15-16/11/2022
The World Bank target for eradicating poverty by 3% is growth in GDP per capita of 4% every year
globally.
GDP is related to a profit (not revenue) generated within a nation. Divided per capita is GDP per capita.
The higher is the GDP growth the lower is the poverty in the country.
In the EU 20 to 25% of people are living at risk of poverty and social exclusion. We do not define the poor
by the number of $ per day, but what the person can afford and what choices and opportunities they have.
In the EU poverty is defined as 17% below the average income in a national level - relative measure.
Absolute measure - in each country Eurostat defines basic needs, if you can not pay it, you are in a
‘severe deprivation”. Roughly 10% of those 25%.
Microfinance is the result of the capitalist system, it’s also a part of it, where GDP defines growth.
Microfinance supports where the capital is needed.
WHY GROWTH IS EVIL?
If we talk about growth and numbers and consumption, we only talk about quantity, we are missing quality.
If we expect non-stop growth due to consumption, we are consuming useless goods, that if we drop the
quality of life might stay the same.
Moreover the consumption based economy is dangerous for the planet.
Solution:
Is there a way to produce GDP without hurting people and the planet?
Kate Rowarth produced a framework. We have to choose among businesses which are in between a
certain threshold related to hr and ecology.
17/11/2021
Billions of dollars are spent into intern.cooperation in Africa for nothing. Over the last years the aid grew
every year, while the GDP of the African countries is basically unchanged.
As soon as the foriign money influx is spent, the system collapses, since the entire economy is based on
foreign money. Often leads to political crises, coups, etc.
Possible solutions:
- Issuing bonds in the capital market - way to raise money, companies issue bonds that spread
between investors with the promise to repay with an interest rate. In this case a government of a
country issues bonds. In this case the relationship is multilateral and anonymous.
- Bank loan - bilateral contract.
- Raising taxes.
In addition the capital received through bank loan or bonds should be invested into the income generated
activity. Thus, increasing income the government receives more tax money that can be invested into the
infrastructure or another productive activity.
If the capital is not invested into the productive activity, it’s just a flow, ex: distributing food to the poor.
Searching for solutions for people not to count on charity or donors, we should think about how to deliver
tools (assets, equipment) and/or skills (knowledge, education, training) for them to take care of
themselves, to promote self-help. Self-help 90% goes to small entrepreneurs, but not all people are
entrepreneurs. Nevertheless only 10% can go to education and developing skills, that will help to be self
sustainable, to get a salary based job. Yet, microfinance in the vastest majority support small individual
entrepreneurial activity
