The Economist's great surveys
Monday, November 28, 2005 at 3:59PM ■"Tired of globalization: But trade liberalization and other forms of openness are needed more than ever," The Economist, 5 November 2005, p. 11.
■"The hidden wealth of the poor: A survey of microfinance," The Economist, 5 November 2005, 15 pages.
A great bit of analysis (the cover story on globalization, uh, I mean . .. globalization!) coupled with the usually brilliant survey collection of articles penned by Tom Easton and others.
No secret on making Doha's Hong Kong meeting go well: the Old Core cuts trade subsidies and we let the next Green Revolution do its bit to gin up a new generation of New Core pillars (all our current ones enjoyed the previous revolution, so no mystery there).
That's the top-down solution.
The bottom-up one involves micro-finance that frees women from women's work, gets young girls in school, and jump starts economic connectivity between the Gap and the Core.
The settlers are there, my friends. We just need to lay some tracks.
Bank accounts come with wealth. Remember when everyone seemed to keep their savings in mattresses? Well, that was back when many of us still worked the land, had meager savings, and didn't trust banks. We micro-financed through hoarding. Inefficient, but it beat bank runs.
But there's real money, and markets, to be found in those current-day equivalents of mattresses. Companies got rich in this country by selling mostly to the poor, as C.K. Prahalad pointed out in his great book, The Fortune at the Bottom of the Pyramid.
Banks will go there because there's money to be made. It is estimated that the demand for micro-financing right now in India is upwards of $40B a year, which is 40 times the current supply offered by institutions that specialize in this sort of lending.
So do you think it would be a good thing or a bad thing for global banks to gain more entry inside the Gap?
As one micro-financier put it, "We are not paternalistic, we do not lend to the poor. We lend to those who do not have access."
Connect and get rich. Deng said it, noting that no country in history ever got rich without opening up first to the outside world.
Aid isn't the answer. Balance sheets are.
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