A note on economic development

“I think we have gone too far in the pro-poor direction…… we don’t necessarily have trade-offs. Factories are pro-poor.” Chris Blattman, Yale University

I am on record as not being too enthusiastic about “pro-poor growth” as it is currently practiced. Loans to the poor and other approaches that completely bypass those with a higher probability of succeeding at creating big business – the educated and middle class – will at best only keep the poor afloat and at worst divert resources from much needed long-term investment. I am not saying that the educated have a monopoly on entrepreneurship. All I am saying is that what we want is to create sustainable jobs. This requires scale. And scale comes with big business and industry.

Blattman neatly summarizes this point:

The difference between a country with $1,500 and $15,000 of income a head a head is simple: industry. All the microfinance and microenterprise programs in the world are not going to build large firms and import technology and provide most people with what they really want: a stable job, regular wages, and a decent work environment.

More on this here.

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7 thoughts on “A note on economic development

  1. Probably more like the difference between $1500 and $5000. Once you hit $15,000, all of your factories have probably moved to Vietnam.

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  2. This pretty much sum up what I have been thinking lately! I am from what people calls a “poor country”in West Africa. Had a chance to get a bachelor degree from a US institution a while ago, and have been thinking lately about all the young educated men and women in many African capital city with no jobs… and wonder why no one was talking about them and all the focuses were on the rural areas… why don’t we invest also in this young men and women and teach them how to invest in their own people in the rural area..? Would like to further discuss this idea you developped…

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