A Chicago bucket drummer illegally plays his tunes for a little cash. Photo: grendelkhan (flickr)

The term “shadow economy” tends to invoke images of sly back-alley business deals. But in reality, the term encompasses everything from bucket drummers on the streets of Chicago to the woman who sells tamales at my workplace. Because of the recession and layoffs, a growing number of Americans and illegal immigrants have been forced to try and make ends meet in this informal market.

It is staggering to learn how large the shadow economy really is: about a trillion dollars and rising, according to a recent Christian Science Monitor article that explores many aspects of the informal market. Economists are curious about where all this money is ending up, and what it is doing to the economy as a whole.

Some argue that a rise in the shadow economy unfairly increases the competition with local small businessmen — people who are already struggling with a damaged economy, reports the Monitor. But others from the International Monetary Fund claim that the competition actually increases the efficiency of both markets. They believe that the shadow economy makes goods and services more available and affordable than in formal markets. Their studies also show that roughly two-thirds of the money illegally generated in the shadow economy is actually spent in the official economy.

In the end, it boils down to the fact that the majority of those working in the shadow economy are the same ones who have been excluded from the official economy — typically because of socioeconomic status. In October, the U.S. Bureau of Labor Statistics reported that the unemployment rate had reached a 26-year high of 10.2 percent nationwide. For many Americans and illegal immigrants who have been the hardest hit by this recession, the shadow economy is often the only way to get by. The trillion-dollar size of the informal market is yet another signal that people everywhere are struggling.

Could Wall Street's bull charge for good? Photo: iHeylen (flickr)

If Wall Street's excesses contributed to the decline of the nation's economy, could the same profit-driven environment really spawn a new generation of do-gooders?

Absolutely, says Wall Street Journal columnist David Weidner, and it's a process that's already begun, exemplified by those who seek profit by selling to poorer consumers. (I wrote about this general trend for Global Envision in "Slashing Health Care Costs, and Slashing, and Slashing", "How to Irrigate on a Shoestring", and Selling to the Poor, On Terms They Can Afford".)

Such entrepreneurs may be guided by a social conscience when they choose the products to fund and invest in and they may be willing to wait a little bit longer to turn a profit, but profit is still the end goal. "This new breed of Wall Streeter has turned the maxim 'greed is good' into 'greed can do good,'" explains Weidner.

A paragon of this model is The Acumen Fund, a non-profit venture fund that invests in business and entrepreneurial solutions to poverty. Its projects include replacing kerosene lamps with the safer and more affordable LED lamps, and pay-per-use toilets in Kenya.

Heidi Krauel, The Acumen Fund's founder, goes further "This is one of the new faces of capitalism," she says. For those just beginning to enter the world economic system, this is certainly good news.

Black males have the highest unemployement rate in the U.S. Photo: Jaci Berkopec (flickr)

Men — and black men in particular — are being disproportionately affected by the economic downturn in the U.S. According to statistics from the U.S. Bureau of Labor, the unemployment rate for black men is nearly 19 percent, Latino men come in at 12.8 percent and white men at 10.4 percent. The national unemployment rate reached 10 percent in November.

The Economist explores why jobs are more scarce for black men than other groups in a recent article.

There is no shortage of explanations for the gap. States with weaker labor markets, like South Carolina and Michigan, also tend to have larger black populations than low-unemployment states like Iowa and Montana.

Predominantly black neighborhoods are often a long way from where jobs are concentrated, in largely white suburbs, so those without cars cannot get to them.

Networking is another important factor in finding a new job. The Economist points out that black men aren't finding jobs through personal contacts as often as white or Latino men.

November's Comment of the Month was sent in by Sarah Standish of Portland, Oregon. Sarah commented on Alok Amatya's post Dairy Cows Fight Terrorism in Fallujah. She offers an alternate look at the relationship between job creation and terrorism. Sarah also wisely points out the need to look at more than one source of information before drawing conclusions. For her efforts, we will make a $25 donation to a project of her choice on Global Giving.

This Wall Street Journal blog post mentions that one study suggested that job creation may not necessarily reduce terrorist attacks:

When unemployment declined in Iraq and the Philippines, violence increased. The scholars say that one reason for this is that government forces may be able to pay off locals for tips on guerrillas more cheaply when unemployment is high. Another possibility is military crackdowns may increase unemployment, because communities are walled off, but reduce attacks by insurgents.

These ideas should definitely provoke us to think carefully about the relationship between violence and job creation, but I don't think they present any compelling reasons to stop focusing on job creation. It sounds to me like the authors have noticed an interesting phenomenon but don't know quite how to explain it yet. In a complicated issue like this one, a single study is probably not enough to draw any absolute conclusions.

Keep writing in and share your though-provoking comments for a chance to win $25 towards the well-deserving charity of your choice!

* Lest anyone think $25 is not a lot, consider these figures from our affiliate Mercy Corps: $25 delivers clean, safe drinking water to 50 people in one of eastern Congo's sprawling displacement camps. $25 provides seeds to farmers in cyclone-devastated areas of Myanmar to plant five acres of rice. $25 gives traumatized children in Darfur 12 weeks of activities and psychological care to help them heal.

It's hard enough to keep a business afloat these days, much less develop a hit product for one of the largest department store chains in the U.S. But that's exactly what the women of Rwanda are doing with a basket weaving business whose end product is sold in Macy's, reports CBS news.

It certainly isn't your average African aid project. When Terry J. Lundgren, Chairman and CEO of Macy's, first heard about the project from American founder Willa Shalit, he expected to see a charity. What he got instead was a proposal.

"I was prepared to make a donation," he said. "And [Shalit] said, 'no no. We don't want a donation, we want a business.'"

It's precisely this business aspect that makes the project sustainable. Last year, the women sold 40,000 baskets in the U.S., and their income is double the Rwandan national average. (View a photo essay about the weaving process here).

You can learn more about these inspiring women in this video:

Watch CBS News Videos Online

In the spirit of the season, we're challenging our readers to make a small (or large) gift to our parent organization, Mercy Corps. Mercy Corps shares Global Envision's belief in the power of global markets to alleviate poverty and employs a market-driven approach to their economic development programs around the world. We've set a symbolic goal of $575 — that's the number of posts we've published on Global Envision since the launch of the blog in April of 2008.

In that time we've written hundreds posts highlighting the economic tie-in on topics ranging from mobile banking to child brides in Yemen. We offered extensive coverage of the global economic crisis and followed how innovation in design is lowering the prices for things like drip irrigation systems, refrigerators and heart surgery in India. We've explained why big business may actually be an ally to the environment.

Please take us up on our challenge and pitch in a few bucks. Thank you for your readership, your comments and your support.

Happy holidays,

Chelsea Wieber

Climate change has wreaked havoc on the farmers of Ladakh. Can artificial glaciers help them adapt to global warming? Photo: Nokes (flickr)

Millions of farmers around the world depend on glacial run-off to irrigate their crops. But what happens when the glaciers disappear?

The people of Ladakh are already facing this challenge. About 80 percent of Ladakhis rely on water from glacial melting to irrigate their crops. But today, most of the low-level glaciers that were near the Himalayan villages of north India have already melted due to climate change.

The Christian Science Monitor recently profiled the efforts of Chhewang Norphel, a local engineer who started building artificial glaciers to help farmers have a reliable source of irrigation. Building artificial glaciers is surprisingly simple, the Monitor reports: "Chhewang diverts the unneeded autumn and winter runoff into a series of large, rock-lined holding ponds. As the days grow colder, the ponds freeze and interconnect into a growing glacier." This icy reservoir melts in early June, just in time to water the new crops.

But Chhewang's efforts aren't a long-term solution for the farmers in Ladakh, writes the Monitor. Man-made glaciers need to be restocked from glaciers high up in the Himalayas. If these glaciers melt, there will be no way for Ladakhi farmers to water their crops and the land could become barren.

China's carbon-capture technologies help reduce emissions from coal plants. Photo: ishmatt (flickr)

At first glance, China appears to be exacerbating global climate change. The world's most populous country is the fastest growing industrial economy and the single biggest source of carbon emissions.

On the other hand, China may be helping green the world by making environmentally friendly technologies more affordable, says The Wall Street Journal.

China's vast market and economies of scale are bringing down the cost of solar and wind energy, as well as other environmentally friendly technologies such as electric car batteries. That could help address a major impediment to wide adoption of such technologies: They need heavy subsidies to be economical.

In other words, manufacturing anything in China makes it cheaper, and that applies to green technologies, too. That's been a major factor in the 30-percent drop in the price of solar panels over the past year, reported NPR.

The WSJ goes on to note that the country's research into carbon-capture technologies is also cutting-edge, working on procedures that could cut down on emissions from coal plants by storing some of the carbon produced underground rather than releasing it into the atmosphere. Manufacturers in developed countries are already interested in how they can apply it to their own facilities.

It's hard for any country to make the switch to greener energy sources, but if China succeeds in fostering innovation and cutting technology costs, the process could make the transition easier for countries all over the world.

Officially, Detroit's unemployment rate is 27 percent. But this number doesn't factor in people that are underemployed or are unemployed and have given up on the job search more than a year ago. In reality, the Detroit News says, unemployment is closer to 45 percent if you factor in these groups. That's nearly half of the motor city's workers.

Detroit mayor Dave Bing commented on the situation in a statement for the Detroit News:

Jobs are the key to revitalizing Detroit ... The statistics tell part of the story, but we can't run from the reality that the need for jobs and investment is far greater than any statistic could measure.

A Detroit street. Photo: NoneOther... {Captured In Lights}...(flickr)

Jared Diamond praises Chevron's environmental stewardship in Papua New Guinea. Photo: Arthur Chapman (flickr)

From Michael Moore to Jonathan Safran Foer, American liberals love to criticize corporations for violations on everything from the environment to human rights to animal rights.

But in some cases they're dead wrong, writes Jared Diamond — an American liberal himself. In a recent New York Times Op-Ed, he argues that big corporations can be a force for good in the fight against climate change, simply because they also stand to benefit by preserving the resources they depend on and reducing their costs through lower consumption.

Diamond draws on examples from three companies: Coca-Cola, Wal-Mart, and Chevron. All three are working to protect the environment in different ways for their own reasons. Coca-Cola depends heavily on water resources and is working to make its plants water-neutral, while Wal-Mart is making its operations more energy-efficient and reducing packaging waste. Chevron, on the other hand, practices a degree of environmental stewardship on the land it owns overseas that Diamond believes is superior to government stewardship of many national parks.

Why would these companies take on such projects? Diamond explains:

Lower consumption of environmental resources saves money in the short run. Maintaining sustainable resource levels and not polluting saves money in the long run. And a clean image — one attained by, say, avoiding oil spills and other environmental disasters — reduces criticism from employees, consumers and government. [...] [I]n the long run (and often in the short run as well) it is much more expensive and difficult to try to fix problems, environmental or otherwise, than to avoid them at the outset.

Diamond readily admits that not all big businesses are so admirable. But he maintains that when working to stop climate change, activists should focus less on working against corporations, and more on working with them to help them realize how much their own economic interests can be aligned with environmentalists' goals.

In 1978, the poor West African country of Liberia borrowed $6 million from a New York bank. The Liberian government promised to use the money to buy and develop an oil refinery, and to pay the money back in seven years.

Today it's not clear if either of those things ever happened.

Two years after the loan, the Liberian government was overthrown in a coup, which later led to a 14-year civil war. Meanwhile, the loan was bought and sold several times, according to allAfrica.com.

But now two investment funds say they hold the note and are entitled to $20 million from the current government of Liberia — a claim upheld by a London court. Today Liberia is led by a democratic government whose president is working with the IMF and World Bank to settle old debts. The Guardian says Liberia struck deals with most of its private-sector creditors, but these two funds are refusing to settle, demanding full payment through the courts.

A representative for the Jubilee Debt Campaign, a coalition fighting for debt relief for the world's poorest countries, accuses funds like these of "profiting from poverty."

As Al-Jazeera's Barbara Serra reports:

So-called vulture funds have been condemned by several governments for preying on the world's poorest states. They buy up the debt of near-bankrupt nations at a cheap price from financial institutions. They then sue those nations in international courts for the full value of the debt, plus steep levels of interest and penalty charges. Every year, developed countries spend billions of dollars to help pay off the debts of poorer nations, but vulture funds siphon off that money for themselves.

Even the lawyer for Liberia says this is a moral issue as well as a legal one. Get the full scoop from this Al-Jazeera video:

One of J-PAL's studies tested the effectiveness of computer-assisted learning in certain Indian schools. Photo: niyam bhushan (flickr)

A research group thinks the best way to determine whether aid programs work is to evaluate them using the scientific method.

J-PAL, short for for the Abdul Latif Jameel Poverty Action Lab, is a group of researchers - loosely affiliated with MIT - who help design and publish academic-quality studies of existing poverty alleviation programs in an effort to find out exactly what works and what doesn't. These researchers partner with non-governmental organizations (NGOs) to evaluate their programs. They also offer courses for other researchers to share their methods. (Class materials are available here for free.)

As J-PAL's website explains, the key to their approach lies in randomization, which is an important part of a well-designed study:

Suppose we would like to see whether one thing (e.g. "schooling") really improves a life outcome (e.g. "health"). The natural instinct is to compare the health of those who have schooling to those who don't. But this would be like comparing apples and oranges: People who have been to school are different in so many ways from those who haven't. Perhaps they have more advantaged social backgrounds, greater access to government services and so better access to schools. And only a few of these factors can be measured and accounted for in a standard statistical analysis. So this simple comparison — those with schooling to those without — may tell us little about the effect of schooling: It may instead be the effect of any of these numerous other differences like social background. If policy are set on the basis of such apples and oranges comparisons, quite a bit of disappointment may result.

J-PAL uses this approach to evaluate existing programs. For example, J-PAL researchers cooperated with an NGO called Pratham to study how much weekly computer use could boost Indian students' academic achievement. They introduced computer-based learning only into randomly selected schools that Pratham was already serving. Students at these schools received basic computer skills training and two hours per week of independent computer time with educational software. After a year, J-PAL found that these students' math test scores had risen, but that their other skills hadn't changed significantly — and all for slightly more money than another effective Pratham program J-PAL had also evaluated.

What makes J-PAL's work innovative is that such randomized studies haven't typically been used in evaluating poverty-alleviation programs, or even in the wider field of economics.

Such data is designed to help aid organizations and governmental bodies decide the most effective way to allocate their funds. For the extra cost of designing an extra study now, J-PAL believes, more money can be directed toward the most effective programs for better poverty-alleviation strategies in the future.

Check out this video to hear directly from Howard and learn more about Vittana. Photo: Vittana

Microfinance, as a poverty alleviation strategy, was popularized in the development sector thanks to the work of Muhammad Yunus. Traditional microfinance loans are distributed to small business owners and entrepreneurs with the goal of increasing the scale and profits of their businesses. What is surprising is that after more than thirty years of growth and popularity, the microfinance sector has largely neglected student loan programs.

One reason for this gap is that there has yet to be a proven track record of success for such loans. It was not until Yunus was awarded a Noble Peace Prize, and the astonishingly high repayment rates from borrowers were documented, that large scale funding institutions invested their resources toward microfinance. Vittana, a startup nonprofit were I currently intern, is working to create a track record of microfinance for student loans in developing countries by using a peer-to-peer lending platform.

Student loan programs are effectively nonexistent in countries outside of the US and Europe. Vittana helps students like Howard Rene Alvarez Morales receive the funding they need to get a higher education. Howard is a 21 year-old law and business management student at the Universidad de Ciencias Comericales in Nicaragua. He is an ambitious student who goes to school on the weekends, works as a legal assistant during the week, and takes English classes at night. In order to complete his thesis and get his degree processed, his university charged him a fee of over $1,000, a large sum of money he did not have. In an interview Howard said, “The main problem I have encountered is finding the financial means to finish my degree.” Vittana was a part of Howard’s solution.

Vittana formed a partnership with the microfinance institution (MFI) AFODENIC in Managua, Nicaragua. Our staff provided the expertise, and individual small-scale lenders provided the capital needed for AFODENIC to establish a sustainable student loan program. Howard received an student loan of $1,044 and was able to pay his school fees. The law and business management degree he is working toward is projected to increase his annual income from $2,000 to $12,000. Beyond Nicaragua, Vittana has MFI partnerships in Peru, Paraguay, Mongolia, and Vietnam and will soon be expanding to additional countries. Our long-term vision is a world where students, no matter where they live, have access to higher education.

Howard is pursing his degree because what he wants most “are the means to work and succeed, and everything begins with the first step.” When that first step is a degree, it is a giant stride toward ensuring that students and their families stay out of poverty and have more sound economic futures. Thanks to Vittana, when I imagine microfinance borrowers, I no longer only see animal farmers, salon owners, and the like. I also see students like Howard.

What can you do to help?

It is because of lenders like you and me that Vittana students have access to higher education. Visit www.vittana.org to find the student you connect with and make a loan today. Alternatively, purchase a Vittana Gift Certificate to empower someone in your life to become a lender.

We’d love to hear what you think! questions@vittana.org

Cell phones are touching the lives of Tajikistani women in many ways. Photo: Kate B Dixon (flickr)

Technology, migrant labor, and patriarchy: three world systems that bring benefits to some have become a tragic combination for the Tajik women whose husbands are divorcing them remotely via text message, reports Radio Free Europe.

Tajikistan's struggling economy means that as many as one in seven Tajiks works abroad, often spending most of the year away. The country is also heavily dependent on the remittances that constitute half of its GDP. If migrant men decide to divorce their wives back home, some do so via cell phone by texting the word "talaaq," Arabic for "divorce." In Sunni Islam, saying the word three times is a recognized way for men to end their marriages.

Migrant Tajiks are largely beyond the reach of their country's laws. Neither text messages nor "talaaq" are legal methods of divorce there (unlike in other countries like Malaysia and Saudi Arabia, where courts have sanctioned the combination), but courts can't enforce this or other divorce proceedings — like alimony payments — on an absent husband.

These Tajik women are often left without homes or means of support when their marriages end. Respite may only come when they are fully integrated into the legal system — to match their immersion in the technology that has already deeply touched their lives.

Samasource works with entrepreneurs in developing countries like Jon Grosier in Kenya. Photo: Appfrica (flickr)

Students around the world face a particular paradox these days: what's the good of an education if there's no work to be found afterward?

Samasource — a small non-governmental organization based in San Francisco, California — is hoping to change this. They are partnering with U.S. companies and connecting them with people looking for work in places like Kenya and Pakistan using a several different methods, among them crowd sourcing website called CrowdFlower through which workers are paid small amounts for tiny increments of work (such as a few cents for filling in one blank in a spreadsheet).

As Samasource tells it, it’s a win-win situation: the cheap labor allows U.S. firms to cut costs, while providing higher wages for their 500 or so beneficiaries than they would likely have earned otherwise. So far, Samasource has focused on work in developing countries like Kenya (where the organization works with Somali refugees), Zambia and Pakistan — but also plans to expand into Mississippi, the poorest state in the U.S., notes the web magazine Reality Sandwich.

In all cases, Samasource's efforts hinge on the idea that work — not handouts — is what changes lives. "When you look at what the developing world really needs, it's a connection to markets," says Janah on the blog "Boing Boing." Markets provide an outlet for skills like English and computer literacy that students around the world have worked hard to obtain, and a livelihood for those who can put them to use.