If you only read one thing this week…


Are Market-Based Approaches a Realistic Solution to Poverty? by Rob Neal
March 4, 2009, 8:07 pm
Filed under: Articles, Development theory, If you only have 15 mins

Here is how Aneel  Karnani views the poor:

[They] lack the education, information, and other economic, cultural, and social capital that would allow them to take advantage of—and shield themselves against—the vagaries of the free market.

And how we view the poor is one of the main problems Mr.Karnani points to in his article Romanticizing the Poor.  All those able to help the poor:  NGOs, corporations, and government, romanticize “poor people as creative entrepreneurs.”  They are viewed as “as value-conscious consumers and resilient entrepreneurs.”  Because they are already savvy, all they need is a chance to use their  skills in the marketplace.  Regulatory and social mechanisms are not needed; the market will lift them from poverty.

Reality may be somewhat different.  What if Mr. Karnani is right when he says:

I have found little evidence suggesting that poor people are particularly discerning consumers or creative entrepreneurs. Instead, and on many counts, they are worse consumers and entrepreneurs than their wealthier counterparts…

For Mr. Karnani market-based approaches. private enterprise, and  NGOs all have a role in reducing poverty.  The missing player is government.  As he says, “[b]y emphatically focusing on the private sector, market-based poverty alleviation programs distract people from correcting the frequent failures of governments to fulfill their traditional and accepted functions.

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