Economic reform in Cuba could lead to less government control over small businesses, like taxi services. Photo: raunov (flickr)

The Cuban government recently announced that it plans to lay off about 500,000 employees over the next seven months. This may signal the start of economic reforms that would privatize small parts of the centrally planned Cuban economy, writes the Economist.

In a speech announcing the government's decision, Cuba's only official labor union, the Cuban Workers Federation, said that the layoffs are motivated by a desire to curb inefficiency caused by cushy government jobs. As quoted in a story by NPR, the union says:

"Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls, and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct."

But in a country where Time Magazine estimates that the government employs about 90 percent of the labor force, where will 500,000 suddenly jobless people find work?

According to Reuters, the government plans to legalize self-employment in 178 different fields, ranging from restaurant ownership to transportation to construction. Small businesses will also be able to hire their own workers for the first time since 1968, when small businesses were nationalized. An article in the Economist says that the reforms will also let employees take control of some small state-owned businesses.

These reforms are meant to reinvigorate Cuba's stagnating socialist economy by mixing in tiny bits of capitalism. This tactic has been successful in both China and Vietnam, where communist leaders control mostly privatized economies. However, the New York Times suggests that the Cuban government might not want to overhaul the system the way China and Vietnam have:

The plan announced so far is much more modest than what the Asian countries have done. Instead, it seems designed simply to boost Cuba’s economic productivity in small-scale enterprises and thus loosen up a state-run economy and work force that have been sputtering for more than a decade.

U.S. experts on Cuba disagree on how effective the reforms will be. The University of Miami's Jaime Suchlicki told the Wall Street Journal that "there is no private sector" to absorb laid-off workers. But in the same article, Philip Peters of free-market think tank Lexington Institute said it depends on how committed the Cuban government is to true reform. "If they carry this thing out fully," said Peters, "it will vastly improve the welfare of thousands of families."

Everyday life on the Congo. Photo: Julien Harneis (Flickr)

The River has seen everything: poverty, political chaos, violence. It has been mythicized in great stories of expeditions (see Joseph Conrad's Heart of Darkness) and exploited by outsiders. Its winding white-water rapids symbolize the struggle of the people that live along it, who have always depended on it for their livelihoods. These people transport goods and food up and down the river, creating a "floating market" that brings life to the Democratic Republic of the Congo.

Learn more about the "lifeblood" of the Congo in NPR's latest in-depth feature on the river that sustains one of the poorest countries in the world.

Most Rwandans now have access to basic health insurance. Photo: Paul Evans (Flickr)

Rwandan Sunny Ntayomba marveled when he met a U.S. student and learned that many Americans lack heath insurance. Rwanda, one of the world’s poorest countries, insures 92 percent of its population thanks to a new government program described by the New York Times.

Health insurance has bettered Rwandans’ prospects for economic development by providing a safety net against unexpected medical bills. This fallback is a small but important guarantee while Rwanda's poor climb up the economic ladder out of poverty.

This guarantee is more important than you might imagine, according to several World Bank surveys, which indicate that improving health could be a key catalyst for reducing poverty. In one study, Dying for Change, interviewees identified illness as the most common cause of poverty — even more important than losing their job. In another, interviewees reported that poor health and an inability to access medical care perpetuated their poverty.

The program makes insurance available for a mere $2 a year, reports the New York Times. While this price is still steep for the truly indigent, for most it’s a steal. The annual premium is less than it would cost to seek treatment for diarrhea, pneumonia, malaria, malnutrition, or an infected cut.

The insurance plan covers these ailments but little else because the government has purposefully prioritized affordability. This strategy has worked well. Life expectancy has risen from 48 to 52 despite the country’s ongoing AIDS epidemic writes the Times. If only rich Rwandans could afford to join, it's likely this leap wouldn't have been possible.

This pioneering program is impressive as it serves the poor while improving their prospects of shaking off poverty. But the program’s success is far from certain as it relies on a sustained government commitment and inflows of foreign aid.

Still, in spite of the program's shaky prospects, this African nation deserves a nod for an accomplishment that has eluded much richer states.

Santosh Ostwal saw a problem and spent half a lifetime trying to fix it until he finally found the solution in an unlikely place — his cell phone. According to an article in The Economist , as a boy, Ostwal would watch his grandfather walk miles a day, back and forth, to turn on and off the irrigation systems for his crops. The walks were dangerous. Alone at night, farmers faced muggings, wild animals and snakes in what Ostwal saw as an unnecessary journey.

Ostwal knew that life could be easier for Indian farmers and began devising a way to set the water pumps on a timer. In an interview with The Economist , he explains the need that he saw.

There are 3.1 million official connections of water pump sets in Maharashtra alone. The all-India figure is more than 1 billion. While farmers didn’t mind too much with the drill of walking up to the farm to switch on their motor pump sets and then head back home, I found that there was a strong resistance to walk back all the way to the farm to switch off their pump sets. A lot of water and electricity would be wasted.

The road to success was long and difficult. It began with a cheap alarm clock to trigger the system, which, according to The Economist, provided half an answer. It was possible to use the alarm clock to start the water pumps, but it couldn’t then be used to turn them off. While it certainly decreased the amount of walking, it did nothing to improve the water waste or soil erosion damaging crop outputs.

His next solution was to tap into existing radio frequencies using a remote control. This proved to be immensely expensive and difficult to get clearances to work on. Finally, after investing so much money that Ostwal, his wife, and two children were forced out of their apartment, he realized that he could instead tap into the wireless phone network. Within 15 minutes, Ostwal got the result for which he had been searching for nearly two decades.

The cell phone solution, which he has dubbed Nano Ganesh, provides the perfect answer. It uses already existing, cheap technology to start and stop the water flow from anywhere, sparing the farmers their long, dangerous walks. It also prevents soil erosion from excessive watering, which increases crop output for the more than 10,000 farmers across India. In fact, the technology has proven so useful that it is now being used in Egypt and Australia. And it's such a simple fix that it could continue to spread and ease the lives of farmers around the world.

For a full podcast interview with Santosh Ostwal, click here.

More women than men work in food preparation, one of the job categories expected to grow most in the U.S over the next decade, according to the Atlantic. photo: Give2Tech (flickr)

Are women taking over the economy?

Recent statistics show women have come out ahead of men in the U.S. recession. The Newsweek article “Women Will Rule the World” even dubbed the economic crisis a “mancession” as men have accounted for two-thirds of the 11 million jobs lost thus far. Men’s unemployment rates have also climbed to 10 percent, compared to the rate for women which now hovers at 8 percent, wrote NPR.

The Atlantic article “The End of Men" explained that the U.S. economy is shifting away from male-dominated industries like manufacturing that rely on physical strength and less-skilled labor. Instead, there are more professions that emphasize social intelligence and communication skills, like teaching, nursing and service-based industries. The consequence? More jobs where women are equally or, some argue, more qualified than men.

The face of the economy is changing, suggests The Atlantic. For example, the number of women exceeded the number of men on U.S. payrolls this spring. Men have since regained the majority, reflecting seasonal employment dynamics that make men more likely to work in summer jobs like construction, explains Nicholas Kristof of The New York Times. These advancements and others could be more a product of women playing “catch-up” rather than “forging ahead” of men, Kristof argues.

The evidence, however, might suggest that women aren't just closing the gap.

Lately, women have dominated the roots of economic success – higher education. According to The Atlantic, women hold 60 percent of bachelors and masters degrees and are expected to lead the U.S. middle class in the future.

The importance of higher education is reinforced not only by the decline of industries that rely on less-skilled, manual labor in the U.S., but also by the results of the latest recession. Workers with higher levels of education were far less hard-hit by the downturn, with unemployment rates around half the national average, explained David Leonhardt in his New York Times blog.

Women are more present in the workforce than they were in the past and their potential to revive the economy may be crucial. The Atlantic revealed that women outnumber men in all but two of the 15 job types that are expected to grow most over the next decade. These range from nursing to food preparation. Newsweek, alongside others, has touted female entrepreneurship as the possible key to future economic growth and recovery. In the U.S. alone, female-led firms grew by 20 percent versus an overall firm average growth of 7 percent.

The potential for female entrepreneurship to affect growth may be especially true in the developing world, where female education levels, wage rates and health indicators have even more room for improvement. Newsweek explored statistics from the Women’s Learning Partnership, which claim that “for every year beyond fourth grade girls attend school, a country’s wages rise by 20 percent, and the child-mortality rate dips by 10 percent.”

What does this all mean for the U.S. economy? Overall, it seems less about women catching up or taking over and more about their ability to drive the economy. But women's increasing presence in higher education, the workforce and entrepreneurial ventures, both in the U.S. and around the world, arguably positions them at the forefront of economic growth.

Heather Fleming has been named one of the World Economic Forum's Young Global Leaders for 2010. Young Global Leaders are recognized by the World Economic Forum as "exceptional young leaders who share a commitment to shaping the global future."

Born on an Indian reservation in New Mexico, Fleming knows first hand the difficulties people face growing up without resources many take for granted, such as running water or electricity. Her experiences eventually led to the pursuit of a degree as a civil engineer and the start up of Catapult Design, a company she co-founded with Tyler Valiquette. Catapult Design "is a non-profit firm providing engineering and implementation support to the thousands of organizations in need of technologies or products capable of igniting social change."

Fleming has worked with other like-minded designers and engineers as a co-founder of Engineers Without Borders, D2M and as a co-leader for Appropriate Technology Design Team. These design and engineering companies provide low-impact solutions that benefit the world with inventions such as the "turbulent air" turbine, improvements to the Hippo Roller--a water barrel with handles that can be rolled and a fuel efficient cooking stove for Darfur refugees that uses less wood.

See Fleming talk about her passion for the work she does in this video.

Educated citizens of developing countries often move abroad to find higher paying jobs. Photo: Jakko (flickr)

“Brain drain” sounds like a pretty scary thing, right? It’s the term often used to describe what happens to developing countries when their best and brightest citizens leave to find work abroad. But does it always have to be a bad thing? NPR’s Planet Money blog profiles a new study that suggests that emigration can have many benefits, especially for the migrants themselves.

For the study, economists John Gibson and David McKenzie tracked the top high school students from five countries over a period of 28 years. The countries — Ghana, Tonga, Papua New Guinea, Micronesia, and New Zealand — all have an especially high reputation for producing skilled emigrants. Gibson and McKenzie asked these people about their migration patterns and current ties to their homelands and concluded that it makes financial sense for talented citizens to leave developing countries to work abroad.

“The best and brightest stand to earn $40,000-$70,000 more per year by working abroad – which is at least two to three times as much as the developing country individuals would earn at home. Even accounting for differences in costs of living, this is a huge gain and benefit of migration for these individuals.”

Furthermore, migrants send an average of $5,000 a year back to their home countries. That may not seem like a lot when compared to New Zealand’s 2009 per capita income of $27,400, but consider that Papua New Guinea’s was $2,300 and Ghana’s was $1,500 (figures from the CIA World Factbook). That additional money gives developing economies a welcome boost.

Instead of worrying about brain drain, Gibson and McKenzie suggest that developing countries should "focus instead on the basics of providing the policy environment needed to foster growth and innovation at home." But until then, talented citizens from developing countries will probably continue to look for economic opportunities far from home.

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.