Would an Increase of Wages in Bangladesh Destroy Their Economy?

by Jaime Bravo

 Since a lot of factories in Bangladesh were destroyed, many people wondered whether an increase of wages would destroy the (fragile) economy of Bangladesh. Many people are employed every day in the sweatshops, the factories where they are being turned to slaves by an economic paradigm that does not fit for them. As I argued in my last piece, they are poor but they are not stupid. In fact, since that happened, many people started saying that the benefits from the sweatshops are incredibly great because they provide of higher wages (considering that, if they do not work in factories (with increasing-returns) they will work in the agricultural sector (with constant-returns) and because they let them to save little by little so that they can provide their children with a better education and, in the long-term, with a better future. This is the theory. But the reality isn’t so sweet. Again, economists have something to say about this issue.

What do we (Really) Know From Economic Development? A Random Analysis of Poverty in Some Non-Developed Countries

by Jaime Bravo

  One of the things I have come across recently is the fact that we know very  little about poverty. I mean, really. We have the Millennium Goals, settled by the UN, and, yes, poverty is decreasing in some parts of the world. In a study I made a few weeks ago, I discovered a few facts about poverty in non-developed countries that are really important. I saw that there is a big problem with GDP all across the world. The study was based on a few countries (particularly, Germany, Pakistan, Bangladesh, Argentina, Afghanistan, Colombia and Spain) and there were three different groups.

Firstly, I considered GER and SPA as the completely developed countries; ARG and COL (those from Latin-America) are considered as the upcoming-completely-developed countries among the group. Finally, PAK, AFG and BAN are the less-developed countries included in the study. What I saw was that, even though the less developed  had a lower-income than the others, they were doing significant efforts (for example, the number of children in school in Afghanistan has increased a lot if we compare it with the upcoming-completely-developed economies).

Secondly, I found that the crisis hit harder to developed economies than to non-developed ones (the table I presented included data from Afghanistan, Albania, Bangladesh, Burundi, Colombia, Ethiopia, Germany, Kenya, Norway, Spain, Sudan, Thailand, France and Austria) in terms of GDP reduction. It could be because both the GDP and the exports decreased simultaneously. (The table presented considered the data from 2009, one year after the crisis started.) This is quite interesting: while non-developed economies are mainly importers of manufactured-products and exporters of commodities, they didn't stopped exporting commodities but importing manufactured products. The logic behind this is quite simple. Non-developed economies have a lot of unskilled labour and they have a lot of labour-intensive industries. In the other hand, developed economies have some kind of equilibrium between unskilled and skilled-labour and they have a lot of capital-intensive sectors/industries.

The Rise of Brazil

by Viva Avasthi

1. Why has Brazil experienced such rapid economic growth?

The graph below (despite its confusing title) shows the real GDP growth of Brazil compared to the US and UK.

To see how Brazil compares to other countries, click the words 'Explore data' on the bottom right of the graph.



Through its combination of a young population, plenty of natural resources and a fairly robust political system, Brazil has managed to create and sustain a boost in its economic state. The rise of China (which will be explored later in the series, but has been already been explained by our author Chris Pearson here) contributed to Brazil's economic development as China had, and still has, a massive demand for commodities due to its sudden surge in manufacturing. (For a simple and effective explanation of what commodities are, click here.) Brazil's massive levels of exports of commodities to China leaves it slightly vulnerable as China's economic condition has a direct impact on Brazil's economy.

During the first decade after the Cold War, America's relations with Brazil drastically declined, which marked the beginning of the end of the US' influence over Latin America. This resulted in Brazil having more independence in its political and economic actions, which allowed it to expand without the somewhat oppressive and exploitative US hindering its progress.

Aside from its commodities exports, Brazil has a fairly well developed high-tech industry. Brazil has clearly made use of the resources it has, but it could be argued that it is overly dependent on exporting commodities. However, notable examples of other areas where Brazil does very well globally are ethanol production and the aviation industry.

Ethanol production

Brazil is the second largest producer of ethanol in the world after the United States. In 2010, Brazil produced 486,000 bbl/d of ethanol, up from 450,000bbl/d in 2009. A combination of high world sugar prices, a poor sugar cane harvest, and underinvestment caused a precipitous decline in ethanol production in 2011.

Source: http://www.eia.gov/cabs/brazil/Full.html, Last Updated: Feb. 28, 2012

How Will The Rise of the BRICS Affect Us?

by Viva Avasthi

On Saturday 27th October I attended a lecture on the rise of the BRICS (Brazil, Russia, India, China, South Africa) as part of the University of Cambridge's Festival of Ideas. 

The speakers were:

Jaideep Prabhu
University of Cambridge
Judge Business School

Isabel Hilton

Journalist

Martin Jacques
Author
'When China Rules The World'

Michael Keith
University of Oxford

 In this series of six articles...

I will be presenting the economic development of each country from the BRICS in detail by addressing the three questions posed below. In order to do this, I will use my research as well as the opinions of the aforementioned speakers.

1. Why have the BRICS experienced such rapid economic growth?
2. How has this affected us?
3. How will this affect us?

The first article in the series is on Brazil, since it is the 'B' in 'BRICS'.

The final article will be an overview of how the BRICS have affected us and will affect us as a group of countries.

The graph below highlights the fact that there has most definitely been a rise of the BRICS. 



This graph measures the GDP based on the PPP (Purchasing Power Parity, which accounts for differences in spending power available through different currencies) of each country rather (than the more common) GDP based on current prices. 

I have included the data on the US, UK and Germany so that the BRICS can be compared to other non-BRICS countries. Please move your cursor over the graph to see the various statistics.

Sweatshops: a Curse or a Boon?

by Viva Avasthi

Sweatshops have been branded as places where the poor in developing countries are forced to work under horrible conditions for massive multinational companies such as Nike, for example. But is this really the case? Are there benefits to so-called 'sweat shops'?

Contents of Investigation:

1. Introduction
2. The problems with sweatshops
3. An alternative approach to the issues surrounding sweatshops
4. Conclusion