Economic Analysis

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Economic Analysis

The article, “The Best and Simplest Way to Fight Global Poverty, by Matthew Yglesias focuses on the pressing concern of global poverty. Accordingly, the significant increase in the rift of economic growth between countries has raised concerns regarding the gap between wealthy and poor individuals. On a global scale, the respective disparity in terms of wealth and economic growth has been evidenced by the current division between developed states and developing countries. Even though several developed states such as the United States and countries within the Western frontier have engaged in the provision of financial aid to such settings, it has been rather difficult to determine the derivative implication on employment. In support of this assumption, Yglesias (para. 5) asserts that the long-term effect of such aid may be ambiguous especially in relation to the conditions that surround the affected individual. For example, conditions that consistently exhibit low pay and salaries may actually restrict the employee from increasing his or her productivity despite the intervention of financial assistance from developed states (Yglesias para. 5).  

The presumption asserted within the article correlates generally to the notion of unemployment in developing countries. Indeed, the issue of unemployment has always presented a significant concern for developing countries. This is based on the restrictive impact that the aforementioned factor imposes on economic growth. Generally, high levels of unemployment imply that the level of productivity within an economy is limited from realizing its full potential if all conditions are constant. As such, the limited levels of productivity contribute to lower levels of economic growth. For many developing countries, the level of unemployment largely affects the youth who are actually capable of imposing positive impact on economic growth if provided with the chance to work (Nafziger 296). However, the provision of a nominal occupation or job opportunity does not necessarily translate into increased productivity as asserted in the article. This is because of the lack of incentive to actually work hard which leads to little or null growth within the economy. In this respect, the supply of adequately paying occupations may actually increase the economic growth (Nafziger 296).

Despite the seemingly simple aspect of the solution aforementioned as per the article, it is imperative to note the disparity that may actually arise in respect to the proposed solutions. Superficially, the provision of well-paying occupations to the unemployed may be a welcome step towards the eradication of unemployment and the reinforcement of economic growth for many developing countries. However, it is also possible that the intended effects will remain unrealized. For instance, the transfer of financial assistance to poor American civilians may have asserted considerable success, especially in terms of unemployment and increased economic growth (Yglesias para. 2). Despite this, the global destitute, especially those that populate less developed countries, may require solutions that are ironically complicated in contrast to the ones aforementioned. This is because of structural factors such as urbanization and development, which seem to occur at different levels in relation to developed and developing countries. For the poor in less developing states, the occupation of rural areas is imperative in ensuring participation in subsistence farming (Yglesias para. 2). 

Even though the engagement in farming within the rural areas may be deemed as an occupation, it does not necessarily abide by the aspects of employment as identified in developed countries. In fact, such individuals may be seen as unemployed. Nafziger (301) asserts that agricultural labor is a form of disguised unemployment. Accordingly, individuals that operate their farms may actually be taking part in the provision of services that do not necessarily require operation on a permanent basis. Such labor is actually underutilized and contributes further to high levels of unemployment in most developing countries. While the article appears critical of financial assistance, it objectively establishes the possibility of better results in terms of productivity and economic growth surrounding the provision of money to unemployed youth groups. Using Uganda as an example, it is evident that the financial assistance provided by the government to half of the 535 groups in the state asserted benefits in the long-term since most of the finances was utilized in the attainment of skills as well as business resources (Yglesias para. 2).

The insistence on the acquisition of skills arises from the notion that education plays a huge role in reinforcing productivity and eventual economic growth (Chou, Liu, Grossman, and Joyce 34). For the youth groups that succeeded in attaining long-term gains, skilled-trade practices and participation within small enterprises in the services and industrial sectors was rather significant and particularly beneficial in augmenting Uganda’s economic growth by reducing the number of unemployed youths. The same illustration may actually be effective in countries such as Pakistan and Indonesia due to the considerable presence of rural youth affected by continued disguised unemployment (Maccini and Yang 1013). Rather than engage in the provision of jobs and occupations that do not contribute to long-term economic growth and productivity, efforts should concentrate in the supply of financial resources in order to encourage significant participation in the attainment of skills necessary to enable skilled trade and establishment of small and medium enterprises.

Works Cited

Maccini, Sharon, and Dean Yang. “Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall.” American Economic Review 99.3 (2009): 1006–26. Print.

Chou, Shin-Yi, Jin-Tan Liu, Michael Grossman, and Ted Joyce. “Parental Education and Child Health: Evidence from a Natural Experiment in Taiwan.” American Economic Journal: Applied Economics 2.1 (2010): 33–61. Print.

Nafziger, E. Wayne. Economic Development. Cambridge: Cambridge University Press, 2009. Print.