. On this site, we have collected several of the best blog entries and comments, and placed them in various sections. In these blog sections, posts refers to original blog entries, while comments refer to user comments to these entries.

This blog section containst three post, about the effects of corruption, microcredit, and trade on poverty.

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The Post (December 14, 2005):
Corruption is somewhat like HIV/AIDS when it comes to poverty - it is difficult to tell which causes which. Read More... In the end, as with AIDS, it is a combination of both: people are more likely to fall into poverty because of corruption, and corruption deepens the poverty that impoverished people are living in.

In the news, most corruption cases involve large sums of money, and the government officials invovled are generally very high-ranking. While this type of corruption - 'grand corruption' - is a problem in developing countries (it takes money away from public service projects such as medical clinics, food programs, and schools that would otherwise benefit the poor), impoverished individuals are most affected by corruption on a smaller scale - 'petty corruption.'

This type of corruption occurs on a very local level, and usually small things: bribes to policemen to keep a roadside stand open, or a 'fee' that comes up while applying for a free driver's license. While the amount of money involved is generally very small, many poor people cannot afford to pay, driving them deeper and deeper into debt and poverty.

Another problem is that the corrupt officials (such as a policeman taking bribes) are often not all that bad. In many developing countries, especially in Southeast Asia and Eastern Europe, bribes are the only way to accomplish anything. Also, many people accepting bribes must do so because their base salary is not enough for them to support themselves and their family. It is interesting to think about ways to curb corruption in places where it has such a foothold - where corruption is a way of life. Collapse...

Comment #1: (Respondent #1)
I'm less willing than you seem to be to let petty corrupt officials off the hook for soliciting bribes. Read More... I suspect complacency is at the heart of a lot of corruption in third-world countries. At work is a sense that this is simply how we do business--always have, always will. Somewhere, though, I read that the use of public "report cards" that expose corrupt practices are having an impact in poor countries such as Bangladesh. By shining a glaring light on corrupt behavior, these consumer reports help shame and pressure officials and governments into behaving properly. Collapse...

Comment #2: (Respondent #2)
In Bangladesh, if corruption could be stopped, per capita income would more than double. Read More... The [T]otal value of corruption is more than total foreign aid received per unit time. That's why it is believed that in Bangladesh, we could survive without foreign aid if we could stop corruption and manage our own resources.

Corruption is so deep rooted there, sometimes it seems [the] only way to control it is having a patriotic, committed, benevolent dictator, who can force people behave [in a] responsible way and make system work, and lead the country to be worthy of democracy someday. Collapse...

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The Post (November 20, 2005):
One of the most interesting (and new) methods of alleviating poverty, especially in rural areas, is 'microcredit,' or microfinance. In essence, it involves very small loans, usually of money, to people who need capital. Read More...

After a short time, they pay the loan back, along with a small amount of interest. Since microcredit was pioneered by Professor Muhammad Yunus in the 1970s when he created the Grameen Bank in Bangladesh, it has evolved into many different forms. Grameen Bank maintains that the best way to assist poor people is to loan to them in groups, so peer pressure can be exerted on individuals who do not repay the loans. It also concentrates on loaning to women, because of the discrimination they face in society.

Other groups now loan items other than money - Heifer International gives villages a variety of different farm animals, from chickens to oxen. Also, there is increased specialization in the type of loans given. More are more microcredit operations focus on kickstarting small business and helping local businesses expand their markets.

In the end, I wonder what the best type of microcredit program is. Grameen Bank, the organization that started it all, seems to be very successful, with almost a 99% repayment rate on its loans, and has assisted millions in Bangladesh, but I wonder if other programs have achieved similar or better results using different methods. Collapse...

Comment #1: (Respondent #1)
A recent edition of The Economist magazine carried a review of microcredit organizations around the world. Read More... Some of the points made in the review articles included: -- Many microcredit institutions that began as charities now are making a transition to becoming more professional and business-like. That, in turn, is forcing them to be more accountable for their business practices. Questions have been raised about whether the 99% repayment rates that microcredit organizations claim reflect "good" loans as they would be measured by standard banking metrics.

My question: Will the pressure to meet standard business standards also lead microcredit organizations to become less responsive to the needs of poor customers?

-- The healthy desire for financing -- specifically, for loans -- is among customers at the bottom of the income ladder offers an as-yet-barely-tapped business opportunity for businesses that can solve business challenges such as the (relatively) high costs of servicing such small loans and servicing customers who live in remote locations.

Other microcredit organizations that pioneered the modern microcredit movement include ACCION and others in Latin America. Arguably, some started before the Grameen Bank. Few of their leaders have achieved as high a public profile, however, as Professor Yunus. He has a tremendous ability to comunicate in simple, powerful phrases that condense great wisdom into memorable words. Collapse...

Comment #2: (Respondent #2)
[T]he United Nations declared 2005 the year of "micro-credit," a label that seems to herald the global acceptance of this intervention as an effective poverty alleviation strategy. Read More... But while micro-credit programs have raised living standards for poor families around the world, they may not be for everyone. [N]ot everyone is entrepreneurial enough to turn a small business loan into a living. For some individuals, particularly those living in developing countries with high unemployment, the opportunity to work at a paying job—almost any job--would be welcomed. Recognizing this, some relief organizations are spearheading projects that aim, among other goals, to create jobs for poor people who otherwise would be unemployed. Collapse...

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The Post (December 22, 2005):
Considering the (partially) successful conclusion of the Sixth World Trade Organization Minsterial Conference (MC6) in Hong Kong on December 18th (developed countries made some trade concessions, especially regarding subsidies, to developing nations), I think it is important to look at the possible effect of these WTO talks on poverty. Read More...

The MC6 was actually part of a broader series of trade talks - the so-called 'Doha Round' - , which began in0 Doha, Qatar in 2001. The Doha meeting resulted in an agreement of WTO members on the 'Doha Development Agenda,' which was aimed at creating a more equal playing field for developing countries starting to compete in the global economy.

The major controversy throughout the WTO talks, from Doha to Hong Kong, has been agricultural subsidies. In essence, developed countries, especially within the European Union, have used subsidies toward their domestic farmers to allow them to compete globally. Because farmers in these developed countries receive government subsidies, the global price of many agriculture commodities is driven very low. Then, in developing countries, where farmers DO NOT receive subsidies, many farmers are unable to sell their good competetively, and are forced into poverty. This can be very well illustrated through sugar production. In the European Union, five million tonnes of 'high-cost,' excess sugar are exported. The EU subsidies the sugar - it is estimated that it spends Euro 3.30 to export Euro 1.00 of sugar. Because of this, the EU sugar can be sold in foreign markets for less than any other sugar, even if that sugar is actually cheaper to produce.

Also, tariffs (taxes on imported goods) and quotas are used in many developed countries to limit the sale of foreign goods in domestic markets. These restrictions, along with agricultural subsidies, make it very difficult for Third-World farmers to sell their goods and make a living.

The WTO talks are aimed at cutting agricultural subsidies, reducing tariffs, and eliminating quotas - creating a free trade environment where developing nations can compete and grow. Even by simply cutting EU subsidies on sugar, and opening up the EU sugar market, the WTO can have a huge impact on developing nations. Oxfam estimates, for example, that due to EU market restrictions, 'Ethiopia’s [monetary] losses are equivalent to total national spending on programmes to combat HIV/AIDS.' Anti-open-market policies that are employed by developed countries to give them an unfair advantage should be completely removed by the WTO, and with the MC6, it looks as if the WTO is finally moving in the right direction. Collapse...

Comment #1: (Respondent #1)
Excellent observations... Unfortunately, the Hong Kong MC6 commitments are so backloaded (to 2013) that they are not likely to have any impact any time soon, if they do at all. Read More... It is difficult to be certain about what will actually happen at that future point of time. Meanwhile, the developed countries have laced their commitments with a list of commodities the export of which by least developed countries (to developed countries) will be restricted by quota. Textiles, which are the main export items of Bangladesh, are in this restricted list. The Hong Kong outcome was therefore received with much disappointment by many in Bangladesh.

However, the important thing is to keep the fight on. From that point of view, it is very encouraging. Collapse...

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