Category Archives: Development Economics

A Trip to Bridge International Academies

A child in class at the Bridge International Academy in Embu, Kenya

After one year living in Kenya, my time here is fast approaching its end. In a few weeks, I finish work with Bridge International Academies. I am heading to Southeast Asia for a few weeks of rest and relaxation before moving to San Francisco to help my brother launch a start-up for the summer. After that, I am returning to school to pursue an MBA. And so ends my two and a half years on the road. This weekend, as I visited one of our schools, I was reminded about what a rewarding experience this has been.

I have lived in three countries – the Philippines, Ghana, and Kenya – and traveled to many, many more. I have learned an incredible amount and experienced things I never imagined I would experience. Much of it is documented on this blog. But the most rewarding parts have been the work and the people. Being a part of organizations whose missions have been to make things better for others less fortunate has been a privilege. Working with the folks who commit themselves and their time to realize the vision has been rich and rewarding.

This weekend, I had a chance to go see the grand opening of our 65^th school in the town of Embu in the Central region of Kenya. I shared a taxi with a group of seven from the head office – members of the IT, research, government relations, training, and marketing departments were present. Embu is three hours from Nairobi and the scenery was pleasant. Once you leave Thika Road, the Chinese-built superhighway that is emblematic of the surge in investment in Africa from the East, and pass through Ruiru, the landscape becomes more rural and green. The rolling green hills felt more like Rwanda and Uganda, where flat ground is hard to find.

Rainfall – particularly during the rainy season in April – is high and the floodplains are ideal for growing rice. We passed the Del Monte pineapple farm, which made the farms I visited in Ghana look like the herb garden I had on my balcony in Boston. The lime-green rice paddies that followed reminded me of the rural areas on Negros Island in the Philippines, where I used to ride on the back of motorbikes and tricycles to visit borrowers. When we finally reached the school, everyone was excited to stretch their legs and get to work.

Construction on half the school continued as we helped with last minute preparations for the grand opening ceremony. Kids lined up to see the face painters, parents spoke to the teachers to learn more about the school, prospective children sat in class and went through lessons, and the community elders filed in to dedicate the school. It was great to be a part of such an important event.

Me with the newest teachers at Bridge International Academies

My days at work consist of sitting in an office, analyzing data, managing our longitudinal student testing, and generally sitting in front of my two computer screens, looking at Excel spreadsheets and word documents. When that is your job, it is easy to lose sight of what you are doing and why you are doing it. So visiting the school, watching the kids learning and seeing the excitement on the faces of the parents was important for me.

As I wind down my time here in Kenya, I am proud of the work Bridge International Academies is doing and the impact we are having on informal settlements and poor communities. Bridge has the potential to create a minimum standard of education for every child in the world that is much higher than it is today. Hands-down, it is the most innovative company in the education space at the base of the pyramid and has created a model that will be studied and replicated by organizations across the world. I will be sad to leave, but I am optimistic that the company will change the world. Loyal readers know that a cynic like me is hesitant to use that expression for anything. Mine has been an exciting and meaningful experience, and the trip yesterday really drove that point home.

Here are some of the photos of the trip:

Develop Economies Music Recommendation

Why Jim Kim is Right for the World Bank

1 Reply

As faithful readers of this blog know, I am a big fan of the Barack Obama’s foreign policy positions and decisions. Specifically, I like his deference to nuanced conditions and his emphasis on achieving the objective over claiming credit. In my neck of the woods – specifically, Libya, Somalia, and Uganda – he understands and appreciates the nuances that made previous incursions into the region unsuccessful. I think he understands that multilateralism and mutual respect can achieve more than the cavalier dependence on American exceptionalism.

That is why when I read that he endorsed Jim Kim, co-founder of Partners in Health with Paul Farmer and a giant in the field of public health, for the World Bank presidency, I tipped my hat. Since its establishment, the executive positions of the World Bank and the International Monetary Fund (IMF) have been held by an American and a European, respectively. Former French finance minister Christine LaGarde recently replaced Frenchman Dominique Strauss-Kahn after – in one of the great ironies in the history of the institution – he was arrested for allegedly assaulting a Guinean woman. So when Robert Zoellick announced he would not re-run for the top spot at the World Bank, people debated whether Obama would be the first to break the streak and allow a non-American to run the Bank.

There is good reason for the Americans to run the bank. For one thing, it was created by the U.S. and the Allies in 1944 at the tail end of World War II. Though it started as a lender to post-war European economies, by 1968, the World Bank had shifted its focus to developing countries, funding infrastructure projects and enacting various poverty alleviation strategies. With some policy shifts here and there – most notably during the Reagan years, where neoliberalism was the approach du jour and the Bank’s sister institution, the IMF, created controversial structural adjustment programs that saddled many developing countries with tremendous amounts of debt in exchange for opening their economies – the Bank has focus on eradicating poverty and improving the lot of the four billion people living below the poverty line.

Kim, the MD/PhD

Unlike many previous World Bank presidents, Jim Kim is not a bureaucrat, politician, or World Bank insider. He is a proven innovator and a man whose commitment to the cause cannot be questioned. He has an MD/PhD from Harvard and has worked with some of the pre-eminent public health institutions in the world. In founding Partners in Health, he built an organization that now employs 13,000 people in 12 countries, serving the poorest populations in the world. Most recently, he served as the first Asian-American president of Dartmouth College. In a letter to The Guardian, Professor Martin McKee explains why Kim is a smart choice:

Some commentators will no doubt be offended by the idea that someone who is neither a banker nor an economist could occupy this post. Others may think that, in these difficult times, we need someone like Jim Kim, who combines academic rigour with practical first-hand experience of the reality facing the world’s poor.

Jim Kim is a perfect candidate for the World Bank presidency. He is a first-generation Korean immigrant with a proven record of success. He is clearly innovative and committed to the work that the Bank is mandated to carry out. Having spent his life outside of government, he is apolitical and carries no baggage. Unlike one of his top competitors, Jeffrey Sachs, his positions on development are much more nuanced and his views less explicit. Recently, Sachs withdrew from the race and endorsed Kim himself. I find myself in agreement with his assessment:

Obama has shown real leadership with this appointment. He has put development at the forefront, saying explicitly, “It’s time for a development professional to lead the world’s largest development agency.”

Kim’s appointment is a breakthrough for the World Bank, which I hope will extend to other global institutions as well. Until now, the United States had been given a kind of carte blanche to nominate anyone it wanted to the World Bank presidency. That is how the Bank ended up with several inappropriate leaders, including several bankers and political insiders who lacked the knowledge and interest to lead the fight against poverty.

The Bank can be where the world convenes to address the dire, yet solvable, problems of sustainable development, bringing together governments, scientists, scholars, civil-society organizations, and the public to advance that great cause. This is a global imperative, and we can all contribute to fulfilling it by ensuring that the World Bank is an institution truly for the world, led with expertise and integrity. Kim’s nomination is a tremendous step toward that goal.

Over the past few years, I have talked about Jim Kim a lot after my father – a physician and Dartmouth graduate – recommended the book Mountains Beyond Mountains about the work of Kim and Paul Farmer. My dad often compared people to either Farmer or Kim. The former loved working in the field directly with patients, while the latter preferred tackling the problem at a high level, prioritizing policy over practice as a way of maximizing his impact. Clearly, Barack Obama’s endorsement is both recognition of Kim’s record and another example of the strategic underpinning of Obama’s approach to foreign policy. After all, if Obama plans to pivot away from the Middle East toward Asia, endorsing Kim, an Asian-American born in Korea, sends the right signal. Plus, Kim’s impeccable record exists in spite of his American citizenship, yet the presidency of the World Bank would still remain in the hands of an American.

As someone who works in the field and appreciates the nuances of foreign policy, I applaud the decision to elect Kim. I look forward to seeing what innovations he will bring to the institution.

The founders of Partners in Health - Kim, Ophelia Dahl, and Paul Farmer

Develop Economies’ Music Recommendation

Desperation in the Slums of Nairobi

Leave a reply

SLUM LIFE: A girl stood outside a school in the Mukuru kwa Njenga slum in Nairobi, Kenya. An Amnesty International Report says the government has failed to incorporate slums, leaving women vulnerable to sexual and other attacks. (Tony Karumba/Agence France-Presse/Getty Images)

On Thursday, I shadowed a colleague of mine as he conducted a survey of one of the slum communities where we have several schools. For the last few months, I have been analyzing data about the communities where we build schools and understand where demand is highest. Having spent months looking at scatter plots, I hoped the trip would provide better context and illuminate some of the nuances hidden within the data. As it turned out, the trip did more than that – it exposed me to the worst poverty I have ever seen.

I met Dickens, a research associate with the company, near the Hilton Hotel in downtown Nairobi. After a quick breakfast, we walked a half hour through markets, past the bus station where a group of al-Shabaab sympathizers recently threw four grenades into a crowd of people, killing four and wounding dozens more. We picked up a matatu heading to Lunga Lunga, the densely-populated slum in the industrial area near the airport, arriving at around 9 in the morning. This is the same slum where a leaking gas line exploded, killing 75 people. Once you step away from the main road and down into the slums, you find yourself in a maze of narrow roads and alleys surrounded on all sides by shacks made of corrugated iron sheets.

The industrial slum – also known as Mukuru Kwa Njenga – is actually one of the better slums in Nairobi, which is not saying much. It’s proximity to manufacturing facilities – we surveyed a woman whose home literally bordered a 10-meter wall surrounding a factory – means the residents of the slums have better access to casual manual labor and, if they are lucky, salaried employment. This access to economic opportunities is one of the main reasons people move to this slum in the first place.

Dickens is a field guy. He began working at the company a few months ago after a stint running a survey team with a public health organization. He has a deep knowledge of the conditions in both the rural areas and the urban slums. When our GPS device failed to give us directions to the school, we stopped to ask a group of a boy and two girls in their late teens. The girls were drunk and standing outside of a church, where they were picking up their ARVs – the anti-retroviral drugs that prevent HIV from turning into full-blown AIDS and reduce the risk of transmission.

At 6.7%, the HIV rate in Kenya is low compared to other countries in Sub-Saharan Africa. But transmission rates in the slums are high; an estimated 14% of the residents of Korogocho, one of the largest slums in Nairobi, are HIV-positive. In this slum, where men are paid more frequently, it may even be higher. Because of the stigma attached to positive status, people prefer to pick up their ARVs from churches rather than hospitals. We thanked them for the directions and went to find the school.

These slums were one of the first places where we opened our schools. We have more than five in an area of only a few square kilometers. Our school in Lunga Lunga is one of the most successful in our network, and watching the children run around the playground and gave some much-needed tangible meaning to the work I am doing. After meeting the school manager, Patrick, we walked past the school and over a rickety bridge spanning a trash- and sewage-filled stream toward the community where we would continue our research.

residents in the usual conditions of Nairobi's Mukuru-kwa-Njenga slum. Photograph: Tony Karumba/AFP/Getty Images

While Dickens conducted the survey in Kiswahili, the local language, I jotted down observations and questions in my notebook, not wanting to influence the answers of the respondents. When a person sees a white person conducting a survey in the slums, they may have an incentive to make their situation seem more desperate in order to secure money. Whether or not this was the case, I kept my distance during most interviews.

After an interview conducted in a small alleyway, we stepped back into the main road running through the slum –barely wide enough to fit a car – where we saw a young man in his late teens or early twenties being held and pushed by five other men. Dickens shook his head and speculated that the man had been caught stealing. “This is not going to end well,” he said. In the slums, where people are already consumed by stress and on edge from the sheer desperation, mob justice often trumps the formal legal channels. In the best case scenario, the police would intervene before anything could happen. More likely, the men took him to the place where he was accused of stealing and beat him mercilessly, possibly to death. In Kenyan slums, death by beating, stoning, or necklacing for the crime of stealing is not uncommon. In this case, I don’t know what happened, and I am not sure I want to.

After Dickens finished the surveys, I asked if we could find our school in a part of the slum known as Tassia. I wanted to see how the school was situated in the community in order to understand how location influences the number of students. As we walked further down the road, Dickens and I noticed the number of people outside their homes growing smaller until it finally became empty. When the street opened up into a massive dumpsite filled with burning trash, it became quickly apparent why this part of town was empty. Dumpsites are notoriously dangerous, as idle youths mill around, drinking chang-a, the local brew, and robbing anyone who happens to venture too close. Dickens made the decision to go back, and I agreed. So we turned around and exited the slum along the same road from which we entered. We caught a matatu back to town and called it a day.

The Dandora waste dumping site is an unrestricted dumping site that contains many hazardous materials. The United Nations did a study of more than 300 schoolchildren near Dandora and found that about 50% of them had respiratory problems. Also, 30% had blood abnormalities that signaled heavy-metal poisoning. (Photo Credit: Brendan Bannon)

The slums of Nairobi are a horrible place to live. They are cramped, unsanitary, and dangerous. Girls walking home from school risk being raped along the way, and murders go unnoticed by the media. Life is as cheap as the rent, which is next to nothing. I have been to the rural areas of Ghana and the Philippines and seen poverty of a different sort, where people still live hand-to-mouth, but still live a decent, if not difficult, existence.

The urban slums are another kind of poverty altogether. They are the product of poorly-planned urbanization, corruption, and general indifference on the part of those who could do something about it. Half of the population of Nairobi – about 2 million people – lives in an area that covers only 5% of the land. And most people are trapped, forced to grind out a miserable existence or move back to the country, to a different kind of poverty.

I’m glad I went out to the slums, since it gave me perspective, both in my work and my life. Some people have it bad. And I am thankful I am not one of them.

Develop Economies’ Music Recommendation

The Link Between Poverty and Terrorism

1 Reply

The link between poverty and terrorism is well-known. In theory, one of the purposes of organizations like USAID is to complement the other “D’s” of the foreign policy apparatus – diplomacy and defense – to improve conditions for people most likely to be driven to desperation: the poor. It is not surprising that the hotbeds of terrorism today – Afghanistan, Yemen, Somalia, Pakistan, Indonesia – happen to be some of the poorest countries in the world. Nor is it surprising that many of these countries receive the lion’s share of foreign aid from the U.S. government, despite their apparent animosity toward the country. The Nesaji cotton-and-wool factory in Kandahar is a perfect metaphor for the complex forces working against development efforts. Built by Iran and the Soviet Union in 1971 and maintained by a motley crew of warlords and foreign countries, including its current steward, the United States, the factory has operated for only 60 days throughout its 40-year history. Governments are not the only ones concerned about the causal relationship between poverty and terrorism.

Here in Kenya, an organization called Nuru International, founded by former special ops marine Jake Harriman, is pilot-testing a holistic community-based development model. Its mission is to end terrorism by ending extreme poverty. The connection is not difficult to make. For people living hand-to-mouth, life is a series of struggles often ending in tragedy. Anger, resentment, and despair are a volatile combination in the minds of young men and women who see little hope for escaping their situation. For recruiters of organizations like Boko Haram and the Al-Shabab – literally translated as “The Youth” – these young minds can be manipulated to pick up arms. By stoking latent frustrations at the injustice of poverty and promising a sense of a community, brotherhood, and commitment to a higher cause, a recruiter can more easily convince a teenager to become a suicide bomber.

A member of Boko Haram.

This anger and frustration is compounded by a sense of injustice. When the gap between rich and poor is vast, the impoverished majority are more likely to consider their situation as a function of either indifference or criminality by those controlling the wealth. It is under these circumstances that the fledgling Nigerian terrorist group, Boko Haram, has grown.

Boko Haram has killed more than 900 people since 2009, including perpetrating a massacre last month that left 300 people dead in Kano, the capital of the Kano state in Northern Nigeria. As an Islamic fundamentalist group with ties to Al-Qaeda in the Islamic Maghred, the North African faction of the jihad organization, Boko Haram is a growing concern for Western security analysts. But according to some on the ground in Kano, the group’s motivations are simpler. In an article titled, “In Nigeria, a Deadly Group’s Rage Has Local Roots,” Adam Nossiter explains the situation on the ground:

For now, Boko Haram’s targets remain largely local, despite its bombing of a United Nations headquarters in Abuja, the capital, last summer. The Nigerian state is typically the enemy, and many analysts see the nation’s enduring poverty as one reason. This month figures were released in Abuja indicating that poverty has increased since 2004, despite the nation’s oil wealth; in the north, Boko Haram’s stronghold, about 75 percent of the population is considered poor. Overall, 60 percent live on less than $1 a day. Every citizen appears aware of the glaring contrast between his or her own life and those of the elite.

Ado Ibrahim, a 22-year-old sugar cane vendor wearing a yellow soccer jersey, suspected more violence could be ahead. “Injustice, and misgovernance by officials,” he said, adding, “It’s possible, as long as injustice persists, it’s possible to have another flare-up.”

Down the street, squatting in his open-air stall where he sells cooked yams, Abdullahi Dantsabe had a similar point of view. Why had the attacks occurred? “Injustice,” he said. “The leaders are not concerned about the common man.”

A Yemeni man sits by the wreckage of tourists' cars at the site of a suspected al-Qaeda car bomb attack in Marib in July 2007. Photograph: Khaled Abdullah/Reuters

Nigeria is one of the most corrupt countries in the world. The Corrupt Perceptions Index, which is a measurement of how people view their government, ranks Nigeria 143 out of 180. A Nigerian friend of mine once explained to me the concept of “bunkering,” which is when a businessman – usually someone with military connections at the highest levels or a general himself – connects a pipe to a much larger oil pipeline in order to siphon the product and sell it on the black market. Add to this dynamic massive income inequality and ethnic tensions throughout the country (but mainly on situated on a north-south divide), and the elements that typically fuel the growth of groups like Boko Haram seem to be in place.

In fact, most of the countries today where Islamic fundamentalism is on the rise are generally poor and massively unequal with highly corrupt governments. In Africa, Chad (168), Sudan (177), Niger (134), and Somalia (180), which holds the dubious distinction of last place, are all areas where for terrorist organizations have flourished. In the Middle East and South Asia, Pakistan (134) and Yemen (164) are considered some of the most dangerous countries in the world.

I am not saying that terrorist organizations develop due to circumstances alone. At the highest levels of these organizations are typically rich and educated planners, who are misguided, at best, or sociopathic. Osama bin Laden was the son of a wealthy Saudi construction magnate, and many of Al-Shabab’s top leadership hail from countries outside Somalia – including one, Omar Hammami, AKA Abu-Mansoor al-Amriki, who grew up in Alabama. But the soldiers – the grunts on the ground who are blowing themselves up along with innocents around them – are disproportionately drawn from the poor underclass, the idle youth with few prospects for employment.

It is these people who economic development programs aim to help. Whether they are successful is a different question. In the case of the Nesaji cotton-and-wool factory in Kandahar, the answer is clearly no.

Develop Economies’ Music Recommendation

Pushing Back on the Millenium Villages

3 Replies

When you want to know how someone in international development views the world, there is no surer way than asking them whether they identify with Jeffrey Sachs and Bill Easterly. On this blog, your correspondent has made his proclivities known on multiple occasions – even once being persecuted from doing so by a former employer and being recognized by Mr. Easterly himself for his martyrdom.

Jeffrey Sachs, the pre-eminent economist, is generally associated with the top-down school of development economics, advocated substantial public investment to improve the broader systems – water, health, sanitation, education, etc. – that contribute to poverty. In contrast, Bill Easterly, the roguish author of The Elusive Quest for Growth and White Man’s Burden, supports bottom-up interventions, preferring to search for solutions that develop organically and take into account local contexts. Most people find themselves on one side or the other, except for the deliberators in the middle, like Abhijit Banerjee and Esther Duflo. If Bill Easterly is 50 Cent, then Jeffrey Sachs is surely Ja Rule.

The flagship of the Sachs camp is the Millenium Villages project, a $150 million, multi-country intervention that exemplifies the concept of “the big push.” The systems that underlie the poverty trap are extraordinarily complex, layered, and multi-faceted. According to the top-down school of thought, it is possible to change the entire system only by changing its key components. The Economist explains the thinking behind the idea:

In development, it seems, you cannot do anything until you can do everything. That is the idea behind the “big push” theory. Outlined by Paul Rosenstein-Rodan in 1943, this says that even the simplest activity requires a network of other activities and that individual firms cannot organise such a large network, so the state or some other giant agency must step in.

The big push came to grief in the 1970s and 1980s as evidence accumulated that, in Africa at least, public investment and foreign aid had produced no perceptible change in productivity, not least because so much of it was stolen. Recently, though, the idea has come back into vogue. The UN talks constantly about its millennium development goals (eight goals, 21 targets). Jeffrey Sachs of Columbia University argues that if public investment and foreign aid are big enough, they will boost household incomes, spurring savings and boosting local investment. They should also “crowd in” external investment by improving infrastructure.

In order to do anything, you have to do everything. Being on the ground, you see the complexities of the system at work. Everything is interrelated and connected in a complex web. Change an input here or there and you can transform the system. But, more often, well-reasoned tweaks to the system have unintended consequences. What is more, it is question whether even the smartest economists can truly comprehend that sheer magnitude of the forces at play. They are, after all, global by nature.

These are the criticisms of Sachs and his “big push” school. Today, randomized controlled trials – the same tests used by the pharmaceutical industry to test the efficacy of new drugs – can actually tell us a lot about whether interventions like the Millenium Villages actually work. And, according to recent studies, it appears that they don’t. Back to the Economist:

Now a Kenyan economist, Bernadette Wanjala of Tilburg University in the Netherlands, has raised further doubts about the project. She interviewed 236 randomly selected households in Sauri who had been offered the benefits and 175 randomly selected ones who had not. In a study with Roldan Muradian of Radboud University, she concluded the first group had raised their agricultural productivity by an impressive 70%. Yet she found that the impact on household income was “insignificant”, and that there had been little extra saving or investment. The villagers had grown more food—and eaten it. They became better nourished, but this did not affect the wider economy.

Better nutrition is important, of course. But the aim of the project is to boost income, investment and economic diversification. It is not clear that these goals are being achieved. For $60 per person per year (which increases the income of the poorest villagers by well over 25%) the project has improved village life only a little more than it would have improved anyway. So far, the project provides little evidence that “big push” development—advancing on all fronts, flags flying—is better than the alternative: gradual, step-by-step changes to remove specific barriers to growth.

The answer, as Easterly puts it, is elusive. But certain interventions – providing an affordable education by lowering operating costs or leveraging social networks to distribute capital – affect the systems that influence poverty in a very real way. And these, to me, are the most exciting interventions of all.

Develop Economies’ Music Recommendation

Brain Gain: The Upside of Losing Talent Abroad

Leave a reply

Human capital flight – otherwise known as “brain drain” – presents a challenge for developing countries. In countries with a lower per-capita GDP, wages are also typically lower. So highly-skilled labor immigrate to richer nations where their specialized talents yield a salary several times what they could earn in their home countries. Frequently, these professionals – doctors, lawyers, computer scientists – have been educated at the expense of the government, and losing them is a big hit to the country. For this reason, people often see brain drain as a problem, and try to incentivize top talent to stay in-country.

But there is another theory about international labor mobility that posits the opposite. The Economist explains the thinking behind “brain gain”:

Several economists reckon that the brain-drain hypothesis fails to account for the effects of remittances, for the beneficial effects of returning migrants, and for the possibility that being able to migrate to greener pastures induces people to get more education. Some argue that once these factors are taken into account, an exodus of highly skilled people could turn out to be a net benefit to the countries they leave. Recent studies of migration from countries as far apart as Ghana, Fiji, India and Romania have found support for this “brain gain” idea.

The most obvious way in which migrants repay their homelands is through remittances. Workers from developing countries remitted a total of $325 billion in 2010, according to the World Bank. In Lebanon, Lesotho, Nepal, Tajikistan and a few other places, remittances are more than 20% of GDP. A skilled migrant may earn several multiples of what his income would have been had he stayed at home. A study of Romanian migrants to America found that the average emigrant earned almost $12,000 a year more in America than he would have done in his native land, a huge premium for someone from a country where income per person is around $7,500 (at market exchange rates).

Living in the Philippines, where international remittances from Asia, the Middle East, and the United States have brought an incredible amount of foreign exchange into the country, I saw the dramatic effect Filipinos abroad had (and still have) on the economy. I have also met many Kenyans, Ghanaians, and Filipinos who pursue degrees in engineering and computer science to develop a competitive skillset for a global economy. Most of them want to go to the U.S. or Europe to make a small fortune. And once they have had enough of the rat race and have built up a nest egg that will allow them to buy a house and raise a family comfortably, many want to return to their country of origin and spend the rest of their lives back home.

Putting aside the fact that global diasporas are good for the world, I want to discuss a benefit that the Economist article leaves out. When skilled talent from developing countries move abroad to work for international companies, they gain valuable work experience that they could not get in their home countries. When a software engineer comes to Seattle to work for Microsoft, he or she experiences work in a fast-paced environment, surrounded by talented people with different skills, managers who become valuable mentors throughout their careers, and, most importantly, a demand for quality that is often absent from companies that do not compete in a global marketplace. After 10-15 years in this type of environment, they return to their home countries, where they mentor a new generation of young talent, teaching them the Microsoft way.

Microsoft is only one example. The company and industry are secondary to the work environment, which emphasizes the importance of intangibles, like time management, prioritization of tasks, and quality control. Working for an American company like General Electric, for example, might teach someone the importance of optimization in manufacturing, while working for Target shows them the importance of customer service in maintaining client relationships. Then, when they return to their home countries and start their own business, they bring with them those industry-specific best practices. As a result, they are more competitive in the domestic market, forcing competitors to either adapt or die. Ultimately the economy becomes stronger and more competitive.

This is not simply a theoretical framework for the benefits of brain gain. I see it in action every day. Senior software developers in Kenya have often spent years working for tech companies in the United States. Leading managers in nearly every type of business, from coffee shops to breweries, manufacturers to telecoms, have spent some time working in Europe, Asia, Canada, or, most often, the United States. Often, they are the decision-makers. And decision-makers drive innovation in any industry.

Clearly, brain drain is not ideal

I am not trying to say that brain drain is necessarily a good thing. Most immigrants probably choose not to every return to their home countries. For most, leaving the comfort of a well-paying job, a decent healthcare system, and a Western education for their children is not an appealing option. But, I will say that experience working for a multi-national, or, frankly, any company, in the U.S is going to teach any young professional – including Develop Economies – a thing or two about how to succeed in business.

In a perfect world, financial incentives would keep talent from moving abroad. Unfortunately, that simply is not the case. But the upside of this movement is that, when they do come back, returning ex-patriates are far more capable than they would have been had they decided to stay.

Develop Economies’ Music Recommendation

Non-Profit Career Advice: Urban Development

Leave a reply

Photo credit: Digital Slide Theater

This is the first post in an ongoing series offering advice to people interested in learning more about international development work. Mandy Goodgoll, a Masters Candidate in International Affairs at the New School, offers advice on urban development in developing countries and emerging markets.

First of all, let me say that urban development is a great field to get into. It can be analytical, creative, big, small, international, local… essentially, whatever you want it to be. Having said that, I would highly recommend narrowing the search a little. By that I mean, narrowing down to a sub-field you think you might want to try out.
Some examples:

Water (from infrastructure like sewage management, to conservation, to increasing access to potable water for the urban poor… I’m currently writing my thesis on water management)
Forestry (a variety of important issues in forestry like conservation… not something I know too much about)
Low-income housing (could be in an urban environment in a big city in the US, or it could be related to ‘slum upgrading’ in any developing city around the world).
Urban management (working with local governments to make service provision (like water works, or roads) more accessible or managed more sustainably
Urban farming (this is kind of a big deal as of recently, not only in cities like NYC. It’s also being written about in Argentina and Tanzania – reducing the footprint of cities and eating local)
Renewable energy (from solar panels in India to wind farms in Eastern Africa… it’s one of the hottest topics right now, and extremely relevant in the developing world)
Transportation (another really hot topic that mostly centers around public transportation, bike lanes, and other new forms of transportation – death to the car!)

So that’s a very brief rundown of topical areas you may want to delve into. I would recommend thinking about what kind of experience you want. Large and internationally recognized organizations may look great on the resume, but in actuality, you may not have such an exciting experience sitting in the head office of some organization doing research on the internet.

Here, I suggest – go local! There are a lot of opportunities to volunteer for 3-4 months at local NGOs, so that’s why narrowing it down to a sub-field you’re interested in will help in your hunt. Then I would recommend narrowing down on a region. South-East Asia? East Africa? South Africa? Central or South America? There are very unique issues in each of these areas, pertaining to urban issues and urbanization in general.

Latin America is heavily urbanized. Look at Bogota, Carracas, Santiago, Sao Paolo, Rio, Buenos Aires… mega urban cities with big divides between rich and poor – making urban issues very complicated to answer.

In Africa, urban development is much less advanced. You have the cities of South Africa, which present unique problems in respect to the rest of the continent; you have Lagos which is essentially a huge mess of poverty, bad-governance, zero infrastructure, and corruption (don’t go there); and Nairobi, which is this complicated urban metropolis that essentially makes no sense at all, from an urban perspective.

Kibera, the largest slum in Kenya

Then there’s Asia – which I don’t know as much about as my focus and experience has been Latin America/Africa. But in cities like Bangkok, you have crazy issues with water management, alternative forms of transportation, sustainability issues, green-building, and urban poverty overlapping to create a melange of a city that is really exciting.

I would highly recommend looking into NGOs in different places that get you working at the local level. It doesn’t necessarily have to be linked to the urban specifically, because any exposure you get to how the city works (or doesn’t work) from a local level will give you insights on how citizens (or non-citizens) are affected by the decision made in the city. How are people excluded from infrastructure? How do they view their urban environment? How do the flows in a city impact society, economies, the environment? I would recommend this avenue because it can give you more insight into the structure at the bottom, rather than the top – which will inform you in a different way in the future.

On the other hand, you can go dig wells in West Africa, or work with a Sanitation Activist Group in Cape Town… That would give you access to very specific topics, and would also allow you to work at the local level.

Regarding where to find such NGOs… you could look at organizations that have partnered with UNICEF or UN-Habitat in the past. Also, idealist.org has volunteer opportunities. One organization which comes to mind as a good hub of information is the African Center for Cities. It’s run out of the University of Cape Town, and is led by Edgar Pieterse – guru of African urban development in general. I like the work they do, and a lot of it is really on- trend: http://africancentreforcities.net/.

Okay, hope that helps.

Mandy’s Music Recommendation

Global Diasporas Create Economic Prosperity

3 Replies

The book review in the Wall Street Journal this morning discusses the Robert Guest book, Borderless Economics, which details how global labor movement increases trade, informational flow, communication, and technology. The topic of migration has been making the rounds, partly due to book reviews of Borderless Economics in all the major journals and magazines, but also because the time is right for a frank discussion about the realities of a global economy.

Develop Economies agrees with all of Guest’s points. The economic benefits are vast. With engineers and PhDs from abroad and a more nimble, low-cost workforce comprised of unskilled immigrant labor, the United States can compete for first place in the global economy. Without it, we might be battling for second place. But, in this post, I want to discuss the role of Diasporas in preventing conflict and promoting economic development.

The world would be a better place if international movement and migration were more fluid. One of the reasons that Ghana is considered to be one of the successful democracies in Africa, while Kenya deals with upheavals every few years and corruption scandals every day, is that an internal diaspora through the country over the last half-century led to a blurring of tribal boundaries. Both countries have dozens of tribes, each with its own language. But, while Kenyans, as a generalization, maintain strong ties to their familial home and typically marry within the tribe, Ghanaians intermarry and bring the entire family with them when they move. “That’s why we are so peaceful,” one coworker told me. “We all marry each other!” (This is also one reason why mobile money is pervasive in Kenya, but not Ghana – but that is for another post.)

Now imagine that dynamic on a global scale. Heterogeneous and multi-ethnic societies are less likely to adopt a herd mentality, because cultural exchange promotes empathy. This, to me, is why the United States is probably the most integrated and least bigoted country in the world (seriously). I am always amazed when I come back to the U.S. and look around the airport to see people of every color speaking different languages. And, from a numbers perspective, it makes sense:

Mr. Guest concludes with the argument that, thanks to America’s immigrants, the U.S. is likely to remain for decades the richest and most powerful nation in the world. America has the largest foreign-born population by far—an astonishing 43 million people, 10 million more than the entire population of Canada. China, by contrast, has a foreign-born population of less than one million.

From an economic standpoint, Diasporas create global trade networks that move money and products around the world for a fraction of the cost it might cost otherwise. I saw it in the Philippines, where the richest family in the country is Chinese, and West Africa, where the Lebanese control rice importation, and in East Africa, where the Indians control just about everything. With greater economic integration, the cost of conflict increases drastically for both nations. Create enough cross-border migration and trade, and the lines begin to blur completely.

Infographic from the Economist

In the WSJ article, specifically, the author examines the point purely from an international development perspective. The author, Katherine Mangu-Ward, editor of Reason magazine, discusses the economic benefits, compared with foreign aid:

Infographic from the New York Times

‘As a tool for spreading wealth, open borders make foreign aid look like a child’s lemonade stand,” writes Robert Guest, business editor of the Economist, in “Borderless Economics,” a rapid-fire case for the free movement of labor from one country to another. [Economist Lant] Pritchett found that if developed countries slightly liberalized their immigration laws and increased their work forces by a mere 3%, the gains in remittances and other benefits to developing countries would amount to more than $300 billion.

Put another way, a Salvadorean man with a high-school education needs only to come to the U.S. to increase his annual earning power more than eightfold, from $2,700 to $22,611—a figure, by the way, almost identical to the earning potential for Americans with the same level of education. Compare the $300 billion benefit with the $70 billion spent annually on foreign aid by developed countries, much of which ends up in the Swiss bank accounts of corrupt politicians.

Sing it from the rooftops

I couldn’t agree more. But I do have to address one point at the end of the article, in which the author feels the need to take down microfinance:

It is galling to Mr. Guest that many well-meaning people are more invested in promoting ideas like Third World microcredit than in clamoring for easier immigration. Lant Pritchett, the former World Bank economist, shares Mr. Guest’s skepticism about the importance of the much ballyhooed microloans that help the world’s poorest people to buy livestock or open a small business. The concept was pioneered by Muhammad Yunus, the founder of Grameen Bank in Bangladesh and winner of the 2006 Nobel Peace Prize. Mr. Pritchett tells the author that the average gain for a Bangladeshi from a lifetime of these loans is about the same as the earnings from working just eight weeks in America. “If I get 3,000 Bangladeshi workers into the U.S.,” Mr. Pritchett wonders, “do I get the Nobel Peace Prize?” No, but with luck Mr. Guest’s argument in “Borderless Economics” will be rewarded with serious attention in the places that count.

This is unnecessary. Whether or not that Bangladeshi will make more in those eight weeks is completely irrelevant if he never has the chance to go to the United States. I think that all countries should have freer trade agreement, reduce tariffs, and eliminate ethanol and farm subsidies. That would certainly be more effective than the most successful anti-poverty strategies in lifting hundreds of millions of people above the poverty line. Unfortunately, it will never happen. Because supporting the elimination of tariffs, like open borders, is political suicide. And, like most policies supported by purist Libertarians, it will never happen.

So, in the meantime, microcredit is doing something to fill the gap. I am sure that the Bangladeshi would prefer that to waiting for his visa to the United States to process. If Pritchett can make that happen for even ten poor Bangladeshis, then he should get the Nobel Prize.

Develop Economies’ Music Recommendation

How to Use Data to Better Serve the BoP Market

Leave a reply

Develop Economies, age 42.

When I was a kid, my parents enrolled me in a program called “Science by Mail” through the Museum of Science in Boston. The Museum would send me a kit. Once I received a box containing balsa wood and glue with instructions to build a bridge that could hold as many pennies as possible.

Fast forward 20 years, and I am pretty much doing the same thing. For the last two years, I have been working at different non-profits and companies, trying to figure out how to use data to maximize effectiveness. While I think relying on data too heavily without taking into account externalities that make us human risks making bad decisions, I do believe that data is a powerful tool to make good decisions.

So, with that in mind, here are a few things I have learned about using data in the context of non-profit, social enterprise, and all other endeavors at the base of the economic pyramid.

1. Choose a Problem-Solving Framework

McKinsey, the management consulting firm, has an approach to problem-solving called MECE. It stands for “mutually-exclusive, completely exhaustive.” The idea is to first come up with a question you want to answer, and then deconstruct all of the elements of that question to its most fundamental elements. Then, once you have those bite-sized questions, you approach answering them methodically. This is particularly useful when you have a big data set and a wide scope of questions you could answer.

When I was trying to figure out how Bridge could expand our reach to as many students as possible, I started breaking the question down to its components. How do get more students in school? You can do it two ways: attract more students, retain the ones you have, or both. I decided to focus on retention, since the data I had could more easily be used to answer that question. I broke off a sub-question – why do students leave? Well, that can be broken off into preventable reasons – poor quality education, parent preference – and non-preventable ones – money, moving upcountry, etc. You can continue breaking these questions down to make your analysis more manageable.

The visual representation of this process is a decision tree, which is typically used when you have a series of binary, fork-in-the-road decisions. There are other ways of looking at problems – scenario analysis, etc. Breaking down complex problems this way is an easy way to make these questions a lot more manageable.

2. Start with what you want to know

Sometimes, you don’t have enough data. Sometimes, you have too much data. Believe it or not, the latter can sometimes cause more problems than the former. A couple months ago, the World Bank and the Kenyan government launched “Open Kenya,” an online database containing every bit of government data that could be digitized. As the first African government to open its data to the public, Kenya was considered to be at the vanguard. And, working at the iHub, I had good fortune of seeing the World Bank’s “Open Data Evangelist,” Tariq Khokar, speak to software developers about how to use this Open Data website for good.

He cautioned the group of mostly researchers and developers about a problem that many people who love data don’t often think about: what to do when you have too much data. You can easily get lost if you try to boil the ocean. One approach is to look at the data, see what you have, and decide which questions you want to answer. Another, more enlightened approach, according to Tariq, is to step back, think about what you want to do, then seek out the data you need.

This is good advice. Data can’t tell you everything. But it can tell you how to optimize a process, think about the most lucrative market, the most cost-effective way of doing things, etc. This is particularly important when you are trying to balance two dimensions of creating products and services for the base of the pyramid market: affordability and quality/utility. There is a point where these two lines cross – the maximum people will pay for a certain value – that can be identified by taking a look at the data.

3. Take It With a Grain of Salt

The current financial crisis has at least some of its roots in financial engineering, also known as computation finance, which tries to “precisely determine the financial risk that certain financial instruments create.” The problem with this goal, of course, is that it is completely impossible. What distinguishes human beings – sentient beings with feelings and emotions – from, say, gravity, is that sometimes we behave irrationally. What you end up with are a bunch of mortgage-backed securities and derivatives with AAA ratings from Moody’s and Standard & Poors that become collectively known as “toxic assets.” Another case of when keeping it real with data goes wrong.

My point is that data can only tell you so much. I happen to rely on it quite a bit in my job, but I know that, to understand the nuance behind the data, I need to speak with people who understand what is happening on the ground. Parents living in the slums and earning $60 a month have a much different idea of what “quality” means than a parent living in a posh suburb of Nairobi. And, even more importantly, parents living in Baba Dogo (a slum in Nairobi) have a different concept of quality than those in Mathare (another slum in Nairobi). Unless you understand what motivates those parents to make education decisions and ask them why they choose to send their students to one school over another, your data will be useless.

These are three things to consider when thinking about how to use data in running your social enterprise or non-profit. Go to work.

Develop Economies’ Music Recommendation

Wal-Mart (Does Not) Come to India

1 Reply

There is a fierce debate going on right now in India about a new piece of legislation that that will allow multi-national corporations to operate as joint ventures in the country, owning up to 51%. And a week ago, the Indian government backtracked and announced that it would not pass the legislation after all. It is worth examining the potential pros and cons.

There has been no shortage of voices from the left and right commenting about whether or not this is a good thing.

On the one hand, there is no question that everything, from food to clothing, will be cheaper as a result of companies like Wal-Mart entering the country. Huge multi-nationals have the economies of scale and capital to invest in efficient end-to-end supply chains that ensure that the crops don’t rot on their way to point-of-sale. In the existing system, middlemen – also called traders, “market ladies,” or aggregators – insert themselves into the inefficient supply chains and take a piece of the margin, which is ultimately passed onto the consumer. So the advent of a retail giant like Wal-Mart, which has the scale to develop large-scale commercial farms and negotiate with farmers’ cooperatives to fund the harvest in exchange for the yield will be a good thing.

Productivity will undoubtedly increase as farmers invest in fertilizer, irrigation, and good agricultural practices (GAPs). The cost of food will decline across the country and fewer people will go hungry. Inefficient farmers may end up going under as larger farms become more dominant, but they – along with everyone else in the country – will be paying less for food as a result of this increased productivity.

The American Enterprise Institute details other advantages to farmers:

Farmers, who comprise 60% of India’s workforce, could be one of the biggest beneficiaries of Wal-Mart and other large retail chains entering India. Currently, farmers depend on the traders at the local warehouses to sell their produce. Adding an additional competitor, particularly one that will value quality and will have the ability to pay more in the absence of middlemen, will help farmers get better deals.

While farmers get only a fraction of what their produce sells for on the market, consumers end up paying unnecessarily high prices and have limited choice because of the middleman’s cut and the fact that 40% of India’s fruits and vegetables are lost each year to wastage. Retailers like Wal-Mart will cut out middlemen and create modern cold storage systems and supply chains for produce that will help check India’s double-digit inflation.

Critics of the legislation feel that the introduction of massive big-box retailers will eliminate a source of employment for the millions small business-owners who sell fruits and vegetables at independent shops called Kiranas. But Rupa Subramanya of the Wall Street Journal explains why this fear may actually be unjustified:

The principal fear in India regarding the potential entry of Wal-Mart is that it will wipe out the “kirana” stores, the Indian equivalent of “mom-and-pop” stores in the U.S. An estimated 33 million people or 7.3% of India’s workforce is employed in the unorganized retail sector, which includes the kirana stores, and only 5% of the retail sector is organized.

So are these fears well-founded? Research suggests, probably not.

A much cited study by the Delhi-based Indian Council for Research on International Economic Relations looks at the effect organized retailing has on the unorganized retail sector. It shows that, on average, when an organized retailer opens, the kirana stores nearby generally lose about 23% of their sales in the first year, but are back at their original sales figures within five years. About 1.7% close down every year, but, even in the medium to long run, traditional retailers will still control 85% of the market, according to the study.

This is a difficult question, but I find myself siding with the laissez-faire crowd on this one. I have seen firsthand the inefficiencies of a highly distributed agriculture sector that lacks large retailers. I have seen the lack of investment in productivity and the crops rotting in the markets. Consolidation, within reason, is a good thing because it creates economies of scale where there are none. And, in the end, most of the country ends up ahead.

Unfortunately, the Indian government caved to popular sentiment and backtracked. In an article titled “Wal-Mart’s India Delay Means Politics ‘Killing Farmers'”, the impact is discussed:

The global chains were likely to invest in trucking and distribution systems in India, where government estimates show 40 percent of fruit and vegetables rot before being sold because of the lack of cold-storage facilities and poor transport infrastructure. Farmers will have “assured business” if foreign companies were allowed to invest in multibrand retail, said Pratichee Kapoor, associate director for retail at Technopak Advisors Pvt.

India reversed its decision amid protests by the opposition and its allies that had forced repeated adjournments of parliament. Opposition parties argued that the move would wipe out the jobs of small shopkeepers, who dominate the country’s retail sector.

Rajan Bharti Mittal, managing director of Wal-Mart’s wholesale partner Bharti Enterprises, in a statement yesterday called the government’s reversal an “unfortunate” decision. The policy change would have brought “farmers better realization for their produce as well as better prices for the consumer,” he said.

It is a shame. But I suspect we will see this change sometime in 2012. If India is to truly be a global power, it needs to not only modernize its food production and distribution, but also provide a modicum of confidence for foreign investors. But we will see.

Develop Economies’ Music Recommendation