Musings on market-oriented approaches to International Development
Two decades ago, 93% of the world’s poorest people lived in low-income countries (LICs). Today, according to the Center for Global Development, 72% of the world’s poorest people live in middle-income countries (MICs). While middle-income countries have an income per person (in PPP) greater than USD $1.25/day, these states are home to millions – 960 million – of poor people due to inequality and demographic trends. Even without China and India, the proportion of the world’s poor in MICs has tripled, in a range of countries from Nigeria to Pakistan or Sudan.
It would seem then that =evelopment practitioners need to alter their strategies for achieving improved social, economic and political outcomes. Obviously, one alteration would be a change in the composition of development resources provided to developing countries. Another would be a more pervasive role for the private, acting as a more active vehicle for enabling further change from a life of poverty to a life with greater affluence. This could happen in three ways.
First, job creation. For the poor in the developing world, a primary driver in advancing from living below the poverty line is access to jobs, particularly in roles that do not require extensive formal training. The continued creation of jobs will help to perpetuate a desired outcome of continuous economic progress.
Second, the private sector can act as a coherent force for encouraging more substantive engagement by the government with low-income individuals. Despite the conventional cynical caricature of corporate lobbying as anathema to society’s best interest, corporate advocacy in LICs and MICs can encourage the state to ensure meaningful access of low-income individuals to education and health care: essential goods for a vital workforce. Corporate advocacy can also act as an impetus to encourage a concerted effort by the government to facilitate a buoyant private sector with a sensible macroeconomic policy and sound infrastructure.
Third, corporations have an opportunity to collaborate with civic and other non-governmental organizations, and create a network of services to offer a more holistic set of opportunities and support for their workers. For example, NGOs can support the provision of financial literacy training for employees, workshops on health-related matters, all while working in partnership with private organizations.
These three expectations are partly informed by my personal experience working as an Acumen Fund Fellow in Kenya for a hybrid maize seed manufacturer, Western Seed Company (WSC). For example, WSC regularly works with NGOs to demonstrate the higher yield of hybrid seeds versus conventional farm-saved seeds to low-income farmers. These NGOs often provide farmers with services outside the capacity of WSC, such as training on effective agronomical practices or strategies for running a successful agri-business.
Together, these steps can help to bolster the effects of aid, investment and policymaking in both LICs and MICs, encouraging a continued advancement in the well-being of citizens at the lowest and lower end of the economic ladder.
Are there any other ways you think business can help the “new bottom billion?”