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Effective Strategy

It is ambitious, and perhaps futile, to try to develop a single holistic theoretical framework or a comprehensive action program to reduce poverty. A problem-solving, pragmatic approach is more likely to be effective than a grand program. This book examines specific problems and proposes targeted interventions, whose efficacy can be supported by conceptual logic and empirical evidence. This approach draws on the distinction that economist William Easterly makes between planners and searchers1 Planners set out a predetermined big goal, and come up with a big plan for reaching it. Searchers’ ambitions are more modest; they are on the lookout for favorable opportunities to solve problems—no matter how big or small—whose solution will provide some benefit to the poor. Similarly, the eminent philosopher Karl Popper, in his influential book The Open Society and Its Enemies, contrasted two modes of social reform: utopian social engineering and piecemeal social engineering. Utopian social engineering involves a grand blueprint for society: “it pursues its aim consciously and consistently” and “it determines its means according to this end.” Piecemeal social engineering, by contrast, involves tinkering with parts of the system, with no overall plan. The utopian approach is “convincing and attractive” because it appeals to rational thought. Popper, however, argued that it was folly, and that the piecemeal approach is ultimately more effective.

Poor people consistently emphasize the centrality of material opportunities. This implies a focus on two dimensions of poverty: income and access to services such as public health, education, sanitation, infrastructure, and security. This book argues that poverty reduction must also emphasize these two dimensions. First, the best way to raise income is to create employment opportunities for the poor. The private sector is clearly the best engine of job creation; the government can play a useful facilitating role. Second, governments are responsible for providing basic public services. The poor bear a disproportionate share of the burden when governments fail in this responsibility.

The secondary emphasis in poverty reduction should be on the following two issues: BOP modification and government regulation. There is some, even if rather limited potential for firms to earn profits by selling beneficial goods to the poor. The challenge is to creatively find new business models that provide truly beneficial products and services to the poor at prices they can afford. Second, markets often fail, and it is the role of the government to implement appropriate regulation to protect vulnerable consumers, especially the poor.

The book also argues for de-emphasizing two approaches that do not work well: microcredit and the BOP proposition.

Business and government occupy center stage for poverty reduction efforts. Civil society does not have the resources to directly provide products and services to the poor on a large scale. However, civil society has an important role as an advocate and a catalyst for change, and as a watchdog to ensure that the private sector and the government fulfill their responsibilities.

Sidebar 1.4 Effective Strategy for Fighting Poverty

Primary emphasis:

  • • Create employment opportunities suited to the poor.
  • • Ensure that the poor have adequate access to public services.

Secondary emphasis:

  • • Market beneficial goods to the poor at affordable prices.
  • • Implement appropriate regulations to protect vulnerable consumers.

De-emphasize:

  • • Microcredit
  • • The base of the pyramid approach
 
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