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Poverty fighting in Saudi Arabia and in USA Report

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Updated: Jan 14th, 2020

Introduction

Poverty is a major global scourge affecting billions of people around the world. Both developed and developing countries experience poverty-related problems. According to research on world demography, there are over three billion people who survive on less than $2.50 a day around the world. This population represents almost half of the world population. Additionally, the GDP of approximately forty seven poor countries is less than the wealth owned by seven richest countries in the world.

These statistics clearly illustrate how inequality in resource distribution among nations has continued to affect the living standards of people. In understanding the concept of poverty, it is important to double emphasize the fact that poverty cuts across the global screen, ranging from Africa to America through the Arab world. In other words, it is a problem that almost every nation tries to address continuously (Rosen & Gayer, 2010).

Based on the negative impact of poverty, there is no doubt that the wish of every leader is to combat this scourge permanently in order to raise the living standards of people. As such, there are preventive programs which have been adopted in most countries.

This report discuses some of the poverty prevention programs that have been adopted by Saudi Arabia and the United States in dealing with a global problem, threatening the lives of billions of people around the world. A part from principally focusing on preventive programs, the report further synthesizes causes of poverty in the two countries together with the economic impact of the proposed measures programs.

Poverty in Saudi Arabia

When most people think about Saudi Arabia, majority are usually clouded with the assumption that the country must be extremely rich based on the fact that it is the world’s leading oil producer. Saudi Arabians are therefore associated with wealthy living standards characterized by latest American cars, high level of technology, designer brands and fashion and innumerable high class malls around the country (Rosen & Gayer, 2010).

This school of thought carries a lot of weight even though the living standards for most Saudi Arabians contradict it. It raises the question of how the country benefits from petroleum products widely spread in the country. Can this be used to raise the living standards of millions of its people languishing in poverty?

Due to the presence of oil in the country like in most Arabic nations, a good number of Saudi Arabians understand the meaning of living a decent lifestyle. The government has significantly invested in fighting poverty by initiating programs that aim at alleviating the life of its people (Ramady, 2010).

Both healthcare and education are given free of charge to Saudi Arabians by the government. However, history has continuously registered low enrollment in education institutions, leading to a higher rate of illiteracy in the country than one would expect. Moreover, all Saudis who have attained the age of adulthood are entitled to a piece of land from the government and a loan to enable them construct a house and develop a foundation for their life.

Like many other countries around the world, Saudi Arabia has experienced fluctuations in economic performance and stability. Its highest GDP per capita was in late 1970s and early 1980s. This realization was mainly attributed to high oil prices, leading to enormous revenue from oil sales. The living standards of most people were also commendable as every person was valued at a GDP of US$16,650 in the year 1981.

Unfortunately, this trend did not continue as the prices of oil drastically fell around the world, resulting in economic stagnation (Ramady, 2010). Coupled with Saudi Arabia’s fall in oil production, the GDP assumed low figures as people struggled to cope with the situation that was leading to poor living standards.

By late 1980s, the country recorded a GDP of US$5,500. With other factors coming into play like the Gulf War that led to the rise in oil prices, Saudi Arabia experienced quantifiable economic growth once again. Consequently, it recorded US$9,000 as GDP in the year 1999.

Even though Saudi Arabia has a widespread social safety net, inequality in resource distribution and allocation has augmented hatred among majority of its poor people. By the year 1999, the National Commercial Bank indicated that out of the twenty million citizens, wealth of the nation was being controlled by only one hundred and twenty millionaires.

This national wealth that was thought to benefit the entire population equally was estimated at US$400 billion. As a result of this skewed revelation, twenty percent of men in the country, ranging between the age of twenty and twenty nine years lacked employment. This saw most households experience extreme strain in meeting their financial needs.

In responding to the situation that was becoming more evident, the government initiated programs aimed at creating employment for Saudis in the late 1990s. Between 1995 and 2004, there were successful strategies whose principal objective was “Saudiization” of the labor force (Ramady, 2010). Furthermore, there are several legislations that have been adopted requiring five percent of the population to be part of the private sector.

To achieve this target, most Saudi firms are required to have at least five percent of employees being made up of Saudi citizens. In other words, the government has remained focused on limiting chances of employment for foreigners and increasing opportunities for local citizens.

Some of the measures which have been incorporated include nonrenewal of work permits and raising visa charges that are to be paid by employers before hiring foreigners. Other programs aim at ensuring that more citizens enroll for education to fight high levels of illiteracy and making healthcare more affordable among more citizens (Ramady, 2010).

Poverty prevention in Saudi Arabia

As mentioned above, poverty remains a major problem affecting the people of Saudi Arabia. Emanating from intertwined factors like unequal resource sharing, illiteracy and politics, the government has remained focused at establishing strategies and programs, which target mitigation of the impact of poverty and lowering its escalation rate among Saudis (Ramady, 2010). This segment of the report examines some of the projects that have turned to be a source of hope for many people who have learned to survive under tight financial limits.

One of these programs is the social insurance plan. This is considered as the oldest program that was initiated to alleviate the living standards of Saudis. The force behind this establishment was the Royal family through a decree and efforts from several offices in the country.

The main aim of this program was to promote the living standards of poor and needy people in Saudi Arabia through pensions. Common beneficiaries of the initiative include but not limited to orphans, handicapped individuals and helpless women (United Nations, 2002). The program also offers social help to disabled people, families of prisoners and those affected by disasters. Additionally, the social agency runs productive projects, which enable poor people to meet their daily needs.

Charity organizations are also common in Saudi Arabia. These voluntary organizations usually comprise of Saudis who are mainly interested in doing social work. In attempting to improve the living standards of people, charities are involved in a wide range of activities including monthly assistance, financial assistance to newly married individuals, assistance to patients in hospitals in homes and hospitals, establishment of hospitality homes, helping the orphans and handicapped and care for the elderly (United Nations, 2002).

In general, the programs are aimed at augmenting social development and improving the living standards of poor families by addressing existing problems.

The government has also been a key player in the management of poverty in Saudi Arabia. Since the development of the social insurance agency, the government maintains its support and commitment by ensuring that funds are allocated during national budgetary allotment.

Besides this allocation, the amount allocated has continued to increase up to four times since the agency was established. The social insurance allocation increment ranged between 42% and 38%. In the year 2002, the total charity value was 119,979,410 Saudi Riyal (United Nations, 2002).

In responding to the situation, the Ministry of Labor offers 50,000 Saudi Riyals to individuals who qualify to be technically handicapped. This approach is aimed at allowing handicapped people to run businesses and earn a living. In addition, the launch of a retirement system by the Saudi Arabian government was highly applauded as one of the ways of considering the elderly in the system.

The scheme allows retirees to receive a reasonable amount from the government to allow them lead a normal life after retiring from the civil service. According to the scheme, civil servants are deducted 9% of their salary, which is added to 2% of the government’s budget (United Nations, 2002). This money is given as full salary after retirement with the lowest earner receiving 1,500 Saudi Riyals. This applies to those citizens who have served for at least forty years and thirty five years for military officers.

Individuals working in the private sector are also covered by the social insurance. For instance, those who get handicapped while on duty are compensated, based on the assessment done by officials from the insurance organization concerned. In such cases, employees are allowed to contribute 5% while the employer gives 8% towards the insurance system.

In ensuring that its citizens have decent houses, the government has established Specialist Lending Corporations, whose mandate is to offer loans to citizens with affordable terms (United Nations, 2002). As a result, there is no interest charged on these loans to allow low class people to improve their housing.

Moreover, the government initiated the Saudi Industrial Development Fund which offers long-term loans for up to five or ten years, mainly for industrial projects in the country. The main advantage of this approach is to encourage more investors to construct industries that would in turn absorb majority of poor and jobless people as a way of improving their living standards.

The land development fund is also a program run by the government, which supports property construction in towns and villages in order to curb immigration (United Nations, 2002). This allows working people to be equally distributed in the country for nation-wide economic growth.

Another important program in fighting poverty is the establishment of the Saudi Arabian Agricultural Bank. This bank promotes farming by providing easy and flexible loans to farmers to allow them advance farming. Farmers further receive agricultural relief to enable them purchase agricultural inputs and equipment (United Nations, 2002).

On the other hand, Saudi Credit Banks have been started by the government, giving financial aid for home refurbishment, marriage loans and business loans for professionals. Coupled with good infrastructure, the Saudi Arabian government aims at lowering poverty levels in the country.

Poverty in USA

Despite the fact that the United States prides being the world’s most powerful nation, the problem of poverty haunts a number of its citizens who find it hard to pay bills and live in poor standards. By the year 2010, the country registered 15.1% as the proportion of people who qualified to be classified as poor. According to the census bureau, poverty percentage recorded in the year 2010 was the highest in America’s history since 1993.

Between 1993 and 2003, the bureau registered a continuous decreasing trend, reaching 11.3% in 2000 (NPC, 2011). Although recession was argued as a contributing factor towards the increase, some of the high figures were registered before the recession period. Nevertheless, a better understanding of the poverty status in the United States goes beyond analyzing statistical data collected by the census bureau.

What is imperative is the examination of the living conditions for those people considered as poor by the government. Of great significance is the manner in which many citizens view and understand “poverty”.

Poverty is measured by a number of parameters including but not limited to the inability to find healthy food, shelter and good clothing for one’s family. However, a few people included in the poor population fit in this category of people in the society. Notably, material hardship is principally limited in both severity and scope (NPC, 2011).

In this approach, it is equally important to double emphasize the fact that the living conditions of people in the U.S living in poverty have steadily improved. As a result, several goods, which were initially considered as luxuries for the middle class people can be acquired by poor households.

This could be attributed to a drop in prices as a result of the introduction of new products (NPC, 2011). These declining prices for several amenities have widely been used to argue that poverty is not a serious issue Americans. Although most households in the U.S may have the conveniences of life, they normally end up suffering from denial of basic needs for humanity like housing and food.

What causes poverty in America? Poverty is caused by numerous factors in America. One of the stereotypic explanations for the existence of poverty in the American society is the fact that poor people are the main causes of poverty, since everything is possible in the U.S. Several poor people have been accused for the escalation of the situation for not seeing beyond the challenges and luxuries of today (NPC, 2011). Poor people have also been coined as fatalists who relinquish themselves to a culture of poverty in which almost nothing could be done to reverse the situation.

However, this theory of blaming the poor for poverty is unrealistic since there are several poor people willing and ready to work. As such, other factors like level of education have to be considered. Due to lack of wages and minimum opportunities to receive higher education, most of the poor people get no employment consideration as compared to their learned counterparts (NPC, 2011).

Other theorists believe that some poor people would rather be given welfare payments than accepting low-paying jobs like restaurant attendants and maids among others. In the U.S, poverty leads to homelessness, high exposure to communicable and nutritional diseases and low education.

Poverty prevention in USA

In addressing poverty in the United States, it is worth noting that the War on Poverty began several decades ago when President Lyndon Johnson proposed an important legislation, a move that was seen as the president’s response towards poverty in 1964. At that time, the country’s poverty rate was approximately 19%. This proposal by President Lyndon resulted into an anonymous adoption of the Economic Opportunity Act (NPC, 2011).

Under this act, the Office of Economic Opportunity was established to mainly foresee the application of local funds in combating poverty in the country. President Johnson further believed that there was need for the federal government to expand its role in providing education and affordable medical services to American families stricken by the poverty.

Although this proposal was highly welcomed, it lost its popularity in the 1980s and 1990s when it was replaced by the Personal Responsibility and Work Opportunity Act in 1996 (NPC, 2011).

Another program that has been successful in fighting poverty in the United States is the Food Stamp Program, which focuses on low-income individuals. This program has received massive support from the political class, recording success in insurance of unemployment, childcare assistance and TANF cash welfare to low-income earners (Weill, n.d.). The program overcame numerous challenges, which led to several initiatives of its nature.

In expanding its coverage area, the number of recipients grew from 17.2 million in 2005 to an average of 26.5 million people per month in 2007. Besides the Social Security, the Food Stamp Program is as large as any other American program established to alleviate the living standards of low-income earners. Its support from politicians is attributed to effective outreach, advocacy and thorough reforms. The integrity of the program has also been augmented by the introduction of the Electronic Benefits Cards (Weill, n.d.).

Another American program designed to deal with poverty is the AmeriCorps VISTA. This was approved in 1964 and founded in 1965 by VISTA, Volunteers in Service to America. VISTA was later integrated in the AmeriCorps Network of Programs in the year 1993 and has remained active in the fight against poverty in the U.S for approximately forty five years (AmeriCorps VISTA, 2011).

Impact on the economy

Although anti-poverty programs are commendable in improving the living standards of people in both U.S and Saudi Arabia, it is important to note that this approach may have significant impact on the economy of a nation. In cases where the government is fully funding these programs, a lot of funds could be used, which would otherwise be utilized to run and establish development projects (Rosen & Gayer, 2010).

Recommendations and conclusion

Based on this report, it suffices to note that poverty in Saudi Arabia and in USA remains a point of concern. Although the two countries exhibit different causes and programs initiated to deal with scourge, there is need for these programs to be supported by politicians and other stakeholders in ensuring their success. Additionally, caution has to be taken in adopting a given program to avoid strenuous cases on the economy of the affected country.

References

AmeriCorps VISTA. (2011). . AmeriCorps VISTA. Web.

NPC. (2011). . National Poverty Center. Web.

Ramady, M. (2010). The Saudi Arabian Economy: Policies, Achievements, and Challenges. New York: Springer.

Rosen, H., & Gayer, T. (2010). Public Finance. New York: McGraw-Hill.

United Nations. (2002). Saudi Arabia Country Profile. United Nations. Web.

Weill, J. (n.d.).. Spotlight on poverty. Web.

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