Author Archives: Josh Weinstein

A New Way Forward on Global Development

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The Obama Administration recognizes that the successful pursuit of development is essential to our security, prosperity, and values.  In a world shaped by growing global economic integration and the fragmentation of political power; by the rise of emerging powers and the persistent weakness of fragile states; and the potential borne of globalization and risks posed by transnational threats, development is a strategic imperative to the United States.  Our investments in development – and the policies we pursue that support development – can facilitate the stabilization of countries emerging from conflict, address poverty that is a common denominator in the myriad of challenge we face, foster increased global growth, and reinforce the universal values we aim to advance.” – A New Way Forward on Global Development

This is an excerpt from the opening paragraph of a memo leaked to Foreign Policy magazine the other day.  It is a draft version of the National Security Council’s Presidential Study Directive on Global Development Policy (PSD-7).  The 7-page documents details plans for an overhaul of U.S. approach to development and foreign aid.  I am still reading through the document and the commentaries that have already been posted, but the approval ratings from the development community have so far been positive.  My first thoughts are that the document is classic Obama: simple and pragmatic, intuitive and ambitious.  It proposes consolidating the fragmented government agencies to reduce waste, bringing more accountability to aid distribution by applying quantifiable metrics to programs and investing in those with a proven return, and building in-country capacity to produce sustainable solutions.  In a world of limited resources and an industry with a reputation for squandering those resources, the report proposes selectively choosing sectors that yield the most far-reaching and broad results.  Simultaneously, the U.S. will hold countries responsible for keeping up their end of the bargain by utilizing funds appropriately.  The U.S. will take a multi-lateral approach, working with other foreign governments, NGOs, philanthropy organizations to divide the labor and financing according to sector expertise.  Lastly, the U.S. will create a new “modern architecture” to ensure that government agencies are working in tandem.  Continue reading →

Industrial Agriculture and Solutions to World Hunger

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In this essay, the author discusses the right approach to combating the problem of hunger – an attribute shared by closed to 900 million people worldwide.  He takes issue with the arugula-eating liberal elites, like Food First, a California-based organization that opposes the technological advancements of the Green Revolution.   Modern improvements in agricultural technology and sciences create higher crop yields.  When land ownership is limited to a few hectares, it is critical to maximize the output on these small plots,  which is what industrial improvements in agriculture enable.   It is true that there are downsides to the Green Revolution, including further marginalization of subsistence farmers and, in some regions, a widening of the income gap in the agricultural community.  But what cannot be said about this approach is that the food it produces is either inferior to organically-grown crops or that the process is any less sustainable.  Industrial technologies, chemical fertilizers, and improved seeds generate more food, feeding more mouths, reducing malnutrition and generating income.

Poverty — caused by the low income productivity of farmers’ labor — is the primary source of hunger in Africa, and the problem is only getting worse. The number of “food insecure” people in Africa (those consuming less than 2,100 calories a day) will increase 30 percent over the next decade without significant reforms, to 645 million, the U.S. Agriculture Department projects.

What’s so tragic about this is that we know from experience how to fix the problem. Wherever the rural poor have gained access to improved roads, modern seeds, less expensive fertilizer, electrical power, and better schools and clinics, their productivity and their income have increased. But recent efforts to deliver such essentials have been undercut by deeply misguided (if sometimes well-meaning) advocacy against agricultural modernization and foreign aid. Continue reading →

The Right Conditions for Microfinance

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Across the world, there are a lot of poor people.  In the developing world, 1.4 billion people live on less than $1.25 USD per day.  While this catch-all gives an idea of who is struggling to get by, the impoverished are stratified in terms of desperation.  Some live in extreme poverty, racked by hunger and disease with little hope of “pulling themselves up by their bootstraps.”  Combating this type of poverty requires humanitarian and development aid.  But those higher on the ladder can be served by microfinance institutions.  But according to the latest statistics from the Microfinance Exchange (MIX), about 100 million people worldwide receive microfinance loans (these figures are self-reported, and the actual number is much higher).   There is still a large underserved population, and microfinance institutions (MFIs) are working to close the gap. Continue reading →

How the Newspaper Discusses Microfinance

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A recent article in the New York Times titled “Banks Making Big Profits on Small Loans” has been making the rounds in the microfinance community.  When major media outlets like the Times cover microfinance issues, they tend to paint a picture in broad, but accurate, strokes.  Generally, the topic is complex and nuanced and condensed into a thousand words or less, leaving many issues unaddressed.  Microfinance, like sea turtles and curling, does not generally attract the attention of non-enthusiasts.  So when an issue does make it to the second-most emailed spot on the NYT website, everyone with (or, in my case, without) a serious readership gives a response.  The CEO of Kiva, David Roodman of the Center for Global Development, Alex Counts, director of the Grameen Foundation, and Change.org (not Change.gov, unfortunately) have all shared their thoughts.  The article and subsequent responses from the microfinance community touch on a lot of broader issues.   With that in mind, I’ll share some thoughts as well. Continue reading →

Microfinance and Job Creation

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The staff of the NWTF branch in Puerto Princesa

“So health care reform and reducing taxes and reining in spending has got to accompany tax reductions, and tax relief for Americans, and trade — we have got to see trade as opportunity, not as, uh, competitive, um, scary thing, but one in five jobs created in the trade sector today. We’ve got to look at that as more opportunity. All of those things under the umbrella of job creation.” – Sarah Palin

The international economic development community is constantly holding its own feet to the fire.  I sometimes describe the push for transparency and demonstrated as a circular firing squad.  It s probably an unfair characterization, since a lack of oversight leads to billions of dollars in squandered aid and international investment.  Microfinance, in particular, is a frequent target of scrutiny from economists.  It is the darling of the development world, and often mischaracterized as the long-awaited solution to poverty alleviation.  But the impacts of microfinance are nuanced and cannot be reduced to a simple formula (i.e. poor woman starts business, business earns money, woman no longer poor).  In reality, microfinance smoothes consumption, offers money for non-livelihood expenses, like tuition and home repairs, and, in a few cases, propels women above the poverty line.  The impact on poverty alleviation is real, but perhaps more muted than the literature would have you believe. Continue reading →

Travel Notification

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Today I leave for Thailand.  I’ll be spending the weekend in Bangkok, four days in Koh Penang, one night in Chiang Mai, and four days in Pai before returning to Bangkok for four more days.  On April 4th I fly to Rangoon in Myanmar for a ten-day trek through the kingdom.  I will be updating the blog whenever I get a chance.

Microenterprise to SME: A Thought Exercise Pt. II

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This is the third post of a three–part series on small- and medium enterprises.  It is the second of a two-part post.

Enterpreneurship training with Negros Women for Tomorrow

The other day I discussed six actions or programs a microfinance institution (MFI) can take to help clients convert their business from a micro-enterprise to a small- to medium enterprise (SME).  Today, I will cover the final six. Continue reading →

Sleeping in the Bed You Make

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“If you ask me to name the proudest distinction of Americans, I would choose- because it contains all the others- the fact that they were the people who created the phrase to make money. No other language or nation had ever used these words before; men had always thought of wealth as a static quantity- to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created.” – Ayn Rand

Wine on the beach tastes better when it's stolen.

I read this week that the victims of supervillains Bernie Madoff and R. Allen Stanford have joined forces to lobby congress to compensate them for their losses.  There are few people I have less sympathy for than the wealthy victims of a Ponzi scheme.  These are not people whose homes were destroyed in a flood.  They are not women whose husbands have died unexpectedly, leaving them widowed and poor.  Rather, they willingly gave their money to a crook who duped them into believing he could do what anyone with a basic understanding of the stock market knows is a mathematical impossibility.  With consistent annual returns of 10-12%, why bother with a savings?  Whether or not they were greedy, they participated in something called the market.  And as sure as day becomes night, the market rises and falls.  The victims knew this.  When it all came tumbling down, I’m sure it was a tough pill to swallow. Continue reading →