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 worker makes a lens for a digital camera in a Chinese factory. Rising wages could contribute to the growth of sophisticated manufacturing jobs in China. Photo: Robert S. Donovan (Flickr)

In China, wages are rising and the cost of labor is increasing. The consequences of this trend are affecting different economic groups in ways that spell significant changes for China’s economy.

The rising wages are forcing some companies to relocate to Vietnam or India, according to a recent article in BusinessWeek. In fact, labor only accounted for about 2 percent of a company’s total costs in 2000. Today, that figure is closer to 12 percent. Profit margins have fallen from 15 percent to 8 percent over the same time period, and to compensate, companies are moving production.

Over the past two years, millions of jobs have moved to China's interior or elsewhere in Asia as factory owners try to cut costs. In Guangdong, the mainland's top exporting province, wages have almost doubled in the past three years, and more than half the factories can't find enough workers. The number of migrants who traveled to coastal provinces for work fell by 9 percent last year, to 91 million.

By contrast, a recent article in The Wall Street Journal suggests that rising wages will help China’s economy by increasing the standard of living and the purchasing power of the working class.

Many economists see the upward pressure on wages as a good thing. Higher incomes for households could help their consumption take a greater share of the economy, reducing the need to rely on investment and net exports. If companies respond by moving their manufacturing bases inland — as they have already started to do — this could help reduce regional disparities in economic development.

So why are wages rising? According to BusinessWeek, government tax breaks and subsidies have encouraged farming and industry in China’s interior, causing people who would normally fill jobs in coastal factories to stay in their home provinces. And Chinese youth are seeking jobs in the service sector, not in manufacturing.

The Christian Science Monitor reports that the government "is keen on moving up the value chain" — meaning that rising wages will shift the focus of China's economy toward more skilled manufacturing as unskilled positions move abroad.

The pool of factory workers is already 22 percent smaller than it was ten years ago, according to figures by Merrill Lynch. And the labor shortage will likely continue as the population ages and wages continue to rise. China's days of being the go-to place for cheap labor may soon be numbered.

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

The Mekong River. Photo: tashandsmoked(flickr)

Before it reaches the sea, the Mekong River travels more than 2,500 miles through Tibet, China, Burma, Thailand, Laos, Cambodia and Vietnam. It is estimated that more than 60 million people depend on the river in some way. But the dams are changing the river and impacting the people who depend on it.

For better or worse, four dams are already in place and 11 are on their way, most of which will be in China.

China is working to reduce their dependence on coal, and get more power from renewable sources like hydroelectricity, according to IRIN, the UN news agency, which reports that "governments downstream claim the hydroelectric dams will cut electricity costs."

The dams currently generate over 3,000 megawatts of electricity, says Radio Free Asia. A Portland General Electric representative told me that's enough electricity to power a city about the size of Portland, Oregon — with a population of 575,000 people — for an entire year.

Besides energy, the dams also help to regulate the rivers flow. As IRIN reports, supporters are saying this is a pretty impressive perk, since the region's unpredictable rains often times cause a flood or drought.

But others, including locals, don't think so highly of the dams.

According to the Foundation for Ecological Recovery, the river's fishing industry alone is worth up to $3 billion annually, and the existing dams are already decreasing that profit. Mekong fisherman Ouy Chai tells Al Jazeera that "before you could catch 10-20 fish in one day and now you can fish all week and not catch anything." His wife says, "I'm scared. What will be left for our children and grandchildren to eat?"

In the same vein, many environmentalists are saying that the dams are harsh on the environment, causing erosion and harming biodiversity. Nguyen Huu Chien, head of the environment and natural resource management program at Can Tho University, tells Radio Free Asia that "it is like a blood vessel in the human body. When we build dams, it is like a blockage in the veins: it will definitely affect other areas."

Despite the protesting and petitioning efforts of those against the dams, IRIN reports that two new ones are currently underway.