See the Poor as Entrepreneurs, Consumers.

Monday, July 30, 2007

Extreme poverty in the world calls for a different kind of market-based solution, a business professor asserts.

The numbers are staggering.

Out of a total world population of 6.5 billion, 1.5 billion people are destitute, living on less than $1 per day with little or no access to potable water, basic nutrition or health care. Another 2.5 billion can be classified as extremely poor, living on less than $2 per day.

Until recently, most of us living in the affluence of a developed country were unaware that so many people lived in such dire circumstances. It took the celebrity tours of Bob Geldof, Bono, Angelina Jolie and Bill Gates, among others, to highlight these conditions, mainly in Africa.

The United Nations, through its Millennium Goals, has made a serious effort to address the issue of extreme worldwide poverty. The debt relief program of the World Bank and the increased financial contributions by wealthy nations also seek to address the problem.

While these efforts have had some success, grinding poverty persists.

So what is the solution?

For starters, the governments of the world’s richest countries could increase their financial aid to a level of $300 billion a year. Economist Jeffrey Sachs of Columbia University argues this single step would go a long way toward ameliorating the most extreme poverty.

But even that sum would not address the core problem. To make a serious run at eradicating the most severe poverty, the poor themselves have to be looked at differently.

In his book “The Fortune at the Bottom of the Pyramid,” C.K. Prahalad, the professor of international business at the University of Michigan Business School, offers a creative proposition. “If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up.”

Prahalad argues that the large number of extremely poor people should be viewed as a vast potential consumer market and that private-sector companies should be encouraged to sell them many of the same products and services that the not-so-poor purchase.

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Source: Star Tribune (link opens in a new window)