Wednesday, June 14, 2006

Sachs or Easterly? A False Choice.

Last week, I was fortunate to meet with three cutting edge programs. They are on different edges of the Bopportunity, but I learned a lot from all three. Here are my observations, as well as a few thoughts on a book I read by William Easterly (www.nyu.edu/fas/institute/dri/Easterly/). I know bloggers are supposed to post more often, but hey, it was a busy week.

Jeffrey Sachs and the Millenium Villages Project- This is a very ambitious new development effort in Africa. The basic idea is to apply the Millenium Development Goal approach to selected villages (+/- 5,000 people) in Africa. The project takes a "teach a person to fish" approach, with a lot of community input in the project. The idea is to bring them improved agriculture, improved health and improved connectivity. He has assembled an excellent team of agronomists, engineers and doctors. For more info: www.earthinstitute.columbia.edu/mvp/ and www.unmillenniumproject.org/press/mvpfactsheet.htm

This project has been criticized by Prof. Easterly as "utopian" in a recent article in Foreign Policy and Easterly raises some good concerns. This lead me to read his book, The Elusive Quest for Growth. It is interesting that although Sachs and Easterly appear to have collaborated in the past, they are fighting publicly now. I think that is too bad... the problems are huge, and I think a more collaborative approach would be better.

Where do I come down, if anyone cares? Well, Easterly makes some strong points about how ineffective most international aid programs have been, but he doesn't offer much in the way of suggestions. As an entrepreneur, I like that Sachs is taking a shot... trying a new approach, with a good team. Will it work? That is the big question.

My concern with the Millennium Development Goals is that they rely heavily on increased funding from the developed nations. While Sachs had some slides on how the amounts pale in comparison to spending on Iraq, this is a very simplistic way to look at it. A closer review of the US federal budget shows that foreign aid already makes up a significant amount of discretionary spending, and I doubt that politically Americans (or French, Germans, Japanese) will dramatically increase these amounts. This number (called ODA) also is much smaller than the amount of foreign direct investment and charitable monies invested in development. So to me, relying on government sources strikes me as risky. To his credit, though, the Villages project is to show what we entrepreneurs call "proof of concept". If he can show significant progress (and he had several great examples with respect to agricultural yeilds and malaria reduction), than I think that other sources of funds may begin to get on board. The trick will then become seeing how much self sustaining economic activity can be generated in these villages. It is a very risky proposition, but it is the best approach I have found.

As for Professor Easterly, my observation is that there are several types of people in the development arena: 1) those that get paralyzed by the complexity of the issues involved in poverty, environmental degradation, disease and education and fail to take action; 2) those that are critics and point out all the things that don't work; 3) those that are trying to make a difference. I would love to see him move from #2 to #3. He has a lot of experience (much more than I)- but the magic comes from improving the lot of the poor. He has a new book out, which is on my reading list- White Man's Burden- and perhaps he offers more suggestions there. But a review by Prof Sen does not give me much hope. (www.foreignaffairs.org/20060301fareviewessay85214/amartya-sen/the-man-without-a-plan.html)

For both, I think that they have spent their careers in international development economics, and need to remember to look at the many impressive things accomplished by business, particularly the social entrepreneurs. It may be my personal bias, but the writings of DeSoto, Hart, Prahalad and Bornstein about these entrepreneurs seem to offer a very promissing, though much less "systemic" solution. But there is a wealth of people that are type #3. As we all know, entrepreneurship is not well suited to large, multinational planning efforts, so I doubt we will see a UN based Millennium Entrepreneur Project. And, frankly, my guess is that most entrepreneurs will be working a little higher on the pyramid ($1-3/day income)- which is why I have a lot of respect for Sachs's efforts at figuring out a way to help those in extreme poverty.

Well, that is more than I meant to write. I will post in a few days about my experiences with two entrepreneurial institutions: the faith based microfinance organization, Opportunity International (www.opportunity.org) and the "Changing Business for Good" organization, Bainbridge Graduate Institution (www.bgiedu.org).

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