Pakistan, known for its textiles, would like the freedom to sell these wares in foreign countries, not just in local shops. Photo: Benny Lin (Flickr)

After environmental disasters, nations often rush to pledge relief aid. But how well-meaning are these donations? If countries were truly acting altruistically, they might also consider amending their trade policies, as Pakistani textile manufacturers argue in the Wall Street Journal.

In Pakistan, textiles are a major part of the economy. “The country's textile sector directly employs 3.5 million people, accounting for 40 percent of urban factory jobs,” writes the Journal. Overall, textile-product exports account for over half of Pakistan's total exports, so any restrictions placed on the sector have a significant impact on the entire economy.

As a result, the cost to Pakistani textile producers from U.S. barriers to trade is considerable, reports the Journal.

Abolishing American tariffs, which currently stand at an average 17 percent on cotton pants and shirts from Pakistan, would boost the nation's textile exports by $5 billion annually, government officials and factory owners estimate.

This sizable loss in income and the effect it has on the economy is integral to reforming Pakistan's economy. Neither the aid that Pakistan receives, in general, nor pledged aid in response to recent flooding, will be enough to lift Pakistan out of poverty, advocates say.

The recent flooding has profoundly impacted Pakistan and made this an opportune time to highlight grievances over the use of aid versus trade. Advocates for lowering trade tariffs are using the inflows of aid and heightened focus on rebuilding Pakistan’s soggy economy to show that most countries’ donations are inadequate.

The crux of their complaints is that the U.S and other donor nations could do far more to help countries such as Pakistan recover if they would stop restricting trade, allowing manufacturers and merchants to prosper and help the economy recover.

When put into perspective, using aid donations to signal support for development does ring a bit hollow, as these numbers cited by Global Issues demonstrate.

The total cost to developing countries of restrictions on textile imports into the developed world has been estimated to be some $50 billion a year. This is more or less equivalent to the total amount of annual development assistance provided by Northern governments to the Third World.

So, as the article continues on to say, “we take back with our left hand every cent we give with our right," a practice that has been understandably met with criticism in the developing world.

Surely the aid given to help ensure there is adequate food, water, and sanitation for flood victims doesn't go unappreciated. However, looking to the future — a necessary response to any disaster — some Pakistanis are calling on donor countries to reevaluate policy, not just pull out their pocketbooks.

A sweatshop in Los Angeles, California. Photo: daveblume(flickr)

The term "sweatshop" is often associated with humid and cramped factories, where wages are usually low and conditions are harsh. Now, one company is making a name for itself by making these work areas a little less "sweaty". The New York Times recently profiled a company that is promising to pay workers a living wage on top of offering better working conditions.

Workers employed by Knights Apparel in factories all over the world are guaranteed just treatment. In addition to getting higher than living wage salaries — which for some more than triple the minimum wage — they can join unions and work in a comfortable space. The president of Knights spent more than $500,000 to renovate one factory in the Dominican Republic for its workers, according to the Times article. He “called for bright lighting, five sewing lines and pricey ergonomic chairs, which many seamstresses thought were for the managers.”

These conditions, though, come at a high (and risky) cost for the company, which must compete against other cheaper apparel companies that offer less to their workers. T-shirts sold wholesale by the company cost about 20 percent more than those sold by a company that pays workers minimum wage. And that doesn't include retail markups.

Knights Apparel may have an advantage, though. It works with a group called the Worker Rights Consortium that pushes college-logo apparel companies to treat workers justly. Barnes and Nobles College Booksellers will promote Knights widely on colleges across the country. Though the company is still unknown, workers' rights issues are familiar on college campuses. The company couldn't have found a better match.

The company has also gotten the attention of Nike, which says it will watch the campaign closely. As for the workers of Knights Apparel, their lives have changed drastically. One woman using her salary to build a house for her family says, "I feel blessed". Another tells The New York Times that the difference between the new factory and others is "heaven and earth".

The use of sawdust stoves is making lives easier for small-scale farmers throughout the timber regions of Tanzania and Zambia, says an article in The Times of Zambia. These special stoves are a cheap, easy to use, sustainable alternative to using charcoal and are in many ways more effective.

According to the article, the sawdust stoves work well in this region because they run without electricity. Given that less than 20 percent of the population has access to electricity, it is necessary to have a non-electric source of energy like charcoal or sawdust.

Where sawdust stoves take a strong advantage over charcoal, however, is in its health and environmental impacts. A recent report on the health and environmental effects of cooking stoves describes how the charcoal trade is accelerating deforestation in the region, and the health problems caused by charcoal stoves, which includes, respiratory issues, eye irritation and carbon monoxide poisoning.

In contrast, the sawdust being used for these stoves is timber waste, so it provides a free and uniquely sustainable form of energy that would remain unused otherwise. According to the video below, the stove pays for itself in saved charcoal costs within two to four months. The stoves themselves are cheap and easy to make, which makes them accessible to those with very low incomes. In the video, cafe owner Roze Mgina explains the benefits of her sawdust stove:

I cook everything, rice, beans, donuts, using just one stove. If you put a bit of firewood in the vent, it gets hotter and cooks things quicker. When I use charcoal it gives me a headache if I stay a long time in the kitchen. With this one I don’t get headaches anymore because it doesn’t produce any smoke.

The Kisangani Smith Group, based out of Tanzania, won an Ashden Award for Sustainable Energy in 2008 for training blacksmiths to make and sell these sawdust stoves. The group has sold more than 3,500 stoves in Tanzania and elsewhere, and continues to provide jobs and training to aspiring blacksmiths.

No two economies are the same. Photo: Silent Observer (flickr)

With all of the talk of the global economic downturn, you'd get the impression that all economies are wallowing. Yet, this interactive map from the Guardian shows that, while some economies are down, some are also up. Find out which is which by passing your cursor over a country to reveal its GDP last quarter.

Admittedly this clever video has no obvious connection to economics. But it's happy and worth sharing.

Vive la Révolution! Haitians rebel in the Battle at Sainte-Domingue. Photo: Wikimedia Commons

This week, the ghosts of colonial misdeeds returned to haunt France.

EU politicians and others wrote an open letter to President Nicolas Sarkozy, demanding that the French government compensate Haiti for a past wrongdoing, explains the Christian Science Monitor.

A petition signed by 100 artists, scholars, and EU politicians that was released Monday called on France to give Haiti $17 billion for earthquake reconstruction. The money would essentially reimburse a fee French King Charles X charged Haiti after a revolt that ended slavery there. King Charles justified the fee as compensation for the loss of slaves and other property.

In 1804, Haiti won a bloody independence from France. But the small Caribbean country was still economically shackled to France until 1947, when the Haitian government finally paid off interest from their lofty independence debt of roughly 90 million gold francs.

Today, that sum is worth about $17 billion — a chunk of change that could surely go to good use helping Haiti rebuild. Haiti remains knee-deep in rubble six months after the devastating earthquake killed thousands and left millions without homes or good health. Yet despite the petition's plea, French foreign ministry spokesperson Christine Fages stressed France's commitment to Haiti, when she spoke with the Christian Science Monitor:

France gives Haiti $25 million a year, has given $30 million in humanitarian aid since the earthquake in January that left some 250,000 dead, has erased a $72 million in debt, and plans a total of $420 million more in aid through next year.

Although President Sarkozy dismissed the petition, he recently stated, "Even if I did not start my mandate at the time of Charles X, I am still responsible in the name of France."

Let's hope so, Monsieur le Président.

China's many factories are one aspect of its booming economy that propelled it to Number Two. Photo: Collin Manuel (Flickr)

China’s consistently high growth rates, strong exports, and expanding industrial sector have been turning heads. So it may come of little surprise that China’s GDP recently surpassed that of Japan, making it the second largest economy in the world, writes the LA Times.

Though China's total output has surpassed Japan's before, this time analysts predict China won't relinquish its lead. "[E]conomists say China is poised to be ahead for good," reports the LA Times. “China's economy will almost certainly be bigger than Japan's at the end of 2010," agrees the Huffington Post, because "China is growing at about 10 percent a year, while Japan's economy is forecast to grow between 2 to 3 percent this year.”

Yet, the Huffington Post points out that China's growth has not been unequivocally beneficial.

China's rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world's lowest.

In China, per capital income was $3,600 last year, standing in stark contrast to Japan's $37,800 per capita income, according to figures in the Huffington Post article. This intrenched disparity highlights how using GDP — a country's total output — can mislead when used as a measure of prosperity. Accordingly, many Chinese told the LA Times that their country is not necessarily better off than Japan, a sentiment explored in this LA Times video.

So, while China has further cemented its economic superstar status by gaining the title, "Number Two Economy," to truly flaunt these laurels, the country must also address its pervasive poverty as well.

A representative from Brazil (right) signs an agreement with the World Bank detailing Brazil's contribution to reconstruction efforts in Haiti. Photo: World Bank Photo Collection (flickr)

Fiscal austerity may be forcing some countries to cut spending on foreign aid, but this isn’t the case everywhere. In fact, Brazil has actually tripled its official aid budget over the last two years, and according to the Guardian, the South American country is quickly becoming a leader in aid to the developing world.

Brazilian generosity is helping to offset falling donations from other countries, says The Economist. A study by Oxfam that appeared in Newsweek found that between 2008 and 2009, foreign aid from wealthy nations decreased by $3.5 billion. But a table in The Economist shows that through a combination of programs and loans to developing countries, Brazil’s 2010 contributions could total around $4 billion, though this figure includes involvement by private contractors.

And Brazil's status as a country that can empathize with developing nations gives it an advantage when designing aid programs. For example, The Economist points out that Brazil can help other countries design successful tropical agricultural programs because they've already done it themselves. The same goes for providing low-cost HIV/AIDS treatment or setting up cash transfer schemes that work.

Brazil tends to finance social programs or agriculture projects around the world, but Africa seems to be a particular focus. The Economist mentions Haiti as an example, where the Brazilian government runs a program that gives families free meals if they take their kids to school. In Angola, Brazilian contractors are building the water supply. And in Mali, Brazilian researchers run an experimental cotton farm. These efforts are even more remarkable when you consider that Brazil is still a recipient of international aid.

But if that's the case, should Brazil really be donating all this money? According to both The Economist and The Guardian, Brazil has actually benefited from increasing its foreign aid. The Guardian states that the economic ties Brazil has built with developing countries helped it escape the worst of the financial crisis, while The Economist suggests that foreign aid could boost Brazil's credibility with other nations.

But no matter what, Brazil's commitment to helping poor countries in the global south might pay big dividends in the future.

Golden nugget. Photo: craig.hamnett (flickr)

Imagine this: Finding a piece of gold worth enough to change your life. Now think of what you could do with that money. You could buy that car you've always wanted, maybe open your own business, or travel the world. This is what is fueling a boom in gold prospecting in Northern Sudan. According to the Los Angeles Times, people from all over Sudan and surrounding areas are flocking to this region in order to dig for gold, hoping that they will be the one to strike it rich.

But it’s not only glitz, glamour, and fantasies which bring people here. Sometimes it’s a matter of survival. The L.A. Times suggests that many of these prospectors -- even college graduates -- have experienced extreme difficulties finding jobs in a country where nearly half the population lives in poverty. So they come to the desert, tools in tow, and begin the long and often unrewarding search for gold.

But the conditions are harsh. In the last year and a half, 40 people have died from malnutrition, thirst or injuries sustained from fighting with other gold diggers.

So why do people stay even after they find gold? Babiker Adam, a farmer who has joined the prospecting contagion, explains the draw to the L.A. Times.

"When you find the gold, it attracts you to stay longer. You will never say, 'I've got enough gold.' Never. I am staying here for two months. My children ask me to come home. But the gold is asking me to stay so I can have more. This is a chance in a lifetime."

The MPI would examine factors besides how much money this Nepalese woman makes picking tea. Photo: Thatcher Cook for Mercy Corps.

What exactly does it mean to be poor? Is it strictly a matter of income, or do other factors count as well, like education and health?

Oxford's new look at poverty may be able to help us better understand which hardships challenge the world's poor. The Multidimensional Poverty Index, or MPI, takes a more holistic approach to measuring poverty than previous poverty indexes, which have focused mainly on income, reports Planet Money. It was designed by the Oxford Poverty and Human Development Initiative (OPHI) in partnership with the United Nations.

The MPI examines three major aspects of poverty: education, health and living standard. More specifically, it considers 10 indicators that affect well-being on a household level, like quality of nutrition, type of cooking fuel, and if a family has a latrine. Ideally, the result is a detailed portrait of the nature and intensity of poverty.

So far the MPI has been applied to populations in 104 developing countries, which are home to nearly 80 percent of the world's poor. Check out OPHI's cool interactive world map to explore the poverty indicators for these countries.

Economists like the World Bank's Martin Ravillion question the MPI's methodology, claiming that it's a mistake to combine so many disparate factors into a single index as though they are equal in value. Ravillion describes the MPI's weakness like comparing "apples and oranges" here on Oxfam's From Poverty to Power blog.

But Sabina Alkire, co-creator of the MPI, insists on the importance of considering multiple aspects so we can understand not just who is poor but "how they are poor." Multidimensional models like the MPI could potentially teach us about correlations between various factors -- for example, does the fact that a child is malnourished relate to whether he or she is educated? OPHI explains how economists, governments and NGOs can apply the new index to their endeavors:

The MPI can be used as an analytical tool to identify the most vulnerable people, show aspects in which they are deprived and help to reveal the interconnections among deprivations. This enables policy makers to target resources and design policies more effectively.

In Pakistan, the wealthy can afford elaborate celebrations, though much of the country remains poor. Photo: Tela Chhe (flickr)

Pakistan’s economy is growing, but only the upper crust of society enjoy the gains.

Pakistan's economy has grown each year since 1951, despite severe drought, political instability, and the global recession. This economic success is apparent in the Times' description of high-rolling lifestyles in Islamabad.

Much of Pakistan’s capital city looks like a rich Los Angeles suburb. Shiny sport utility vehicles purr down gated driveways. Elegant multistory homes are tended by servants. Laundry is never hung out to dry.

But, while some are well-off, many still struggle to get by. Pakistan ranks in the bottom quarter of the Human Development Index in terms of quality of life. And more than 60 percent of Pakistan's population gets by on less than $2 a day, according to UNDP figures. Two professors from the Lahore University of Management Science argue that Pakistan's skewed tax system is a driver of poverty:

[T]he single most devastating factor for increased income and wealth inequalities in Pakistan remains the regressive tax system. Incidence of tax on the poor in the last 10 years has increased substantially (by about 35 per cent), while the rich are paying almost no direct tax on their colossal income and wealth.

The skewed tax system in Pakistan contributes to poverty by increasing income disparities and redirecting funds for social spending back in to the pockets of the rich, explains the New York Times. But only about 2.5 million out of an estimated 10 million who should be paying taxes actually cough up the money estimates Akbar Zaidi, a political economist with the Carnegie Endowment. As a result, Pakistan has had to apply for a $10.66 billion loan from the IMF.

All in all, the rich gain either because they don't have to pay into the system, or because, when they do, they reap the benefits. In an effort to get some of the lost tax dollars, local communities have adopted a creative strategy. They've started paying transvestites to rap on the doors of the wealthy and collect owed taxes. The New York Times captured these "tax collectors" all dolled up in heels and full make-up, but also swathed with the Islamic hajab in a recent video. Often the rich will pay up just to avoid having these "outcasts" linger.

But, this localized effort is really just a stop-gap measure until real reform is achieved. Many look to the U.S. as the necessary catalyst for change say watchdog groups, such as Probe International. The U.S. essentially subsidizes Pakistan’s economy by providing billions in foreign aid, giving the Pakistani government little incentive to reform the tax system. Thus, indirectly, U.S. aid inevitably hurts Pakistan's poor.

Many are fed up, such as Zaidi, the Times reports. Zaidi believes “[t]he Americans should say: ‘Enough. Sort it out yourselves. Get your house in order first. But you are cowards. You are afraid to take that chance,” he challenges.

Take one basic little black dress (LBD), a cool girl from India, sustainability, and education for underprivileged children… What do they all add up to? The Uniform Project: the brainchild of Sheena Matheiken of New York, who grew up in India.

Sheena vowed to wear the same dress every day for a whole year to show people it's possible to reinvent your basic wardrobe while creating new looks through smart accessorizing. The LBD was mixed and matched with vintage, flea market, eBay, and Etsy.com finds. Additional accessories came in the form of donations from eco-designers and hand-me-downs from fans.

Through the project Sheena promoted her personal passion for sustainability in fashion while also garnering an awareness around education for underprivileged children in India. The Uniform Project has an impressive following of 6,894 fans on its Facebook page, which is just over a year old. The cause has raised $95,090 for the Akanksha Foundation whose mission is to provide “a positive impact on the lives of less privileged children.”

The Akanksha Foundation provides children from India’s slums the same opportunity for quality education as those enrolled in public schools. In a country where it costs an average of $360 to send a child to school for a year, roughly 264 kids can attend a year of school thanks to the funds raised by The Uniform Project. Check out this video to learn more about how The Uniform Project came to be.

The Uniform Project Trailer from The Uniform Project on Vimeo.

Could Yemen be reaching a tipping point? Photo: Ahron de Leeuw (flickr)

Once called “Arabia Felix” or “happy arabia” by the Romans, today Yemen is the poorest country in the Middle East. With dwindling natural resources and a growing, deeply conservative Muslim population of 23 million, Yemen could be reaching a tipping point, claims a recent feature in the New York Times magazine.

Yemen is dealing with a potentially explosive combination of severe poverty, depleted oil reserves, water scarcity, corruption, and rapid population growth, according to Bruce Riedel, an expert in Middle Eastern policy at the Brookings Institution. Corruption is so bad, says the LA Times, that billions of dollars from Yemen's budget go to tribal elders and patronage networks in the form of kickbacks. And tribal feuding has become so dangerous that "as much as a quarter of the population cannot go to school or work for fear of being killed," according to the New York Times feature.

Yemen's ranking on this year's Failed States Index is further evidence of a downward spiral. Overall Yemen came in at 15th, up three spots from its ranking in 2009 and nine from 2007.

In response to Yemen's teetering security situation, Washington announced it was tripling its humanitarian assistance — up to $42.5 million — "to address the root causes of radicalism." But according to the Times report, "no one has a real strategy for Yemen..."

Moving Yemen towards a brighter future requires increasing the country's internal stability. Humanitarian aid projects aimed at meeting needs like food, education, infrastructure and community building are a good start. The World Bank is supporting nearly 40 active projects targeting these areas through interest-free loans, as well as offering microfinance loans through the International Development Association. Hopefully increases in foreign aid and international attention will usher in a better era for Yemen.

Cash transfers let people choose what they want to spend money on, like these buffalo. Other purchases could be anything from farm machinery to food. Photo: andrew chang (flickr)

When people donate to charity, they don’t usually expect their money to go straight into the pocket of a needy person half a world away. But giving money directly to the poor is becoming a global trend. It's called a cash transfer and it's much more than a handout.

In principle, a cash transfer is a handout. There are usually limitations on what a recipient can spend it on — no alcohol or drugs, for instance — but the idea is that poor people know what they need more accurately than aid agencies, according to an article in The Guardian. Recipients are free to spend the money on what’s best for their families, which could include food, livestock or farm supplies.

The recipients also gain a bit of purchasing power, which they may never have had before. Being in charge of their own spending can teach people fiscal responsibility says Duncan Green, Head of Research for Oxfam Great Britain. It can also improve their self-esteem. On his blog, he writes that “cash transfers can be a good way to support and empower people.”

But can the system work? In 2006, Oxfam handed out about three months worth of wages to a group of Vietnamese farmers. They studied the results periodically over three years and their figures show that the poverty rate in that area fell from about 65 percent to about 40 percent. Among other things, Green says that the Oxfam team saw “improved community infrastructure, new opportunities for the youth and unemployed, increased community/social activities, [and] increased female participation” in community activities.

Though there are concerns that cash could do more harm than good, The Guardian notes that 45 countries have some sort of cash transfer system in place. And The Boston Globe points out that Brazil and Mexico have been using cash transfer programs since the late 90s. As more and more countries follow suit, this growing acceptance could mean that the world is ready to revamp its aid strategy.

A revolutionary microbicidal gel can reduce a woman's chances of acquiring HIV by 54 percent. Photo: Cassandra Nelson/Mercy Corps.

Funding was a huge topic of concern at this year's International AIDS Conference, which took place last week in Vienna. Scientists, survivors, activists and others striving to defeat HIV are worried because key donor nations have been cutting funding since the recession hit, says Reuters.

The trouble is, these cuts are coming at a critical moment in the fight against AIDS. Just this week, the New York Times reported on a new vaginal microbicidal gel that cuts women's chances of contracting HIV by 54 percent. The gel places a rare power in the hands of women, and one dose could be even cheaper than a condom. Moreover, earlier this month scientists reached a critical breakthrough in the search for an HIV vaccine. The Wall Street Journal described the discovery:

HIV research is undergoing a renaissance that could lead to new ways to develop vaccines against the AIDS virus and other viral diseases. In the latest development, U.S. government scientists say they have discovered three powerful antibodies, the strongest of which neutralizes 91 percent of HIV strains, more than any AIDS antibody yet discovered.

As developments like these bring scientists closer to an ever-elusive AIDS vaccine, their research needs funding now more than ever, reports the Washington Post. At the conference, Global Fund director Michel Kazatchkine told Reuters that his agency needs $20 billion over the next three years to carry this research forward. And in an interview with CNN, Bill Clinton warned donor nations that reduced funding now will mean more gruesome costs later.

If we all do this, the consequences will be calamitous and you'll spend more money later ... You'll start having large numbers of people dying again, you'll have more political instability, more economic collapse, and it's going to cost us more money later. So it's not only going to be a humanitarian crisis. You'll pay now or pay later. So if it's at all possible, hang in there.

HIV/AIDS programs have saved and prolonged the lives of millions, but at the moment 5 million more are still in need of drugs. As a result, activists like Desmond Tutu are looking to President Obama to renew his financial commitment to AIDS funding.