EMERGING MARKETS AND THE END OF POVERTY
Nathan Cenciareli Pinheiro Turquetti
Volunteer Contributor at 'Hecho por Nosotros'
9th of February of 2022,
It is well known the fashion industry is among the world's biggest polluters. Though the data is nebulous, some figures that have been thrown around to argue for better sustainability measures include that global supply chains contribute to one fifth of industrial water pollution and that the apparel sector is responsible for anywhere from 2 to 10 percent of global carbon dioxide emissions. In addition to the environmental externalities, the social costs are undeniable. The International Labor Organization (ILO) estimates that 15 percent of workers in manufacturing and 11 percent of workers in agriculture, two sectors that make up a large portion of fashion industry supply chains, are modern slaves. Still, these figures do not account for the workers who are not necessarily living under forced labor conditions, but are simply not paid enough to meet their basic needs. Brands are known to demand shorter turnaround times and demand lower prices from suppliers, who adhere as they must compete in a global market, and it is always the workers who bear the brunt of such a system. Most of the fashion industry’s manufacturing and raw material sourcing occurs in developing nations, or emerging markets, so it follows that incidents of forced labor and worker exploitation are most prevalent in these countries, typically in Asia and Africa.
According to the International Monetary Fund (IMF), an emerging market is defined as one with some characteristics of developed nations, such as high per capita income, greater integration to global capital markets and has a diversified number of export goods. However, as these nations are not fully developed, in many cases they fail in providing a robust social foundation. In recent years, countries like Ethiopia, China, Indonesia, Vietnam, Bangladesh, India and the Philippines have been experiencing rapid economic growth and an accelerated industrialization process which offers investors bigger monetary returns when compared to developed countries. This could be in part because of the high risk due to political, social or economic instability, and uncertainty.
One such case study is that of Indonesia, the world’s fourth largest population and home to a large number of factories serving the apparel sector due to its cheap labor force and strategic location in Southeast Asia. When compared to similar markets, Indonesia is the country that has given the most attention to circularity, theoretically having an enormous potential for becoming a truly sustainable economic power. Continuous population and economic growth are some of the main factors that prompt Indonesia to become greener, as well as this region’s susceptibility to experiencing some of the worst effects of climate change. An Ellen MacArthur Foundation study identified several niche sectors where Indonesia would thrive: textiles, construction, electronics and electrical equipment, and food and beverage. These sectors combined are responsible for over 43 million jobs and make up nearly one third of the total GDP of the nation, meaning that adapting circularity strategies could drastically impact Indonesia's future, supporting a healthier environment and ostensibly, quality of life.
Despite these predictions and calls to action for Indonesia's future, the country, like many other emerging economies, fails to have good living standards and many Indonesians suffer from social adversities, namely poverty driven by income inequality.
According to the World Bank, poverty is marked by not having enough money to meet one’s basic needs, that is, not having enough for food or clothes, lacking shelter or transport, and access to medical care, clean drinking water, or basic education. According to the United Nations, 300 million workers lived below the US$1.25 a day poverty line as recently as 2015. When broken down, most of this group is comprised of women in emerging markets in Africa, Asia, as well as Latin America. There are a number of causes for the perpetuation of poverty, including lack of government support, worker exploitation, climate change, human rights abuses, scarcity of natural resources or investments, poor private and public infrastructure, lack of a solid educational and healthcare system, hunger, and little or no access to electricity or water. Nations worldwide suffer from these circumstances and, sometimes, suffer from all of them resulting in subdevelopment and, consequently, poverty. Gender inequality and child labor feed global poverty as they create a barrier for countries’ citizens to progress and improve their quality of life. In many developing nations, children are subjected to manual work due to a lack of incentive to study- that is because their families must depend on the income of their children. The ILO estimates that 152 million children worldwide are victims of child labour and according to UNICEF, approximately 356 million children suffer from extreme poverty. Although the UN estimates the number of people living in poverty globally has reduced from 36 percent in 1990 to 10 percent in 2015, there is still much to be done to achieve Sustainable Development Goal Number One: ending poverty by 2030.