Wringing Profit from the Poor
When I meet people and they ask what I do, I?m often met with a skeptical eye when explaining my promotion of private sector strategies for development. This recent article succinctly describes why. It’s an interview with John Perkins, author of Confessions of an Economic Hit Man.
Perkins worked for 10 years as a highly successful ?economic hit man? for a major American engineering and construction firm. ?An economic hit man works by making excessively optimistic projections of economic growth in a developing country, seducing the business and political elite into borrowing vast sums for hydroelectric projects, road building, industrial development and the like. The net result enriches the elite while despoiling the environment, eroding traditional indigenous life and casting much of the population into abject poverty.
?In this neo-colonial system of exploitation, most of the money funneled from the World Bank, the U.S. Agency for International Development and similar organizations, never makes it to the target countries. Instead it goes straight to those U.S. companies — Halliburton, for example, Bechtel, or Perkins’ now-defunct employer, Chas. T. Main, Inc. — hired to build and maintain the projects.?
Given this sordid history between the private sector and development, it’s understandable why there is still a lingering doubt about further building a bridge between these sectors. The fundamental difference, however, is in the approach. At NextBillion, we advocate for the development of bottom-up, locally-led initiatives as opposed to the top-down, politically-driven ones of the past. I?m encouraged by all the enterprises already demonstrating what can be achieved with this strategy, as well as all of the initiatives working to support their development.
I plan on reading Perkins? novel myself, and would encourage others to do so as well. Having a good understanding of why private sector-led initiatives have failed in the past is a good place to start when developing strategies for their success in the future.