Tag Archives: foreign aid

Heads up: My new book will be in stores Sept. 9

My co-author, Paul Polak, and I are now putting the final touches on the manuscript, and it’s got months of design and production ahead. But the new book will be published this year by Berrett-Koehler, the San Francisco firm that brought out an earlier book of mine, Values-Driven Business: How to Change the World, Make Money, and Have Fun (co-authored with Ben Cohen of Ben & Jerry’s fame). The official publication date for the new book is Sept. 9.

Its title is The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers.

It’s premature to tell you much about the book, but I thought you might like to know a little about my co-author, Dr. Paul Polak.

Paul Polak is widely regarded as the father of market-centered approaches to development. He started harnessing the energy of the marketplace 30 years ago when IDE, the organization he founded, sold one-and-a-half million treadle pumps to small farmers in Bangladesh, increasing their net income by more than $150 million a year. Over the past 30 years, he has had long conversations with more than 3,000 small farmers who live on less than $1 a day and walked with them through their fields. IDE has now enabled 20 million of the world’s poorest people to move out of poverty by selling them radically affordable irrigation tools made available through thousands of small village manufacturers, dealers, and well drillers, and opening smallholder access to markets where they could sell their crops at a profit.

Paul’s earlier book, Out of Poverty: What Works When Traditional Approaches Fail, has been widely used as a basic text on practical solutions to rural poverty. He is the founder and CEO of Windhorse International and co-founder and board chairman of Spring Health India, for-profit companies with the mission of bringing safe drinking water to 100 million poor rural customers in the world. Paul is the prime mover for creating and implementing the four social impact multinationals in this book, each designed to transform the lives of 100 million $2/day customers and generate annual sales of $10 billion.

Prior to founding Windhorse, in 2008 Paul established D-Rev, a nonprofit that seeks “to create a design revolution by enlisting the best designers in the world to develop products and ideas that will benefit the 90 percent of the people on earth who are poor, in order to help them earn their way out of poverty. Paul’s vision inspired Smithsonian’s Cooper Hewitt travelling exhibit, “Design for the Other 90 percent.” He was named by The Atlantic as one of the world’s 27 “Brave Thinkers” along with Steve Jobs and Barack Obama. He has also received the Ernst and Young Entrepreneur of the Year award and the Scientific American “Top 50” award for agricultural policy.

Paul graduated from medical school in 1958, worked for 23 years as a psychiatrist, creating innovative models of community treatment, and at various points in his career also worked as a farmer and a hands-on investor in oil and gas, real estate, and equipment leasing. He and his wife Agnes have been happily married for 53 years, and have three grown daughters. At the age of 79, he still puts in an 80-hour work week and loves what he does.

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The sorry record of microcredit laid bare by an industry veteran

A review of Confessions of a Microfinance Heretic: How Microlending Lost Its Way and Betrayed the Poor, by Hugh Sinclair

@@@@@ (5 out of 5)

“Some microfinance is extremely beneficial to the poor, but it is not the miracle cure that its publicists would have you believe. Microfinance has been hijacked by profiteers, and we need to reclaim it for the poor. The problem is not with a few rogue operators, alas, but with systemic flaws that permeate the sector.”

Thus does Hugh Sinclair lay out the thesis he pursues in Confessions of a Microfinance Heretic. If you skip over this statement in the opening pages of the book, you could easily conclude that Sinclair can see no good at all in the $70 billion industry that has grown up under the impetus of Muhammad Yunus’ 2006 Nobel Peace Prize. After all, Sinclair writes — at least twice — that he wouldn’t invest a single dollar in microfinance today. Nonetheless, he insists that the “debate is not whether microfinance works, but how the inherent conflicts of interest can be managed.”

The systemic flaws Sinclair perceives are eye-opening:

  • A majority of the money loaned to poor people goes not to help them launch or sustain microbusinesses to supplement family income but rather for current consumption, sometimes to buy food during a time when there’s not enough money coming in, sometimes just to buy TV sets.”Estimates for consumption loans range from 50 percent to 90 percent of all microfinance loans,” depending on the study. As Sinclair points out, citing numerous sources, the proportion of entrepreneurs among the poor is no bigger than it is among the rich. It’s naive of us to expect otherwise.
  • The interest rates charged for microloans are, far too often, prohibitively high. Muhammad Yunus’ benchmark — 10 to 15 percent above the cost of money — is rarely observed. Though there are indeed many, mostly small, nonprofit MFIs (Microfinance Institutions, generally microloan lenders) that charge no more than 25 or 30 percent, the bigger institutions, and most of the for-profit banks in the industry, typically charge far more. In one notorious case, the effective interest rate runs as high as 195 percent, but there are many other instances in which the rate exceeds 100 percent.
  • The amounts of money loaned by MFIs are far too small to permit businesses to grow to a size where they may employ workers outside the family. In fact, to the extent that businesses remain family-run, they frequently employ even the youngest children, sometimes withdrawn from school to work in the business. However, there’s another side to this question, as Sinclair reveals in an exchange with one businesswoman: “[W]e asked her about her future plans for the business, and whether she thought it could be built up further and be a useful business for her children to take over. ‘You misunderstand me. I don’t do this job because I like it or want to grow it into a big business. I do it so my children will never have to do work like this.'”
  • In countries where local laws and a lack of government oversight give free rein to the MFIs, competition run wild among them has sometimes led to credit crises. In India’s Andhra Pradesh state, for example, “There were more microloans than poor people.” And in Nicaragua “total lending by MFIs was estimated at $420 million in 2008, in a country of about 5.5 million, not all of whom were poor (and MFIs generally don’t lend to children).” Microloan customers frequently borrowed from several of the country’s 19 MFIs — the nationwide average was four — often to be able to pay back loans to other MFIs. “One particularly ambitious client in Jalapa had managed to rack up $600,000 in micro-loans.” As Sinclair disclosed in a talk he gave in Berkeley a few weeks ago, Nicaragua was only the first of several countries where the microcredit bubble is likely to burst. Stay tuned, he said.
  • The profit motive appears to have become the central preoccupation of the microfinance funds, which function like private equity funds, gathering together investment dollars and placing them in selected MFIs. Even some of the biggest and most prestigious of these funds — including the Grameen Foundation (USA), Calvert Foundation, Kiva.org, and BlueOrchard (the world’s largest) — have been tainted by longstanding investments in some of the most egregiously exploitive MFIs, brushing aside mountains of evidence that their investments were helping victimize poor people in Nigeria, Mexico, and other countries.

Despite all this, there is NO documented evidence that microfinance has achieved any reduction at all in the level of poverty. As a 2007 article in the Harvard Business Review stated, “In 1991, for example, Bangladesh ranked 136th on the UN Development Programme’s Human Development Index (a measure of societal well-being); 15 years later it ranked 137th.” And Sinclair writes, “In 2001, Nicaragua was the 106th poorest country in the world . . . Microfinance was almost unheard of in Nicaragua at this point, and there were no large microfinance funds throwing money around. By 2009, when the full Nicaraguan microfinance meltdown occurred, Nicaragua had slipped to 124th place.”

Hugh Sinclair is no cranky, slapdash journalist taking on a controversial subject for the sake of selling books. He is a ten-year veteran of the microfinance industry and has been involved as either an employee or a consultant in dozens of MFIs around the world and in several microfinance funds. He clearly knows whereof he writes, his citation of sources is extensive, and his publisher, Berrett-Koehler, is a highly respected source of books on business and current affairs.

Confessions of a Microfinance Heretic is an important book that should be must reading for anyone involved in international development.

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Books that helped me understand the world

During the last several years — mostly after I bought my first Kindle — I’ve spent a great deal of time reading, roughly half of it fiction, the other half non. I’ve gotten through hundreds of books and have reviewed the last 200 or so in this blog. It feels like a good time to cast a backwards look and identify those books that remain vivid in my memory — books that helped me understand the way the world works. Though most of the fiction I’ve read has been simply enjoyable, a few have touched me. None, though, have really nestled deep into memory and changed the way I view life and the world. I learn mostly from nonfiction. Whatever that says about my character — so be it.

Here, then, are the 20 nonfiction books that have impressed me the most in recent years. They’re arranged in alphabetical order by the authors’ last names. Those I’ve reviewed are boldfaced and linked.

Alexander, Michelle, The New Jim Crow. A shocking survey of the consequences of America’s so-called War on Drugs and the racism in our justice system

Banerjee, Abhijit, and Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. A rigorous and balanced view of both top-down and bottoms-up development policies in the light of field research

Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World. History as I like it: painted in broad swaths across the millennia, rejecting the myth that the “West” was destined to rule the world

Diamond, Jared, Guns, Germs, and Steel: The Fates of Human Societies. A brilliantly original view of world history from a geographer’s perspective, ascribing variable levels of development primarily to environmental and geographical factors

Easterly, William, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. The case against foreign aid and top-down development, by a former World Bank economist

Elkington, John, and Pamela Hartigan, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World. The liveliest and most insightful of several books on social entrepreneurs

Gladwell, Malcolm, The Tipping Point: How Little Things Can Make a Big Difference. The seminal book on understanding “six degrees of separation” and the way networks work

Harden, Blaine, Escape from Camp 14: One Man’s Remarkable Odyssey from North Korea to Freedom in the West. A riveting tale of the North Korean gulag, spotlighting the reality of repression in the Kim family’s private kingdom

Hochschild, Adam, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. One of the most troubling books I’ve ever read about the legacy of colonialism: the harrowing story of how the Belgian King destroyed the Congo and murdered millions of its people

Johnson, Chalmers, Blowback: The Costs and Consequences of American Empire. A scholar and former U.S. official demonstrates how the U.S. dominates the world through hundreds of military bases, undermining our nation’s reputation and robbing our society of the means to address pressing social problems

Larson, Erik, In the Garden of Beasts: Love, Terror, and an American Family in Hitler’s Berlin. An eye-opening account of U.S. official anti-Semitism in FDR’s Administration that shackled our Ambassador in Berlin who witnessed the outrageous acts unfolding in Nazi Germany

Mann, Charles C., 1491: New Revelations of the Americas Before Columbus. A revisionist view of Native American society in both North and South America, offering proof of huge populations and sophisticated civilizations in the present-day U.S. and in the Amazon Basin

Miller, Brian, and Mike Lapham, The Self-Made Myth: And the Truth about How Government Helps Individuals and Businesses Succeed. A clear-eyed look beyond the bounds of Right-Wing ideology at the immeasurable benefits and services every “self-made man” has received from U.S. society

Mukherjee, Siddhartha, The Emperor of All Maladies. An oncologist’s brilliant history of cancer and of the medical profession’s slowly developing success in treating it

Polak, Paul, Out of Poverty: What Works When Traditional Approaches Fail. How a former psychiatrist, laboring face-to-face with $1-a-day farmers in some of the world’s poorest countries, helped 17 million families escape from poverty

Priest, Dana, and William M. Arkin, Top Secret America: The Rise of the New American Security State. A Pulitzer-Award-winning Washington Post reporter and her researcher rip the cover from the enormous intelligence establishment built after 9-11

Skloot, Rebecca, The Immortal Life of Henrietta Lacks. A science reporter’s captivating ten-year search to understand the consequences of a medical crime committed in an overtly racist era before the rise of medical ethics

Ward, Vicky, The Devil’s Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers. The most intimate and candid account of how Wall Street played the central role in launching the Great Recession

Wrong, Michela, It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. A vivid account by a Financial Times reporter of how corruption holds sway even in one of Africa’s most developed economies 

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Must reading about global poverty and the contrasting approaches to ending it

A review of Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, by Abhijit Banerjee and Esther Duflo

@@@@@ (5 out of 5)

Public debate about the way to combat global poverty has ricocheted between two extremes. One was summed up in 2005 in The End of Poverty by Jeffrey Sachs, the Columbia economist who spearheaded the UN Millennium Development Goals. The other was laid out by former World Bank economist William Easterly the following year in The White Man’s Burden. Sachs advocates massive government-to-government foreign aid. Easterly deplores foreign aid, convinced that it does more harm than good.

In Poor Economics, Abhijit Banerjee and Esther Duflo seek a path between these two extremes, emphasizing the Randomized Controlled Studies they and their colleagues had conducted to ascertain what works and what doesn’t. (As of 2010, they had completed more than 240 studies in forty countries around the world.)They characterize Easterly’s approach as demand-driven, since he believes that poor people must seek their own solutions — a conservative, free-market attitude. By contrast, Sachs’ approach is supply-driven, reflecting Sachs’ conviction that a government must provide for its people based on consensus thinking about what poor people need — a liberal, top-down attitude. (I find myself bemused that I’m on the right side of this debate.)

Banerjee and Duflo report that their observations and research results support each of these two approaches — and sometimes both — depending on what issue they study. Hunger, health, education, financial services, family planning, business development, policy options: each field offers up a unique picture of success and failure attributed to one or another of the two approaches. In other words, circumstances and details matter, all of which may vary from one country to another. There is no silver bullet, they assert, no panacea to eliminate poverty.

Poor Economics focuses on the overarching question of whether there is such a thing as a “poverty trap.” Sachs contends there is: poor people will be stuck in poverty unless and until they are given the resources to release themselves from the trap. In many circumstances, Banerjee and Duflo find scant evidence to support this assertion. In others, however, they see the need for government intervention in the lives of the poor because otherwise they will perceive no reason to act for themselves.

Rather than identifying a simple, unitary explanation why Sachs’ approach often fails, they emphasize “ideology, ignorance, and inertia — the three I’s — on the part of the expert, the aid worker, or the local policy maker.” These three I’s, they claim, “often explain why policies fail and why aid does not have the effect it should.” Banerjee and Duflo explain further: “The poor often resist the wonderful plans we think up for them because they do not share our faith that those plans work, or work as well as we claim.”

It would be difficult to find two scholars better prepared than Abhijit Banerjee and Esther Duflo to forge a middle course through the opposite poles of thought about global poverty erected by Jeffrey Sachs and William Easterly. Banerjee, an Indian economist who is also the son of two economists, holds an endowed chair in economics at MIT. He co-founded MIT’s Abdul Latif Jameel Poverty Action Lab with Duflo, a French economist and a former MacArthur Fellow (recipient of the “genius” award).

For anyone who seeks deeper understanding of global poverty and the ways and means of fighting it, Poor Economics is must reading. This book is the latest I’ve read in my ongoing effort to study world poverty. For a list of additional books on the topic, go to my reading list.

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Narrowing global inequities: a reading list

Lately I’ve been working with Paul Polak on a book about how to end global poverty. (Berrett-Koehler will publish the book in 2013.) Paul’s previous book, Out of Poverty, was published six years ago, and this new work – provisionally titled The Business Solution to Poverty – represents the evolution of his thinking, six more years of work with poor people in developing countries, and the reading and relevant field experience I’ve had over the years.

As I’ve dug more deeply into the subject of global poverty, it has become increasingly clear to me that truly understanding how today’s glaring inequities have come about requires extensive knowledge in a wide array of topics, from Third World history to social psychology, development economics to the history of business and international trade.

Well, I confess I’m no expert in any of those fields. I’ve read widely in some, superficially in others, and I’m learning a lot.

My reading has emphasized economic history, the economics of poverty, colonialism, Third World development, social enterprise, and the ongoing debate about the impact of “foreign aid” (more properly, overseas development assistance). Along the way, I’ve reviewed in this blog many of the books I’ve read.

In previous posts, I’ve offered up reading lists on some of these subjects individually. Here, I’m sharing a compiled list. These are the books I’ve actually read. Where I reviewed a book, you’ll find boldfacing and underlining that signifies a link to my review. The books are listed alphabetically by the author’s last name.

Banerjee, Abhijit, and Esther Duflo, Poor Economics A Radical Rethinking of the Way to Fight Global Poverty. PublicAffairs, 2011. (review to come)

Bornstein, David, How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford University Press, 2007.

——, The Price of a Dream: The Story of the Grameen Bank. Oxford University Press, 2005.

——, and Susan Davis, Social Entrepreneurship: What Everyone Needs to Know. Oxford University Press, 2010.

Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World. Princeton University Press, 2007.

Cohen, Ben, and Mal Warwick, Values-Driven Business: How to Change the World, Make Money, and Have Fun. Berrett-Koehler Publishers, 2006.

Collier, Paul, The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It. Oxford University Press, 2007.

Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven, Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton University Press, 2009.

Crutchfield, Leslie R., and Heather McLeod Grant, Forces for Good: The Six Practices of High-Impact Nonprofits, 2nd Edition. Jossey-Bass Publishers, 2012.

Diamond, Jared, Collapse: How Societies Choose to Fail or Succeed. Viking Press, 2005.

Easterly, William, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. Penguin Press, 2006.

Elkington, John, and Pamela Hartigan, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World.Harvard Business Review Press, 2008.

Govindarajan, Vijay, and Chris Trimble, Reverse Innovation: Create Far From Home, Win Everywhere. Harvard Business Review Press, 2012.

Guha, Ramachandra, India After Gandhi: The History of the World’s Largest Democracy. HarperCollins Publishers, 2007.

Hochschild, Adam, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. Houghton Mifflin Company, 1998.

Kamkwamba, William, and Bryan Mealer, The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope. HarperCollins Publishers, 2009.

Kidder, Tracy, Mountains Beyond Mountains: The Quest of Dr. Paul Farmer, a Man Who Would Cure the World. Random House,2003.

Kristof, Nicholas D., and Sheryl WuDunn, Half the Sky: Turning Oppression Into Opportunity for Women Worldwide. Knopf, 2009.

Light, Paul Charles, The Search for Social Entrepreneurship. Brookings Institution Press, 2008.

Lynch, Kevin, and Julius Walls, Jr., Mission, Inc.: The Practitioner’s Guide to Social Enterprise. Berrett-Koehler Publishers, 2008.

Mehta, Pavithra, and Suchitra Shenoy, Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion. Berrett-Koehler Publishers, 2011.

Moyo, Dambisa, Dead Aid: Why Aid is Not Working and How There Is a Better Way for Africa. Farrar, Straus and Giroux, 2009.

Polak, Paul, Out of Poverty: What Works When Traditional Approaches Fail. Berrett-Koehler Publishers, 2006.

Prahalad, C. K., The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Pearson Prentice Hall, 2004.

Sachs, Jeffrey D., The End of Poverty: Economic Possibilities for Our Time. Penguin Press, 2005.

Schwartz, Beverly, Rippling: How Social Entrepreneurs Spread Innovation Throughout the World. Jossey-Bass Publishers,2012.

Sullivan, Nicholas P., You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. Jossey-Bass Publishers, 2007.

Wrong, Michaela, It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. HarperCollins Publishers, 2006.

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The Top 10 Books on the Economics of Poverty

Back in January, I posted “Third World development: A reading list.” Today, the celebrated rural development specialist and author, Paul Polak, called my attention to a similar list that was published at about the same time in the Stanford Social Innovation Review, an outstanding journal that has run a few of my articles and reviews. Only three titles appear on both lists, so I’m reproducing the SSIR article in its entirety here.

The Top 10 Books on the Economics of Poverty  

A suggested reading list to provide a foundation for understanding development, aid, and poverty

By Amy Lockwood

The growing community of students and professionals who are turning their attention to social endeavors as careers is inspiring. As someone who made the career switch from strategy consulting to international development work, I remember all too well the anxiety of trying to understand the different theories, familiarize myself with the players, and become fluent in the languages of this community.

In addition to listening more than speaking, cultivating curiosity, and abandoning the fear of looking stupid when asking, “What does [fill in the blank] mean?”—in my first years in this new space, I asked for recommendations of books that would provide a foundation for my understanding of development, aid, and poverty. I recently revisited these recommendations as a member of the Opportunity Collaboration, and the following is a suggested reading list to provide a foundation for your adventures.

The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (2006), by William Easterly

Easterly, a celebrated economist, presents one side in what has become an ongoing debate with fellow star-economist Jeffrey Sachs about the role of international aid in global poverty. Easterly argues that existing aid strategies have not and will not reduce poverty, because they don’t seriously take into account feedback from those who need the aid and because they perpetuate western colonial tendencies.

The End of Poverty: Economic Possibilities for Our Time (2006), by Jeffrey Sachs

Taking an almost entirely diametrical approach than Easterly, Sachs outlines a detailed plan to help the poorest of the poor reach the first rung on the ladder of economic development. By increasing aid significantly to provide the basic infrastructure and human capital for markets to work effectively, Sachs argues such investment is not only economically sound but a moral imperative.

The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (2007), by Paul Collier  

Economist and Africa expert Collier analyzes why a group of 50 nations, home to the poorest one billion people, are failing. Considering issues such as civil war, dependence on extractive industries, and bad governance, he argues that the strongest industrialized countries must enact a plan to help with international policies and standards.

The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (2009), by C.K. Prahalad

Prahalad, a business strategy professor, was among the first to argue that the fastest growing market in the world was made up of the world’s poorest people. He details the purchasing power of this segment, and advocates that big businesses should learn how to understand this population’s needs in order to develop products that address both economic mobility and corporate growth and profit.

Creating a World Without Poverty: Social Business and the Future of Capitalism (2009), by Muhammad Yunus

Yunus, an economist and Nobel Prize Winner, was among the first to describe a social business as one that is modestly profitable but designed primarily to address a social objective. Using this approach, he argues that modern-day capitalism is too narrowly defined, particularly in its emphasis on profit maximization. By including social benefits in the equation, he believes that markets and the poor themselves can alleviate poverty.

Out of Poverty: What Works When Traditional Approaches Fail (2009), by Paul Polak

Polak, a psychiatrist, has applied a behavioral and anthropological approach to alleviating poverty, developed by studying people in their natural surroundings. He argues that there are three mythic solutions to poverty eradication: donations, national economic growth, and big businesses. Instead, he advocates helping the poor earn money through their own efforts of developing low-cost tools that are effective and profitable.

Dead Aid: Why Aid is Not Working and How There Is a Better Way for Africa (2009), by Dambisa Moyo  

Moyo, a Zambia-born economist, asserts that aid is not only ineffective—it’s harmful. Her argument packs a strong punch because she was born and raised in Africa. Moyo believes aid money promotes the corruption of governments and the dependence of citizens, and advocates that an investment approach will do more to help reduce poverty than aid ever could.

Poor Economics A Radical Rethinking of the Way to Fight Global Poverty (2011), by Abhijit Banerjee & Esther Duflo

Using the framework of randomized control trials, which allow for large-scale data collection to evaluate the effectiveness of an intervention, these two development economists assess the impact of a wide range of development programs in alleviating poverty. They have found that most programs have not been designed with a rigorous understanding of the behaviors and needs of the poor or how aid effects them, they advocate that for programs to be successful they must be designed with evidence gathered from direct interaction with those who they are meant to benefit.

Development As Freedom (2000), by Amartya Sen

A Nobel Prize winning economist, Sen examines the essential role that elementary freedoms, social and political, have in improving the prosperity of the society at large. Although his focus on human welfare as a central aspect of economic thought is not universally accepted among economists, this approach inserts elements of ethics into a field from which it is often not emphasized. Although this is a difficult read, the concepts included are important to the dialogue about the causes and remedies to the economics of poverty.

Good to Great and the Social Sectors (2005), by Jim Collins

Meant to accompany the seminal business book Good to Great that examined why companies succeed or fail and found nine key aspects, including: leadership, simplicity, discipline and innovation, this work focuses on applying these lessons to the nonprofit sector. While more focused on management of organizations than macroeconomic issues, this short and easy to read monograph suggests a roadmap of how those interested in addressing issues of poverty should pursue these efforts.

Amy Lockwood is the Deputy Director of the Center for Innovation in Global Health at Stanford’s School of Medicine, where she works on research, education, and innovation programs focused on issues of global health. With a background spanning the business, nonprofit and academic sectors, she has deep experience developing strategies, managing, and evaluating development projects and organizations throughout Africa, Asia, and Latin America.

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A brilliant rural development specialist shares his ideas on ending poverty in the world

A review of Out of Poverty: What Works When Traditional Approaches Fail, by Paul Polak

@@@ (3 out of 5)

Paul Polak is an extraordinary man. A Czech Holocaust refugee as a child and a practicing psychiatrist throughout the 1960s and 70s, Dr. Polak turned his attention to the challenge of ending global poverty in 1981. In that year, he founded the International Development Enterprises (IDE), a Colorado-based nonprofit organization distinguished by its successful launch of the treadle pump that enables farmers to irrigate very small plots of land at minimal cost. IDE’s mission more generally is to fashion and develop new tools to help poor farmers and other “dollar-a-day” families in developing countries work their way out of poverty. Now nearing 80, Dr. Polak has relentlessly pursued this mission for the past three decades.

In Out of Poverty, Dr. Polak interweaves the IDE story and the principles that guide it with that of one Nepalese family who moved from poverty into the middle class. The fundamental precepts of Dr. Polak’s work are clearly laid out in the introduction:

“1. The biggest reason most poor people are poor is because they don’t have enough money.

“2. Most of the extremely poor people in the world earn their living now from one-acre farms.

“3. They can earn much more money by finding ways to grow and sell high-value labor-intensive crops such as off-season fruits and vegetables.

“4. To do that, they need access to very cheap small-farm irrigation, good seeds and fertilizer, and markets where they can sell their crops at a profit.”

Much of Out of Poverty deals in detail with the challenges entailed in implementing these principles. Irrigation, including the story of the treadle pump, gets the most attention. Dr. Polak describes himself and the staff of IDE as what might be called catalysts rather than experts: from his perspective, the first step in any venture in rural development must be to talk to the people who will be affected by whatever is done — and listen to them. The IDE approach is resolutely bottoms-up, because “To move out of poverty, poor people have to invest their own time and money. The path out of poverty lies in releasing the energy of Third World entrepreneurs.”

IDE’s work over the years has tightly focused on farmers. As he notes, “most of the poor people in the world live in remote rural areas that will likely continue to be bypassed by successive waves of urban-centered industrial growth.” However, in the concluding chapters of Out of Poverty, Dr. Polak also shares a number of ideas for helping slum-dwellers (“43 percent of the urban populatioin in developing regions”) move out of poverty, too. The book is chock full of great ideas for small-scale entrepreneurs.

Dr. Polak and IDE were pioneers in the bottoms-up development model that is fast emerging as the only approach likely to make a dent in the endemic poverty in so many poor countries.

Regrettably, Out of Poverty is not well written. It is endlessly repetitive, with the same phrases and anecdotes appearing in chapters throughout the book, and it fails to deliver on its promise of sharing many examples of families that have moved into the middle class through IDE’s work, since the only story told in any detail is that of one Nepalese farm family. That’s a great pity, since this is a message that needs to be disseminated far more widely among policymakers around the world. A second edition, reorganized and with additional examples, would be a boon to the development community.

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Third World development: A reading list

To my mind, the emergence of new nations out of a colonial past was one of the most significant developments of the 20th Century, and their uneven struggle to attain the comforts and possibilities of life to be found in Europe, North America, and Japan continues to loom large in the 21st Century. As a consequence, a fair proportion of my reading bears on these issues.

Much of what is written about development in what is variously called the Third World, the Global South, the under-developed countries, or the developing nations is self-serving and less than useful as a guide to understanding the true issues involved. The underlying reality is that since World War II the countries of the “West” have invested a total of nearly $2.5 trillion in “foreign aid” (as it’s popularly known in the USA) or “overseas development assistance” (as it’s termed elsewhere). You might think that investments of that magnitude would have produced dramatic improvements in the quality of life for the billions of people who live in poverty. However, the truth is appalling: there is precious little to show for this outpouring of aid other than the most obvious advances in education and public health.

Here are some of the books I’ve read in recent years that cast light on this reality. Some of them directly address the issues surrounding foreign aid. Others illuminate the backdrop to those issues. But I don’t pretend this list is comprehensive in any way. It’s simply a starting-point. I’ve listed these books in alphabetical order by the authors’ surnames.

Bornstein, David, How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford University Press, 2007. Much of the social change taking place today in the world’s poorest countries is a result of the work of the venturesome folks called “social entrepreneurs” — and Ashoka, the USA-based organization that supports them by the thousands. This box profiles nine of the better-known Ashoka Fellows, demonstrating the role of local leadership in making the world a better place.

——, The Price of a Dream: The Story of the Grameen Bank. Oxford University Press, 2005. Muhammad Yunus gained global fame when he won the Nobel Peace Prize in 2006, but the story of his decades of dogged efforts in Bangladesh — and of the immense organization he built — is much less well know. This book demonstrates how home-grown solutions to development programs are often superior to anything imposed on developing countries by the international community.

Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World. Princeton University Press, 2007. Clark puts the question of economic development in historical perspective, dispelling long-popular myths about the supremacy of the West.

Diamond, Jared, Collapse: How Societies Choose to Fail or Succeed. Viking, 2005. A fascinating exploration of the historical influence of environmental factors in the failure of “developing countries” — and a sobering perspective on the prospects for development breakthroughs in much of today’s overpopulated world.

Easterly, William, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. Penguin Press, 2006. This is the best book that tackles the issue head-on and makes the clearest case for an explanation.

Guha, Ramachandra, India After Gandhi: The History of the World’s Largest Democracy. HarperCollins Publishers, 2007. In global perspective, the greatest challenges to narrowing the inequities among nations lie in sub-Saharan Africa and India. This history of the subcontinent after independence helps to convey the complexity of the issues faced by change agents in the world’s second most populous nation.

Hochschild, Adam, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. (Houghton Mifflin Company, Boston and New York, 1998). The most dramatic portrayal of the legacy of colonialism I’ve ever read.

Kamkwamba, William, and Bryan Mealer, The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope. HarperCollins Publishers, 2009. The astonishing story of a brilliant, self-taught young man who demonstrated the vast potential that underdevelopment leaves behind.

Kristof, Nicholas D., and Sheryl WuDunn, Half the Sky: Turning Oppression Into Opportunity for Women Worldwide. Knopf, 2009. It is impossible to tackle the issue of economic and social development without considering the central role of women: it’s become a truism in the field that the education and empowerment of women is the surest first step toward meaningful social change. Nick Kristof, a long-time New York Times columnist, is one of the world’s most incisive observers of the daily reality lived by people in the Third World. Previously, Kristof and WuDunn reported jointly from China for the Times.

Mehta, Pavithra, and Suchitra Shenoy, Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion. Berrett-Koehler Publishers, 2011. The Aravind Eye Care System, based in the South Indian state of Tamil Nadu, has had an outsized influence on the treatment of eye disease throughout the world. Pavithra Mehta, a grand-niece of Aravind’s founder, tells the astonishing story of this extraordinary institution, illustrating the potential for indigenous development that shuns outside support.

Prahalad, C. K., The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Pearson Prentice Hall, 2004. In this paean to the multinational corporations of the world, the late C. K. Prahalad, one of the most celebrated management consultants of recent times, presents a host of case studies about the potential of business to foster development while increasing profits. Although the general proposition seems shaky to me, some of the case studies are impressive and thought-provoking.

Sachs, Jeffrey D., The End of Poverty: Economic Possibilities for Our Time. Penguin Press, 2005. Here is the cheerleader’s polyannish case for large-scale development assistance. Useful as a counterpoint to Bill Easterly’s White Man’s Burden, which far better reflects my own experience in developing countries.

Sullivan, Nicholas P., You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. Jossey-Bass Publishers, 2007. Grameen Telecom is much less well known that the grassroots bank that spawned it. This intriguing story is a great case study of the long-familiar “leapfrog effect” that allows underdeveloped countries to advance rapidly by skipping over the use of technologies long dominant in the West.

Wrong, Michaela, It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. HarperCollins Publishers, 2006. No consideration of Third World development is complete without taking official corruption into account. This story, which focuses on one courageous Kenyan man who tried to expose corruption, brings to light some of the complications it poses.

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Hope for Africa

A review of The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope, by William Kamkwamba and Bryan Mealer

@@@@@ (5 out of 5)

A debate has been raging for years within that rarefied global community that earns its keep from the business of what we Americans call “foreign aid.” (Others, less afflicted by an aversion to international engagement, call the field “overseas development assistance.”)

On one side are the advocates for large-scale bilateral and multilateral aid, insisting that huge grants from the World Bank, the International Monetary Fund, the U.S. Agency for International Development, and their ilk are the only source of real hope for the many desperately poor nations of what is broadly, though incorrectly, called the Global South (Asia, Africa, and Latin America). The advocate-in-chief for this perspective is Professor Jeffrey Sachs of Columbia University, who has argued that massive infusions of aid to the governments of the poorest nations can lift them out of poverty in short order. In 2006, Sachs published his seminal book, The End of Poverty: Economic Possibilities for Our Time, a work that provided the rationale for the Millennium Development Goals.

Arrayed against Sachs and his colleagues are the born-again critics of government-to-government aid, most noticeably William Easterly, a long-time World Bank economist who came in from the cold in recent years to testify to the widespread failure of “foreign aid.” His 2007 book, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good, set off the debate between the two opposing camps.

The gist of the difference between the two perspectives is simple: One side insists that the problem of poverty is far too big to be addressed through anything other than large-scale action carried out within each poor country on a national scale. The other side contends that top-down, nationwide development programs rarely work and that only solutions crafted at the grassroots and adopted by those who are most affected by them can bring about genuine social change.

Though I’ve read a number of other books taking one side or another in this debate, the work that has cast the most light on the topic is one that paid no attention whatsoever to “foreign aid” or economic development schemes, whether large or small. It’s an extraordinary, first-person tale by a young man from Malawi entitled The Boy Who Harnessed the Wind.

William Kamkwamba, the narrator of this awe-inspiring story, was a seventh-grade dropout who mastered fundamental physics by reading an out-of-date English textbook in a local, three-shelf library near his village and using his knowledge to construct a working windmill out of junkyard parts to generate electricity to irrigate his father’s farm. He was 14 years old.

You can read news reports and even the most perceptive magazine articles about the challenges of development, but you won’t get nearly as close to the essential truth of the challenge as you will from reading The Boy Who Harnessed the Wind. Kamkwamba’s tale is unsparing of himself, his community, and his country. Through his all-seeing eyes, we witness the tragic consequences of the profound official corruption that held sway in Malawi for so many years after it gained its independence from Britain in 1964. We feel the unrelenting hunger he and his family experienced for months on end in the famine of 2001-2002. We see the darkness descend all around us as William is hounded by fearful villagers who can only explain his windmill as magical. But, most of all, we observe the steady evolution of his brilliant young mind as he confronts one setback after another, and prevails over them all.

If there is hope for Africa, as I firmly believe, it lies in the minds and hearts of William Kamkwamba and other young people whose innate genius is unlocked by the spread of education and opportunity for self-expression at the grassroots. There are hundreds, maybe thousands, of William Kamkwambas across Sub-Saharan Africa. And it will be a combination of top-down aid – to build schools, train teachers, and buy textbooks – with the local action of countless NGOs, with both local and international support, that will provide them with the tools and the freedom to solve the problems that have held down their forebears for generations past. I don’t think genuine development – thorough-going social change – will come any other way.

ISBN-10: 0061730327

ISBN-13: 978-0061730320

ASIN: B002PEP4U0

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