Economics

By admin • Teaching, Uncategorized • 28 Sep 2011

The economics of aid and development are complex and stir intense debate. From William Easterly and Dambisa Moyo to Jeffrey Sachs and Paul Collier there is no shortage of opinions, remedies, speculations. If everybody agrees on one thing is that there is no such thing as a silver bullet to the challenges of both aid and economic development. In his 1998 book, The Fortune at the Bottom of the Pyramid, C.K.Prahalad proclaimed that the most sustainable approach is for the bottom billion to enter the capitalist market place as consumers. Soon a heated debate ensued on the viability of such approach.

Ten years later, and with the MDG, the Human Development Index and a renewed urgency and interest in the field of design for social change the answers are no more concrete. What has changed is that the framework itself has changed and successful projects have emerged that tackle many of these issues. Amartya Sen, an economist, provided the conceptual framework for the Human Development Index, and therefore for a new perspective on what is human development, influencing policy and international development in general.

Mohammad Yunus, another economist, has developed one of the most successful projects to stimulate economic opportunity and gender equity.

Bottom of the Pyramid Approach

“These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power…that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.” Franklin D. Roosevelt, 1932

C.K. Prahalad, The Fortune at the Bottom of the Pyramid

  1. The innovation sandbox
  2. Build an ecosystem
  3. Co-create solutions
  4. A new concept of scale
  5. Use technology
  6. Sustainability will emerge as a source of innovations at the Bottom of the Pyramid
  7. The challenge is market development
  8. BofP markets are evolving rapidy

[see debate: Fortune at the Bottom of the Pyramid: A Mirage by Aneel G. Karnani and C.K. Prahalad'sresponse]

Other approaches to markets at the Bottom of the Pyramid:

“developing relationships with non-traditional partners, co-inventing custom solutions, and building local capacity.”

Reinventing strategies for emerging markets: beyond the transnational model by Ted London and Stuart L Hart

Making Better Investments at the Base of the Pyramid by Ted London

Base of the Pyramid Protocol (or economics as design!)

examples:

but support structures are needed :[i4c] Campaign

The [i4c] Campaign™ exists to support thoughtful entrepreneurship committed to people, the planet, and profit. Together with our partners, we are ensuring a better tomorrow by supporting responsible businesses today.

Empirical Economics

Poverty Action Lab at MIT and the work of Ester Duflo — [ at TED ] but sometimes the result does not really matter.

Other links:

Paul Polak & Out of Poverty

Aid to Africa Debate at the Asia Society (2007) [youtube] :  John McArthur debates William Easterly

Economic Security for a World in Crisis by Muhammad Yunnus

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