Belarus: A Country Plagued By Poverty

Belarus, or White Russia, is a country in Eastern Europe bordering Russia and Ukraine. In the 1990s, following the collapse of the USSR socialist system, Belarus was one of the poorest countries in Europe, with around 50% of its population living below the poverty line. This figure has since decreased, with the proportion of people living in poverty falling from 60% in 2000 to less than 1% in 2013. Despite this progress, poverty is once again on the rise in Belarus, with the average worker in some regions earning just $100 per month, barely above the poverty line of around $90. The main reason for poverty is unemployment, as the state fails to provide adequate support for those out of work. While the Belarusian economy is an upper-middle-income mixed economy, the distribution of wealth favours the rich, and the poorest remain economically immobile.

Belarus was one of the poorest countries in Europe in the 1990s

Belarus, officially the Republic of Belarus, is a landlocked country in Eastern Europe. It is bordered by Russia to the east and northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Belarus was one of the poorest countries in Europe in the 1990s due to the collapse of the USSR socialist system. Around 50% of the population lived below the poverty line at the time.

The collapse of the USSR in 1991 and the subsequent transition to a market economy had a devastating effect on Belarus. The country suffered a severe economic crisis, with hyperinflation, a sharp decline in trade with other former Soviet republics, and a deterioration of its balance of payments. The period between 1996 and 2000 was particularly difficult, with a financial and economic crisis in Russia causing a sharp increase in prices and the devaluation of the Belarusian ruble.

The collapse of the USSR also had a significant impact on Belarus's industry and agriculture, which were heavily dependent on imports and exports from other Soviet republics. Industrial output declined sharply in the early 1990s, with all sectors experiencing decreases in output. The agricultural sector also suffered, with a decline in the amount of land under cultivation and a shift from livestock to crop production.

However, Belarus's economy began to recover in the late 1990s, and between 2001 and 2005, the country experienced steady and dynamic growth, with GDP growing at an average rate of 7.4%. This growth was driven mainly by the performance of the industrial sector, particularly in agriculture and manufacturing. Belarus's economy is highly centralized, with the state controlling key industries, and it has been described as a welfare state or market socialist.

Despite the economic challenges in the 1990s, Belarus has made significant progress in reducing poverty. The proportion of people living in poverty fell from 60% in 2000 to less than 1% in 2013, outpacing the general rate in Europe and Central Asia. The highest rate of economic growth occurred during the 2006-2011 period, when many European countries were affected by the financial crisis. The main causes of economic growth have been Russia's favorable pricing of energy and the economic growth of its nearby trading partners, which heavily stimulated the agricultural and mining industries.

The poverty rate fell from 60% in 2000 to less than 1% in 2013

Belarus has made significant progress in reducing poverty, with the poverty headcount ratio falling from 60% in 2000 to less than 1% in 2013. This remarkable achievement is even more impressive when compared to the Europe and Central Asia region, which started with a lower poverty rate in 2000 but only managed to reduce it to 14% by 2013.

This success can be attributed to several factors, including favourable energy pricing from Russia and strong economic growth in Belarus's trading partners, which boosted the country's manufacturing and agricultural sectors. High economic growth also allowed the government to maintain high employment levels and increase wages, pensions, and social benefits. Direct transfers, such as pensions, played a crucial role in reducing poverty and inequality.

However, it is important to note that the definition of poverty varies and can impact the reported poverty rate. For example, the World Bank uses a poverty line of $5.50 per day at 2011 international prices, while Belarus's official poverty line may differ. Additionally, alternative measures of poverty, such as the cost of basic needs, may provide a different perspective on poverty dynamics.

While Belarus has made remarkable progress in reducing poverty, it is not without its challenges. The country has experienced several economic crises, and the factors contributing to past success may no longer be in play. For sustainable progress, Belarus may need to adopt new economic policies and address issues such as population ageing and the increasing gap between the rich and poor.

Despite these challenges, Belarus's progress in reducing poverty is commendable, and it remains committed to further improving living standards for its citizens.

The country's economic growth benefited the poorest

Belarus is an upper-middle-income economy, ranking 74th in the world by GDP. It is an export-oriented country with a well-developed manufacturing industry, services sector, and agriculture.

Between 2001 and 2005, Belarus's economy demonstrated steady and dynamic growth, with GDP growing at an average of 7.4% and peaking at 9.2% in 2005. This growth was driven by the performance of the industrial sector, which grew by more than 8.7% per year on average. The country's GDP continued to grow by 9.9% in 2006 and 10% in 2008.

The economic growth during this period benefited the poorest in Belarus. The proportion of people living in poverty fell from 60% in 2000 to less than 1% in 2013, outpacing the general rate in Europe and Central Asia. The high economic growth rates were accompanied by a fall in the number of households below the national poverty line and an increase in household income among the bottom 40% of the population.

The country's economic growth was driven mainly by the agricultural and mining industries, which were stimulated by Russia's favourable pricing of energy and the economic growth of its nearby trading partners. Belarus's economy is heavily dependent on Russia, with beneficial terms of Russian oil and gas deliveries contributing to its economic development.

Despite the overall economic growth and poverty reduction, not everyone in Belarus has benefited equally. In recent years, the distribution of wealth has begun to favour the rich, with the poorest remaining economically immobile. The gap between the incomes of those living in the capital city of Minsk and those in outlying regions has also widened.

The distribution of wealth has begun to favour the rich

Belarus has an upper-middle-income mixed economy, ranking 74th in the world by GDP. It is a post-Soviet transition economy, retaining centralised political and economic controls by the state.

In the 1990s, Belarus was one of the poorest countries in Europe, with around 50% of the population living below the poverty line. However, the proportion of people living in poverty fell from 60% in 2000 to less than 1% in 2013. This decrease outpaced the general rate in Europe and Central Asia.

Despite this, the distribution of wealth has begun to favour the already rich, with the poorest remaining economically immobile. In 2010, the top 20% of Belarusians owned 36.7% of the country's wealth, and this figure increased to 38.8% in 2016. This trend is reflected in the country's Gini coefficient, an inequality indicator, which is one of the lowest in Europe.

The main causes of economic growth have been Russia's favourable pricing of energy and the growth achieved by its nearby trading partners. This has heavily stimulated the agricultural and mining industries. However, not everyone has benefited from this so-called "inclusive" growth. There is a widening gap between the incomes of those who live in Minsk, the capital, and those in outlying regions.

Unemployment is a significant issue in Belarus, and it is estimated that less than 10% of unemployed people receive welfare benefits. The benefits themselves are meagre, ranging from $12 to $24. In 2015, a law was introduced to fine unemployed citizens, supposedly to discourage them from being work-shy. This has been criticised as a way to punish people for being poor.

Unemployment is a major problem in Belarus

Belarus has an upper-middle-income mixed economy, with a strong emphasis on full employment and a dominant public sector. The country's economy is highly centralised, with the state retaining control over key industries.

However, unemployment is a significant issue in Belarus. While the official unemployment rate is less than 1%, the real figure is likely much higher. According to the World Bank, the actual unemployment rate is seven times higher than the official rate. Some estimates place the figure at 10%, or even as high as 15-24%.

The discrepancy between the official and real unemployment rates can be attributed to the fact that many unemployed Belarusians avoid registration due to obligatory public works requirements. Furthermore, the benefits provided are meagre, ranging from $12 to $24 according to economist Aliksandr Chubrik. This is especially concerning given that unemployment benefits reach less than 10% of those who are unemployed.

The introduction of a "social parasite tax" or "freeloaders tax" in 2015 further complicates the situation. This law imposes a fine on the unemployed population, requiring those who pay direct taxes for less than 183 days a year to pay a fee of 20 basic amounts (BYN 360 ≈ $250). Failure to pay this fee can result in fines, administrative arrests, or compulsory public works.

The unemployment situation in Belarus is a critical issue that requires attention, as it can have far-reaching social and economic implications. Addressing this problem is essential for the country's overall well-being and stability.

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