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Sep 06, 2021
The pandemic caused the global economy to contract by 4.3% in 2020. Now, as the economic cogs begin to move again, some countries are unveiling an extra gear. This week, El Salvador will become the world’s first nation to accept Bitcoin as legal tender. It’s just one among a band of nations that are shifting their entire economic models in order to get the show back on the road. Others that were already leading with pathbreaking innovations are making efforts to consolidate those changes.
From Estonia’s digital revolution to New Zealand’s pandemic stimulus to Ghana’s cultural tourism forays, today’s Daily Dose lasers in on the surprisingly creative and often successful economies set to shape the world of tomorrow.
Estonia’s government runs in the cloud. Literally. This tiny European nation, where citizens pay taxes, vote and more by using a digital signature, is perhaps the world’s most digitized economy. While other economies suffered, Estonia’s gross domestic product grew by 5.4% in the first quarter of 2021. When the pandemic hit last year, 87% of Estonia’s schools were already using online learning tools. The country offers residency to remote entrepreneurs from abroad and is working on a digital nomad visa to allow international workers to live for up to a year in the Baltic state. Registering a business takes only a few days, offering vital breathing space for a host of tech startups to thrive just as Wise, Skype and Taxify have done.
2 - Pakistan
The fintech landscape in Pakistan has been on an upward trajectory for years, even though financial inclusion — ease of access to financial services across the board — stands at less than 14%. That makes it the world’s third-largest unbanked population, after China and India. But there are over 100 active fintech companies in Pakistan that are attracting overseas capital, despite the fact that a staggering 80% of e-commerce transactions still use cash. In the first half of 2021, startups in Pakistan raised $82 million, nearly as much as the amount raised in the previous three years combined. What’s more, almost half of that went into the fintech sector. The State Bank of Pakistan is trying to encourage moving money online by issuing licenses for fully digital banks.
3 - El Salvador
Nayib Bukele, the populist president of this Central American state, gets more headlines than his accomplishments deserve, his critics say. But he may eventually have the last laugh if one of his recent moves ends up benefiting the country as it transitions away from a service-based, agrarian economy toward a digital one. Earlier this year, Bukele signed a law making Bitcoin legal tender, becoming the first country in the world to do so. His government says Bitcoin transactions will be free of charge and is in the process of installing 200 ATMs to handle cryptocurrency integration into the economy. Bukele is banking on El Salvador’s geothermal potential to turn Central America’s tiniest country into a global crypto-mining hub.
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For decades, Ghana has been regarded as the spiritual home of the Black American diaspora. In 2019, it embraced that reputation. President Nana Akufo-Addo has built an ecosystem around repatriating people from the diaspora and masterminded a series of celebrations around the “Year of Return” in 2019 to mark the 400th anniversary of the start of the transatlantic slave trade. According to the Ghanaian government, the Year of Return injected $1.9 billion into the economy due to spending by tourists that year. The government is still charging ahead on a tourism economy drive. Citizens of Caribbean countries such as Barbados and Guyana have signed visa waivers with Ghana, and Black diasporans are being actively urged to resettle in the country.
2 - Dominican Republic
In recent years, the Brazilian butt lift has become a wildly popular cosmetic procedure, and the Dominican Republic has emerged as a mecca for people looking to resculpt their backside. Why? Because in its capital, Santo Domingo, clinics charge around half of what you’d pay in a city like New York. There’s a downside though: A cheap butt lift can also pose a lethal risk. The Dominical Republic may be easy on the pocket, but it’s become the most dangerous place in the world to have plastic surgery. Still, that’s not slowing the waves of overseas medical tourism. In 2018, more than 23,000 plastic surgeries were performed in the Caribbean country — two-thirds of them on foreigners.
3 - Benin
The economy of the Benin, Nigeria’s tiny next-door neighbor, benefits in many ways from the latter’s overwhelmed ports and porous borders. But that’s not all. Over the last several decades, Benin has positioned itself to receive thousands of students from across the border. Many private universities have sprung up across the country promising cheap tuition and an undergraduate degree in three years instead of the four years required in Nigeria. But who is benefiting the most? Although the schools are regulated by the Beninese authorities, their Nigerian counterparts argue that the franchise colleges have led to a decline in the quality of university curricula and that diplomas can easily be bought by students who are unwilling to study.
Last year, Switzerland was named the world’s most innovative economy by the World Economic Forum for the 10th straight year. And yet, in 2020 the country suffered its worst economic crisis in over four decades, with GDP shrinking by 2.9%. Today, a major recovery is underway due to the “mountains of cash” consumers saved during the crisis, which economists expect will fuel a spending spree. Last year, Swiss citizens saved $97.3 billion, a significant rise from the $65.6 billion saved the year before. At the height of the pandemic, the Swiss government, like the U.S., juiced the economy by disbursing compensation for lost earnings to help stabilize household incomes.
2 - New Zealand
During the early days of the pandemic, New Zealand and its charismatic leader, Prime Minister Jacinda Ardern, showed the rest of the world how to deal with the virus. In fighting off COVID-19 at the time, its economy rebounded quickly as domestic spending and employment figures rose. Under Ardern’s watch, the country also introduced a COVID-19 fiscal support package, which, at $7.3 billion, was one of the largest stimulus plans globally on a per capita basis. Some of the benefits citizens received included wage subsidies and additional money for low-income families. According to the International Monetary Fund, the “unprecedented fiscal and monetary stimulus prevented large-scale unemployment and insolvencies while preserving financial stability.”
3 - Vietnam
During the pandemic, Vietnam emerged as the top-performing economy in Asia, beating behemoths like China, Japan and Singapore. Its success in containing COVID-19 — despite being next door to China where the first case was discovered — was hailed by the IMF as a “roadmap for other developing countries.” This, despite trade ties to China and a health care system ill-equipped to handle a pandemic. Part of Vietnam’s success is also the product of a blossoming manufacturing industry, which has been boosted by its new trade agreements with the U.K. and EU. All of which has led the World Bank to project that the Southeast Asian country’s GDP will expand by about 4.8% this year, almost twice its growth in 2020. But that will depend on whether it can quickly bring a devastating new wave of cases under control.
Since gaining independence from Britain in 1966, Botswana has had one of the world’s highest per capita growth rates. And unlike many other nations around it, it has never suffered a coup or civil war, and boasts an economy that is relatively stable. Thanks to a harmonious relationship with De Beers, the mining company that extracts and manages its huge diamond deposits, the Botswanan government’s long-term vision has seen it apply profits from mining to improve the country’s infrastructure and strengthen the economy. But it’s not all roses. Unemployment now exceeds 18% in the country of approximately 2.3 million people, and there have been growing complaints of government efforts to throttle press freedoms.
2 - Guyana
Like Estonia and New Zealand, oil-rich Guyana has weathered the storm of the pandemic well. According to the IMF, GDP growth in the country is expected to reach 16% this year, making it one of the world’s best performing economies. The boost was triggered by the discovery of offshore oil fields in recent years — a blessing for what was once one of the world’s poorest nations. This in turn is spurring a major development drive, with spending on new bridges and an industrial rail network. As things stand, Guyana could boast the highest per capita oil production worldwide — one barrel per person per day — by 2026.
3 - Libya
The 2011 intervention by the U.S. and other international forces in part led to the ouster of colorful dictator Moammar Gadhafi and the civil war that followed. Since then, the North African country has been in a deep funk of chaos. But a decade on, the Libyan economy is returning from the dead, thanks to a recent truce by all sides in the conflict. Its external debt is one of the lowest globally, international flights have resumed, and, according to the World Bank, oil production is projected to reach 1.1 million barrels per day in 2021. The outcome of a general election scheduled for late December could either cement or reverse the gains made over the past year.
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