Home » Earning Money in a Global World, Economic Opportunity, Social Entreprenurialism

Changing Economies

11 April 2009 2 Comments

In third world countries, it is the natural response of international humanitarian workers to want to increase the pay of impoverished local workers as much as possible. Compassion kicks into action when confronted by the harsh realities of families of ten subsisting on the equivalent of two U.S. dollars a day.  The individual in a position able to provide a pay raise feels compelled to do so.  Aid workers have learned the hard way, though, of the unintended consequences of such actions.

When groups of local persons working for international missions suddenly make more money, what happens?  At first, their families are more well off.  Meals are better.  But then, as more and more make more money, the local stores catch on and raise their prices.  The hundreds of thousands who do not work for the mission are now in far worse financial straights then before the mission entered.  The loaf of bread that was twenty cents is now forty cents.  But they still earn two dollars a day.  Even the few locals who were lucky enough to obtain a better paying job with the humanitarian mission now must pay more for their bread- offsetting any gain.  In sum, the final situation is worse on a larger scale than before the humanitarian mission arrived.  This hazard has long been recognized.

But a funny thing has happened in the newly globally interdependent world.  I saw it recently when I asked some Iraqi friends in Basrah for quotes to translate a book from English to Arabic.  The quote:  $17/hour.   This is, in fact, more than many of my friends in the USA make.  Living in a country where less than five years ago the average wage was $2/day or less, some Iraqis are now charging $17/hour for their services.  What has happened?  Iraqis have been empowered to discover the laws of supply and demand.  And what they have is in demand. 🙂

2 Comments »

  • Kelly Brown said:

    I really like your post. Does it copyright protected?

  • admin said:

    Yes, it is my copyright but if you would like to use it elsewhere let me know how you would like to use it.

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