Nothing works in poor countries. Influence the leaders or become involved in politics.
By Ramiro Young
I’m convinced. I’m convinced with a simple idea. That the only possible real long-term development of poor countries will not come from having NGOs or having external, internal, humanitarian or financial aid. It will not come from direct investment, venture capitalists, or local or international entrepreneurs. I think that the “solution” will ultimately come from policy makers in local countries. I know it sounds “easy to say it, difficult to do it” but I don’t think the world has other choice if it wants to come up with a solution.
In this “Financial innovation in the social sector” course (number 15.227C, led by an incredible MBA students team) and in the “Applied macro and international economics” course (number 15.012, led by professors Roberto Rigobon and Tavneet Suri) I have seen how enormous efforts are being made by thousands of governments, organizations and people to help poor people and poor countries to go out of poverty.
I have seen with Lant Pritchett how only 0.3% of movers (households that were poor in 1995 but had moved out of poverty in 2005) admitted that were helped by NGOs. In Macro, I have seen how IMF created an aid trap for highly indebted poor countries. I have seen with Dr. Dilip Ratha how the World Bank is helping poor countries find new ways to finance themselves, but with little success or with little impact, one of those. I have seen in presentations of Root Capital and E+Co how well intended, but with little impact, social investment funds can have in a national economy. Microfinance, Endeavor, charter cities, all fantastic innovations or ideas with currently limited overall impact.
But what I did see was how Ireland overcame enormous long-standing economic and financial difficulties in the 1980’s with a renewed leadership team that implemented policies and that promoted the needed trust that they will comply with them. This changed completely the game and the country met an unprecedented growth.
Could this be replicated in the poorest countries in the world? What, the policies? No! The leadership!!! As Dani Rodrik says, each country has to find the best way to grow, with the policies that match their culture and economic condition. There shouldn’t be a Washington Consensus recipe for every country (although, I have to be honest, most of those recipes seemed to me common sense and viable in the long-term). We have to look for a new leadership!
All led me to think that everyone is avoiding the real big issue: That the most effective, efficient and cheapest way to make a country grow is to have leaders that establish clear rules, policies, institutions and a long-term plan for economic, political and socio-cultural development.
Is this something easy to do? Of course not! But it seems to me that it is almost a waste of time, effort and money trying to help from the bottom of the pyramid to reach those leaders. Obviously, a lot of people are saved because of those NGOs actions. But imagine if all those people became involve into politics. Wouldn’t have a greater impact there? Instead of helping one village, be in charge of a whole state. Instead of building one school, being the education Minister.
It will take longer to reach those positions, and it could be improbable that you would ever reach that leadership status. But wouldn’t be more effective at least if you are in a middle management position in the government? Wouldn’t be more efficient to invest your time and effort from a Government standpoint instead than from a NGO view? That’s a recommendation to local people in poor countries.
Regarding current leadership in poor countries. What should be the best way to influentiate those leaders to implement long-term policies and institutions and other economic measures that will make their countries grow but are maybe a threat to their political power?
Well, let’s take a short-cut, suppose that most of the current leaders of poor countries are corrupt and don’t care about the well being of the population (mmmmm……. short-cut?). Well, I don’t think you will change that culture in a decade, but there should be a way to let the new prospect leaders, that are starting to get involved in their national politics, know how the developed world works and take best practices from it in order to customize them to their local culture and economic condition. There should be a way that these prospect leaders open their minds and meet other prospect leaders and form a community. Let’s propose the United Nations to do this in a big scale: Choose big poor and emerging countries. Choose hundreds of people from each of them and highly train them and show them that they have an option. They can change their current situation or follow the crowd and be forgotten.
Well, I think I’m becoming a dreamer……
