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06

Jul

Doughnuts Defeating Poverty

An article about how hope and optimism (“a feeling that a better outcome is possible”) for the future are important for development in impoverished areas. I would be interested to see the spending behavior of women though, whether they also “self-medicate” with self-destruction behaviors or invest more money on their family. Especially since many of these countries are patriarchal

Excerpts taken from the New York Times:

Alfred Nasoni and his wife, Biti Rose, have had seven children in this village of Masumba. Two died without ever seeing a doctor. Alfred and Biti Rose pulled their eldest son out of school in the fourth grade because, they said, they couldn’t afford $5 in school costs for a term. And they farmed only part of their 2.5 acre plot because they lacked money for seeds.

Yet poverty is sometimes romanticized, and it’s more complicated than that. Alfred, 45, told me that even as his children were starving, he spent an average of $2 a week on local moonshine and 50 cents on cigarettes. He added that he also spent $2 or more a week buying sex from local girls — even though AIDS is widespread.

All this hints at an uncomfortable truth: The suffering associated with poverty is sometimes caused not only by low incomes but also by self-destructive pathologies. In central Kenya, a recently published government study found that men, on average, spent more of their salaries on alcohol than on food.

It’s a vicious circle: despair leads people to self-medicate in ways that compound the despair.

Yet there are escape hatches. In 2005, Biti Rose joined a village savings group founded by CARE, the international aid group. These “village savings and loans” are among the hottest ideas in development work. They now serve some six million people in 58 countries.

[…]

With a loan of $2, Biti Rose started making and selling a local version of doughnuts, which she initially sold for 2 cents each. “People really liked my doughnuts,” she noted, and soon she was making several dollars a day in profit. Inspired by her example, Alfred began growing vegetables and selling them; he turned out to be a shrewd businessman as well.

Seeing an upward trajectory in the family fortunes, Alfred cut out the girlfriends and curbed his drinking, he says.

To read more, click here.

30

Jun

Microfinance as an engine for development?

Interesting article about microfinance and whether it significantly makes a difference to the lives of the poor. While Ruper Scofield, Peace Corps volunteer, saw it as a way out of the poverty trap in Guatemala, others could not find a strong causal relationship. Then again nothing is ever black or white. The fact that there are still many successful stories prove that there is a grand possibility for change, given time and the suitable factors and application.

Excerpts taken from The Guardian:

A market in Guatemala, the country where the CEO of the global microfinance organisation Finca first saw the benefits of extending credit. Photograph: Kevin Rushby

[…] But Scofield’s story didn’t end there. “I’d read all these terrible stories about how foreign aid is stolen and wasted and so forth, but this really worked. It had an immediate impact on the welfare of the people and it was cheap. But what really made an impact on me was that, when the time came to leave, the people were terrified. I realised that we’d made a real difference.

The realisation stayed with him. Today, Scofield is president and CEO of the Foundation for International Community Assistance (Finca), a global microfinance organisation he co-founded with John Hatch in 1984 to provide savings accounts, loans and other financial services to some of the world’s poorest communities. A shaping influence in the evolution of the village banking model, the group has a loan portfolio of more than $500m extending across five continents. From small beginnings to great things, as they say.

Except, of course, it’s far from clear microfinance is a great thing. When the UK Department for International Development (DfID) commissioned a study of its impact (pdf), the report’s authors concluded: “Despite the apparent success and popularity of microfinance, no clear evidence yet exists that microfinance programmes have positive impacts.

The review also cautioned – pointedly, when one considers the above story – that “while anecdotes and other inspiring stories purport to show that microfinance can make a real difference in the lives of those served, rigorous quantitative evidence on the nature, magnitude and balance of microfinance impact is still scarce and inconclusive”.

Read more here

02

Nov

The Shadow Superpower

Forget China: the $10 trillion global black market is the world’s fastest growing economy — and its future.

An interesting article about System D  where “inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise”. Basically, an economic system “under the radar.” Ruled by the spirit of organized improvisation, System D is growing faster than any other part of the economy particularly in developing countries. 

“It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too. Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world — close to 1.8 billion people — were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes.

The growth of System D presents a series of challenges to the norms of economics, business, and governance — for it has traditionally existed outside the framework of trade agreements, labor laws, copyright protections, product safety regulations, antipollution legislation, and a host of other political, social, and environmental policies. Yet there’s plenty that’s positive, too. In Africa, many cities — Lagos, Nigeria, is a good example — have been propelled into the modern era through System D, because legal businesses don’t find enough profit in bringing cutting- edge products to the third world. China has, in part, become the world’s manufacturing and trading center because it has been willing to engage System D trade. 

[…] And it comes to this: The total value of System D as a global phenomenon is close to $10 trillion.” (The U.S GDP is about $14 trillion)

Source: Foreign Policy

20

Jun

Why Can’t More Poor People Escape Poverty?

A radical new explanation from psychologists.

Researchers have found that exerting self-control on an initial task impaired self-control on subsequent tasks: Consumers became more susceptible to tempting products; chronic dieters overate; people were more likely to lie for monetary gain; and so on. 

In addition, researchers have expanded the theory to cover tradeoff decisions, not just self-control decisions. That is, any decision that requires tradeoffs seems to deplete our ability to muster willpower for future decisions.  

As Princeton psychologist Eldar Shafir formulated the point in a recent talk, for the poor, “almost everything they do requires tradeoff thinking. It’s distracting, it’s depleting … and it leads to error.” 

In a paper in April 2010, Harvard behavioral economist Sendhil Mullainathan and MIT’s Abhijit Banerjeeapplied this same notion to decisions requiring self-control. If a doughnut costs twenty-five cents, they wrote, then that “$0.25 will be far more costly to someone living on $2 a day than to someone living on $30 a day. In other words, the same self-control problem is more consequential for the poor.” And so, in addition to all the structural barriers that prevent even determined poor people from escaping poverty, there may be another, deeper, and considerably more disturbing barrier: Poverty may reduce free will, making it even harder for the poor to escape their circumstances.

The economist Amartya Sen, in his well-known volume Development as Freedom, notes how an individual’s “freedom of agency” is “constrained by the social, political and economic opportunities” available to them. He’s right: Fewer options do reduce freedom. But now, we may need to grapple with a new possibility: that poverty doesn’t simply reduce freedom by constraining an individual’s choices, but that it may actually alter the nature of freedom by reducing an individual’s willpower.

Source: The New Republic

27

Apr

Inspiring Cambodian Women: The Harpswell Foundation

Although this blog is not talking about a specific woman, I think it is important to mention The Harpswell Foundation and their mission to help women in Cambodia.

According to The Harpswell Foundation website, this NGO was created to help provide housing, promote, educate, and inspire marginalized women in developing countries. In 2007, The Harpswell Foundation was recognized by the Cambodian government. They have built many schools in countrysides where it is much needed. A year later, they received a gold medal for their humanitarian service by the Cambodian government, presented by Deputy prime minister Kong Som Ol.

To read more about The Harpswell Foundation please, click here.

(via inspire-satreykhmer) <— Please visit and follow my friend’s tumblr, especially if you are interested in Cambodia, women’s rights and the developing world. :)