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3 Questions: Alice Amsden on development and eradicating poverty

Alice Amsden, the Barton L. Weller (1940) Professor of Political Economy in the Department of Urban Studies and Planning, has spent decades focusing on issues of development and poverty eradication. Recently, Amsden was appointed by the United Nations secretary-general to a three-year seat on the U.N. Committee on Development Policy, a subsidiary of the U.N. Economic and Social Council. The 24-member committee provides inputs and independent advice to the council on emerging cross-sectoral development issues and on international cooperation for development. The MIT News Office recently talked with Amsden about international development.

Q. Has there been measurable progress in the last decade on global anti-poverty initiatives and, if so, why?

A. Although the World Bank hasn't shouted about it, its data on poverty alleviation are very surprising. They show that from 1981 to 2005 there has been absolutely NO progress made in reducing poverty in Africa. The average African has no more sustenance now than 25 years ago. The same flat progress is evident in Latin America and the Middle East, but their absolute poverty level is lower than Africa's (see the accompanying graph). There's been a lot of noise about Africa, but little accomplished.

Q. Why has development lagged in Africa? Why has poverty fallen faster in China?

A. Poverty is pernicious because of increasing population and diminishing returns. There's also ideology, or believing in something that doesn't conform to the facts. The popular "bottom up" approach to fighting poverty doesn't seem to have performed very well. For 25 years Africa has had a bottom-up approach and nothing has changed. Have we crowded out central governments, when in many cases they are promoting interesting new solutions? Hostility at the grass roots toward government, even popularly elected ones, has stymied technological change. National projects that can make a huge dent in poverty, such as irrigation, electrification and industrialization, have been side-railed.

We see this if we look at the countries where poverty has fallen fastest. They're the East Asian countries that have successfully industrialized. In 1981, East Asia had some of the world's poorest countries. Then investments in job creation soared, which led to spending that stimulated the economy. We know that a lot of energy initiatives should come from the grassroots. But we also know that electrification for a large number of people is very effective. Witness China. China reduced poverty more quickly than India. China is a role model for rural electrification. China's high savings are channeled by government into productive investment and more jobs.

If foreign aid doesn't generate jobs, it isn't sustainable. What good is more schooling if unemployment is all a graduate can expect? What good is vaccinating a child against an infectious disease if her landless parents have no steady income? If one foundation donates to health care, another foundation should give management assistance on what to produce. Taiwan is a good role model because it has always had hundreds of small factories operating in rural regions and towns. Countries that excelled in developing after World War II all started with prewar manufacturing experience. Investments in small factories might help the poorest countries break into this circle.

Q. What is a "Non-Volunteer Organization" and why do you think these could play a role in poverty alleviation?

A. The bottom-up approach is not very economically stimulating because it often involves volunteers who don't get paid, or get paid "in kind" (they administer pills and get some extra to sell on the side, for example). Someone who volunteers has good intentions, but volunteerism crowds out the emergence of paid professionals like nurses, who have steady incomes and are a social group that is able to save and invest. Alongside NGOs we need some "NVOs" (non-volunteer organizations). That has to be part of the anti-poverty movement as much as the volunteer stuff.


A version of this article appeared in MIT Tech Talk on June 10, 2009 (download PDF).

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