Tag Archives for " global poverty "
@@@@ (4 out of 5)
Maisie Dobbs’ private practice as a “psychologist and investigator” is taking off when she receives a curious assignment from a wealthy journalist celebrated for her front-line reporting in World War I. Georgina Bassington-Hope explains that her twin brother has died, and she is convinced he has been murdered despite the police and the coroner’s conviction that his death was an accident. She wants Maisie to dig deeply and find the truth. Over the following weeks, Maisie’s life will be dominated by this unsettling case.
Georgina’s brother, Nick, was a brilliant painter whose work was beginning to earn him a fortune when he tumbled from a scaffold where he was about to hang his masterpiece. Maisie finds it difficult to obtain evidence that his death was anything but accidental: the case is a complex intellectual puzzle. Her thoroughness, obsessive attention to detail, and refusal to take anything at face value eventually lead Maisie into dark corners where the truth eventually emerges. The story is unsettling but it lacks the repeated violence of so much other detective fiction. Maisie works with her brains, not her fists.
Messenger of Truth, the fourth in Jacqueline Winspear’s venerable series of Maisie Dobbs novels, is set in the closing days of 1930 and the early months of 1931. With the terrors of World War I still vivid in every mind, the Depression is in full force. Unemployment is rampant, and the fascist politician Oswald Mosley is gaining a following with his demagogic message. The ostentatious wealth of Georgina’s family contrasts with the desperation all around. Maisie’s class awareness rises as the gross inequities weigh on her more and more heavily. Having been born and raised close to the edge of poverty, Maisie has gained an education only through the lucky accident that the aristocratic family that employed her “in service” has given her opportunities for education and advancement closed to millions of others.
@@@@ (4 out of 5)
“Planning based-approaches — so common across government, civil society, and even business — represent a neo-Soviet paradigm” and have long been shown to be at best minimally effective in fostering meaningful social change.
If that assertion is a revelation to you, you’re sure to find The Social Labs Revolution illuminating. No matter how familiar you may be with economic development, urban planning, or other fields in which disciplined planning is a fixture, you’re likely to discover something new in this challenging book.
The author, Zaid Hassan, has built a consulting business on the basis of his belief that, instead of “strategic planning” by “experts,” the world’s most urgent and compelling problems can be solved only by bringing together large, diverse teams representing every aspect of the population that is most directly affected. Working together over months or years as a “social lab,” a team consisting of as many as 36 people struggles together but, eventually, and after considerable conflict and unhappiness, will arrive at a set of practical approaches to prototype as the first stage in solving the problem they share. At its core, a social lab is characterized in three ways: it’s social, it’s experimental, and it’s systemic (in that the ideas that emerge “aspire to be systemic in nature.”). Work within the lab is based on the “U Process” championed by Otto Scharmer.
The problems Hassan and his colleagues choose to address are invariably deep-seated and often life-threatening. The Social Labs Revolution focuses on three long-running experiments, one on sustainable food, a second on malnutrition in urban children (specifically, those living in Maharashtra state in India), and the third on stabilizing the (notoriously unstable) nation of Yemen. For example, the first of these three, a Sustainable Food Lab, was global in scope and participation, bringing together participants from government (Brazil, The Netherlands), civil society (World Wildlife Fund, The Nature Conservancy), and corporate food companies (Unilever, General Mills) who worked together for two years. The author credits the team with putting “sustainability” on the radar screens of global food companies.
As Hassan concedes, his consultancy, Reos Partners, is not alone in advancing the social lab technology. He also mentions a Chilean innovation, SociaLab, which addresses new enterprises to alleviate poverty, and the Abdul Latif Jameel Poverty Action Lab at MIT, and points to a number of similar though less structured examples such as Greenpeace’s Mobilisation Lab, set in motion “‘to break through and win on threats to people and the planet.'”
The Social Labs Revolution is blissfully short and easy to digest, with the exception of an annoying digression into an academic discussion of the philosophy underlying the social labs concept. I don’t know about you, but whenever I come across repeated references (13 of them) to the philosopher Martin Heidegger and his disciples, or any other recognizable name from the ranks of dead white philosophers, I head for the exits. Instead of that digression, I would have enjoyed a more detailed discussion of the results that emerged from the three social labs mentioned most prominently in the book. What Hassan offers is spotty and inadequate.
Nitpicking: Someone — the author, the editor, or the proofreader, I know not who, or what potential combination of them — seems to believe that Jack Welch was “the legendary CEO of General Motors.” Fact-checker, please!
The Bright Continent: Breaking Rules and Making Change in Modern Africa, by Dayo Olopade
@@@@ (4 out of 5)
It starts with the title itself—Dayo Olopade’s challenge to the prevailing sentiment that sub-Saharan Africa today is little different in its essence from the “dark continent” perceived by nineteenth century colonialists. In The Bright Continent, Olopade catalogs an impressive number of innovative businesses, social sector ventures, and even an occasional government initiative that contribute to the fast growth of this long-underestimated region.
To put Olopade’s story in context, the World Bank recently announced that economic growth in sub-Saharan Africa is expected to rise from 4.7 percent in 2013 to 5.2 percent in 2014, compared to 3.5 percent globally. And the CIA World Factbook lists eight African countries among the twenty fast-growing nations in the world in 2013. However, these numbers must be interpreted with caution, since the measurement of economic indicators in most countries in the region is notoriously unreliable (as economist William Easterly reminded us in The Tyranny of Experts), and growth in GDP or even GDP per capita doesn’t necessarily mean that life is getting better for the seventy percent of sub-Saharan Africans (600 million) who live on $2 a day or less. Still, there is clearly a lot going on in Africa these days, and it’s time for the world to pay much closer attention.
Olopade, a first-generation Nigerian-American whose parents, both physicians, have roots in rural Nigeria, brings a fresh and well-grounded perspective to the project. She refuses to accede to conventional word usage, rejecting terms such as “developing country,” “emerging nation,” “poor country,” and “rich country” in favor of her own constructions. One is the term “fail state,” connoting a country whose government fails to deliver essential services but is not a “failed state,” which she applies only to Somalia. Another is the distinction between “lean economies” and “fat economies.” (You can guess which is which. Not a bad way to look at things, is it?) She also organizes her material around a clever device she calls mapping, relating new developments in terms of five “maps” that dominate the reality of Africa today: Family, Technology, Commerce, Nature, and Youth. These five maps “showcase the unique institutions that bind black Africa together and are building its bright future,” Olopade writes.
Permeating the book is the concept of kanju, a term in the Nigerian language Yoruba that the author loosely translates as “hustle,” “strive,” “know how,” or “make do.” In practice, kanju means bending the rules and devising workarounds — a concept similar to the Hindi and Urdu term jugaad, which also is often used to characterize the unconventional solutions that people come up with out of necessity.
Here are just a few of the many recent ventures featured in The Bright Continent, every one of them an example of kanju in action:
Olopade emphasizes that virtually everywhere in the region, national governments are “a constant impediment to development progress,” typically ignored if possible and almost universally disdained. (She reports that ninety-two percent of the businesses in Lagos, Nigeria’s largest city with a population now estimated at 21 million, operate outside the law.) Rwanda is an outlier. There, the autocratic government of Paul Kagame enforces rapid and orderly development free of corruption in a pattern similar to that of Lee Kwan Yew in Singapore in decades past. Visitors to Rwanda, including friends of mine, note the surprise they registered when they learned that “everything works there.” The country is on a fast track toward middle income despite (some might say because of) a lack of high-priced natural resources.
The author does have blind spots. I detected a couple of errors in her reporting, and, more consequentially, she seems to have been bamboozled by Columbia economist Jeffrey Sachs, the driving force behind the ill-fated Millennium Villages Project. Olopade refers to the project respectfully, although the available evidence points to the effort as a dismal failure. (The full story is told beautifully and authoritatively by Nina Munk in The Idealist, a biography of Dr. Sachs that focuses on the village project.)
In researching this book, Olopade, a journalist, spent many months traveling across the continent to observe the promising changes underway and interview the bright, resourceful, and usually young innovators who are creating change in one of the world’s most tradition-bound areas.
@@@@ (4 out of 5)
Has the human race made progress since the days when all our lives were nasty, brutish, and short?
Some might think this question patently silly, since it would appear to answer itself. But Angus Deaton finds in it a point of entry into his inquiry on “health, wealth, and the origins of inequality,” the subtitle of his ambitious new book. He is in no doubt that humanity has progressed, not steadily but by fits and starts — and continues to do so to this day. “Today,” he writes, “children in sub-Saharan Africa are more likely to survive to age 5 than were English children born in 1918 . . . [and] India today has higher life expectancy than Scotland in 1945.”
In The Great Escape, Deaton, a veteran professor of economics and international affairs at Princeton, explores inequality — between classes and between countries — with a detailed statistical analysis of trends in infant mortality, life expectancy, and income levels over the past 250 years. He concludes that the large-scale inequality that plagues policymakers and reformers alike in the present day is the result of the progress humanity has made since The Great Divergence (between “the West and the rest”) since the advent of the Industrial Revolution. “Economic growth,” Deaton asserts, “has been the engine of international income inequality.”
No argument there: Deaton is far from alone in this belief. Other scholars have written extensively about this topic in recent years. A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark, is just one example.
Late in the 18th Century, the countries of Northern Europe and North America on the one hand and those of Asia, Africa, the Middle East, and Latin America on the other hand were not that far apart as measured by the available indicators of health and income. Deaton cites “one careful study [that] estimates that the average income of all the inhabitants of the world increased between seven and eight times from 1820 to 1992.” However, that average obscures a harsh reality. The ever-quickening rate of change in “the West” since 1760 or so has widened the gap between (and within) countries to an extreme degree. Deaton terms the freedom from destitution and early death that so many of us now enjoy “The Great Escape,” taking his title from the 1963 film of that name about a massive escape of prisoners from a German P.O.W. camp in World War II.
Only now is the gap closing between the rich nations and China and India (by far the world’s two biggest countries, with nearly 40 percent of the planet’s population and half the world’s poor). Deaton doesn’t consider a bright future for all a certainty, not by any means, in view of global climate change and the ever-present threat of killer pandemics. But, assuming the species continues to thrive, there is sufficient data available now to have some confidence that the gross inequality now existing among nations will not persist forever. After all, five sub-Saharan African countries are now growing their economies faster than China’s.
However, that misleading factoid ignores the outsize role that China has played in “the Great Escape” globally. Deaton notes, as have other observers, that “the number [of] people in the world living on less than a (2005) dollar a day fell from about 1.5 billion in 1981 to 805 million in 2008 . . . [This] decline in numbers is driven almost entirely by the Chinese growth miracle; if China is excluded, 785 million people lived on less than a dollar a day in 1981 compared with 708 million in 2008.” (This reality is one of the principal reasons why Paul Polak and I insist in The Business Solution to Poverty that traditional methods to end poverty have largely failed. After all, China’s methods were hardly traditional!)
In the course of exploring the historical record of growing inequality on the world stage, Deaton delves deeply into the role of foreign aid (officially, Overseas Development Assistance, or ODA) and finds it comes up short. “You cannot develop other countries from the outside with a shopping list for Home Depot, no matter how much you spend,” he writes. With the exception of outside interventions in public health programs — including such breakthroughs as the eradication of smallpox and the near-success with polio — Deaton finds that foreign aid has done more harm than good. He argues that where the conditions for development are present, outside resources are unnecessary. Where they’re absent, ODA entrenches local elites, distorts the local economy, and discourages local initiative. The author insists that “the record of aid shows no evidence of any overall beneficial effect.”
But that’s only part of the story.
In 2012, ODA totaled about $136 billion. Throw in another $30 billion or so from NGOs, and total outside assistance comes to under $200 billion annually. However, net resource transfers from developing countries to rich countries are well in excess of $500 billion annually. (Transfers reached a peak of $881 billion in 2007, fell with the Great Recession, but are rising again.) Quite apart from the fact that an estimated 70 percent of “foreign aid” is actually spent on products and services from donor nations, ODA merely puts a dent in the huge disadvantage that poor countries suffer as a result of lopsided trade policies and prevailing political and commercial imbalances. In any case, just one factor in those resource flows — remittances from overseas residents of poor countries to their families back home — are twice as large as ODA.
The Great Escape is a worthy effort from a senior scholar whose wide-ranging studies have led him to big-picture conclusions. Policymakers and practitioners should be listening carefully.
As I’ve dug more deeply into the subject of global poverty in the course of writing The Business Solution to Poverty with Paul Polak, 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 my 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. I’ve read all these books — some before I began my blog, so that I haven’t reviewed them. Where I’ve 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.
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.
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.
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.
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.
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.
Moyo, Dambisa, Dead Aid: Why Aid is Not Working and How There Is a Better Way for Africa. Farrar, Straus and Giroux, 2009.
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.
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.
A review of Pharmacy on a Bicycle: Innovative Solutions for Global Health and Poverty, by Eric C. Bing and Marc J. Epstein
@@@@ (4 out of 5)
Despite the widespread conviction that the state of the world is deplorable and getting worse by the day, the human race has made measurable, even dramatic progress in some important ways. The collective state of our health is the most telling example. In part because of the eradication of smallpox, the near elimination of polio, and the significant recent progress on HIV/AIDS, humanity in general is living longer and healthier lives. Average life expectancy at birth in India around 1950 was 38 years; today it is 65. In China, it was 41; today it is 77. Over the same period, average life expectancy in the United States has risen from 65 to approximately 80. Numbers can be misleading, but these tell a compelling story.
Building on this amazing success story, major institutions — the United Nations, the U.S. Government, and the Bill and Melinda Gates Foundation, for example — have invested billions of dollars in recent years, targeting specific diseases, promoting the use of vaccines, and building public health infrastructure in developing nations. All these admirable efforts promise to continue the favorable trend in healthcare that has unfolded over the last half-century.
However, there is a hidden dimension in this picture. As Eric Bing and Marc Epstein explain in Pharmacy on a Bicycle, billions of poor people living in rural areas all too frequently fail to gain the benefit of these advances in healthcare. It’s fashionable to look on the world today from the perspective of the cities, but in spite of the massive migration of the last several decades, nearly half (49%) of the world’s population still resides in rural areas. Great numbers of these people live far from transportation hubs, often hours or even days of walking from the nearest road. It’s to these billions of people, nearly all of them desperately poor by American or European standards, that Bing and Epstein turn their attention in their illuminating little book.
Pharmacy on a Bicycle rests on a single, fundamental premise: “Most poor outcomes [in healthcare] are caused not by lack of effective medicines or medical know-how. The ability to prevent and treat many of these diseases inexpensively has been available for a very long time. But getting the right remedies to the right people in the locations where they are needed, in a way they will use them, and at a cost they can afford is continually a challenge. This is not a scientific problem. It’s a business challenge.”
Bing and Epstein argue that humankind has never before been in such a good position to meet this challenge. The costs of many widely-used drugs have fallen dramatically, and scientists have greatly simplified the treatment of many diseases by combining multiple drugs into single capsules or tablets. Extremely cheap diagnostic techniques that provide nearly instant assessments are now available. Through telemedicine, a single well-trained physician can now offer her or his expertise to much larger numbers of patients. The widespread use of clinical checklists and the application of franchising to the healthcare industry have both improved access and lowered costs. And new business models, successfully piloted in many countries, using bicycles, motorcycles, and trained village-level representatives, make it possible for healthcare agencies and for-profit companies to overcome the “last mile problem” that has traditionally limited most of the benefits of the market economy to population centers. “We are now at a tipping point to make lasting global health impacts,” the authors write.
One of the most promising recent developments is the now near-universal access to cell phones; by next year, the number of mobile phones is expected to be greater than the world’s population. “Mobile phones are now being used for patient education and awareness, treatment compliance, health care worker training, data collection, disease and epidemic outbreak tracking, and diagnostic and treatment support.”
Pharmacy on a Bicycle is intended to spark much wider adaptation of these advances by making them more widely known. The book presents a seven-point implementation model called IMPACTS, which encompasses innovation and entrepreneurship, maximizing efficiency and effectiveness, coordinating with partners, accountability, creating demand, task shifting (e.g., empowering nurses to take on some doctors’ responsibilities), and scaling. The book includes an abundance of excellent examples that bring these deadly-sounding prescriptions to life.
Eric Bing is an M.D. who also possesses a Ph.D. in epidemiology and an MBA. He’s the director of global health at the George W. Bush Institute at Southern Methodist University. His co-author, Marc Epstein, is an eminent and much-published professor of management at Rice University in Houston whose previous teaching posts were at the Harvard and Stanford business schools and INSEAD (European Institute of Business Administration).
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:
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.
@@@@@ (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.
A review of Portfolios of the Poor: How the World’s Poor Live on $2 a Day, by Daryl Collins, Jonathan Morduch, Stuart Rutherford, Orlanda Ruthven
@@@@ (4 out of 5)
This book makes a major contribution to our understanding of global poverty.
Portfolios of the Poor reports the findings of a series of detailed, year-long studies of the day-to-day financial practices of some 250 families in India, Bangladesh, and South Africa, including both city-dwellers and villagers. The authors conducted monthly, face-to-face interviews with each family, focusing on money management and recording every penny spent, earned, or borrowed in “diaries” that formed the principal source for their observations. In the process, they made discoveries that will surely be surprising to some readers:
Scholars, activists, and policymakers alike have quarreled over the question of global poverty and what to do about it for more than half a century. More often than not, the disputes they air in official policy debates, in the news media, and in scholarly journals are grounded in statistics developed by the United Nations and the World Bank — figures that usually represent worldwide averages. Therein lies much of the trouble.
The most widely accepted benchmark for world poverty today is $2 a day per person, as determined by the World Bank. However, you have to dig deeply before you can understand what the World Bank and the United Nations actually mean by “$2 a day.” They’re not referring to those two one-dollar bills you may have crumpled up in your pocket or purse. To correct for economic differences from one country to another, they use the concept of Purchasing Power Parity (PPP).
In theory, PPP takes into consideration the sharp differences in how much $2 will buy in any given country as compared to the global norm. But in practice the experts have widely differing views on what method should be used to calculate PPP and, in effect, what is the global norm. As if that isn’t bad enough, the most commonly used techniques to calculate PPP are based on each country’s economy-wide standard of living. In other words, the definition of poverty might depend in part on the price of big-screen TV sets and BMWs or their equivalent. In hopes of correcting that problem, scholars have been writing papers for several years about “poverty-based PPP,” excluding anything but goods and services commonly demanded by people living at subsistence level, but none of the approaches they’ve proposed has yet been officially adopted.
The whole question of PPP, then, is so confusing — and so confused — that the authors of Portfolios of the Poor have rejected the concept. They base all their calculations simply on the prevailing exchange rates between local currencies and the U. S. dollar. To which I say, amen.
The four co-authors of this book are an intriguing bunch. Two are men and two women. (Daryl Collins, the lead author, is female.) All four are products of elite universities: Oxford, Cambridge, Harvard, and the London School of Economics, though only one, Jonathan Morduch, is currently an academic. Morduch teaches development economics at NYU’s Wagner School of Public Policy in New York; he is an expert in microfinance. Daryl Collins, Stuart Rutherford, and Orlanda Ruthven are all development practitioners with practical field experience — Collins with a Boston-based global consultancy, Rutherford with a microfinance institution he founded in Bangladesh, and Ruthven with DFID, the UK equivalent of USAID.
A review of Reverse Innovation: Create Far From Home, Win Everywhere, by Vijay Govindarajan and Chris Trimble
@@@ (3 out of 5)
Back in 2004, a respected marketing professor at the University of Michigan named C. K. Prahalad raised eyebrows in the business community with a widely-read book titled The Fortune at the Bottom of the Pyramid. In 25 words or less, he postulated that multinational corporations could grow their markets and their bottom line by reaching out to the billions of poor people who crowd emerging nations across the globe. Much of Prahalad’s book consisted of “case studies” — written by his graduate students — that purported to support his thesis. Unfortunately, practically none of them did.
Here, eight years later, is the book that Prahalad — now, unfortunately, deceased — should have written. Govindarajan, a professor at Dartmouth’s Tuck School of Business, and Trimble, a younger Tuck faculty member, have formulated a concept they call “reverse innovation” that is the key to doing business in those emerging markets that excited Prahalad’s lust. Their book, too, is dominated by case studies, but in this case the examples do a good job of illustrating how multinational companies have successfully developed products that gained a foothold in developing countries — though by no means necessarily at “the bottom of the pyramid.”
“Reverse innovation” — an ethnocentric term — begins with the conventional wisdom that business innovation takes place in rich countries but asserts that transnational corporations wishing to become established in developing markets must cast off traditional thinking and develop products and services within those markets and base them on the needs and wants of people living there. Govindarajan and Trimble advocate reverse innovation as the alternative to exporting rich-country products and services with minor adjustments, a strategy that many companies have found unsuccessful. (The authors call this strategy “glocalization.”)
The case studies in Reverse Innovation span a wide range of needs, desires, and prices. The authors write about an extremely inexpensive electrocardiograph machine developed and marketed in India by GE Healthcare, lightweight enough for use by individual physicians on rounds in villages. They relate the story of the development from scratch of a lentil-based new snack food by PepsiCo in India, and of a new automotive “infotainment” system crafted through an international effort by Harman and eventually purchased by Toyota. Other examples include Procter & Gamble, Logitech, and the nonprofit Partners in Health.
Most of the case studies are great stories, even if they are better illustrations of how multinational corporations can make more money than they are of how poor people in emerging nations can gain access to needed goods and services at affordable prices. However, the bulk of Reverse Innovation is given over to discussion about change management in large corporations: it’s clear that the real challenge these companies face in growing their markets is to get around the massive barriers thrown up by organizations that are too large, too successful, and too set in their ways. The authors write, “Reverse innovation begins not with inventing, but with forgetting . . . You must let go of the dominant logic that has served you well in rich countries . . . Reverse innovation is what we call clean-slate innovation.”
Govindarajan and Trimble make it clear that the only way for a transnational company to bring about reverse innovation is to (1) start with a champion at the top, usually the CEO; (2) appoint a brilliant and politically savvy person to head up an “LGT,” by which the authors do not mean to suggest gender preference but simply to abbreviate “Local Growth Team;” (3) recruit to the team a group of mavericks willing to ignore the conventional rules; and (4) work on site in one of the major emerging markets, far, far from headquarters.
Reverse Innovation is well-organized, well-written, and delivers on its promise. Why, then, have I awarded this book only three @@@ out of 5? Out of pique, perhaps, more than anything else. For one thing, the do’s and don’ts of management in large organizations are . . . well, for me, the only apt word is boring. And I can’t get past my aggravation that this is yet one more instance of brilliant minds being lashed to the task of making the rich richer.