http://www.ssireview.org/articles/ Strategies, Tools, and Ideas for Nonprofits, Foundations, and Socially Responsible Businesses en nicholas_jenna@gsb.stanford.edu Copyright 2010 2010-02-24T07:00:54+00:00 http://www.ssireview.org/articles/entry/the_ingredients_of_growth/ http://www.ssireview.org/articles/entry/the_ingredients_of_growth/ In recent decades, many economists have advised governments to stabilize, privatize, and liberalize markets. Economists do know how markets work, and they can often predict how mature market economies will respond to certain events and policies. But developing economies lack both mature markets and the institutions that support them—including institutions that define property rights, enforce contracts, convey prices, and bridge gaps between buyers and sellers. These are precisely the institutions that political leaders must establish and then modify as economic growth introduces new problems and opportunities. The work of the Commission on Growth and Development tended to confirm that political leaders play pivotal roles in the success—and the failure—of economic development. As detailed in its publication The Growth Report, the commission closely examined 13 nations whose gross domestic product (GDP) grew at least 7 percent a year for at least 25 years after World War II. In other words, these economies at least doubled in size each decade. Although these high-growth countries used different economic models and political structures and had different resources and histories, their governments followed broadly similar paths. Often ushered in by a crisis, new leadership chose a promising economic model and then stabilized the nation long… Economic Development, Government 2010-02-24T06:00:36+00:00 http://www.ssireview.org/articles/entry/research_how_the_danes_do_it/ http://www.ssireview.org/articles/entry/research_how_the_danes_do_it/ Like any primate species worthy of its opposable thumbs, we humans like our social hierarchies. Yet too much inequality wrecks our health, rocks our politics, and chafes our social ties, find scholars across the social sciences. These same scholars also hotly debate where inequality comes from, yet arrive at little consensus. A new study of 21 modern small-scale societies around the world, however, finds a clear pattern in the disparities: “How much inequality there is in a society depends on how inheritable the wealth is, which in turn depends on the kind of wealth that it is,” says economist Samuel Bowles, director of the behavioral sciences program at the Santa Fe Institute and one of the study’s lead authors. Specifically, parents in crop farming and herding economies tend to value and create material wealth (such as land, cows, and money), which they then pass on to their offspring. Over time, this inherited wealth accumulates in certain households, widening the gaps between the haves and have-nots. In contrast, parents in subsistence farming and hunting-gathering economies tend to rely on and generate other kinds of capital, including embodied wealth (like height, strength, and skills) and relational might (such as social alliances and… Economic Development 2010-02-24T06:00:35+00:00 http://www.ssireview.org/articles/entry/bearing_witness/ http://www.ssireview.org/articles/entry/bearing_witness/ In 1992, while browsing a bookstore in Washington, D.C., I picked up Looking for the Light. On the back cover was a black-and-white photograph, taken in 1933, of a beautiful 23-year-old woman with mesmerizing eyes and a tomboy style of dress. I developed an immediate crush on her, a photographer named Marion Post Wolcott and the subject of the book. Wolcott was a photographer for the Farm Security Administration during the 1930s, one of several photographers employed by the New Deal agency to document the impact of the Great Depression on the lives of Americans. Wolcott, along with Walker Evans, Dorothea Lange, Gordon Parks, and others, created some of our nation’s most iconic images. But Wolcott never became as famous as some of her contemporaries. That’s because, after taking several hundred thousand photographs over three years, she met a man, put her camera down to start a family, and did not pick that camera up again for almost 50 years. Paul Hendrickson, the author of Looking for the Light, summarizes Wolcott’s life as “a story about an artist who stopped, who let go of that gifted magical thing inside her until it was too late and the gift was lost.… Economic Development, Book Reviews 2010-02-24T06:00:16+00:00 http://www.ssireview.org/articles/entry/inequality_makes_us_anxious/ http://www.ssireview.org/articles/entry/inequality_makes_us_anxious/ Why is inequality so bad? It’s not just that the poorest people in highly unequal societies may go without food, shelter, or other basic subsistence goods. It’s not just that extreme inequality makes it difficult for the less fortunate to participate fully in their country’s social institutions. It’s not just that lavishing mansions, cars, and jewels on a few lucky people violates some primitive sense of justice and what’s fair. Although inequality may well be problematic for these conventional reasons, The Spirit Level tells us that it’s mainly bad because it makes status differences more extreme and salient and thus generates insecurity about our worth and where we stand in the social hierarchy. We should dislike inequality, in other words, because it produces anxiety and because such anxiety in turn leads to chronic stress, health problems, and other undesirable outcomes. The great achievement of The Spirit Level is documenting that this inequality-induced anxiety has so many bad effects. It makes humans feel stressed and deprived and more likely to get depressed, smoke, overeat, or engage in violent behavior. It also leads to conspicuous displays of consumption, such as buying fancy cars, big houses, and luxury clothes, all of which serve… Economic Development, Book Reviews 2010-02-24T06:00:07+00:00 http://www.ssireview.org/articles/entry/whats_next_namibia_experiments_with_aid_for_all/ http://www.ssireview.org/articles/entry/whats_next_namibia_experiments_with_aid_for_all/ In Otjivero, a dusty village in central Namibia, everyone knows where to buy freshly baked bread. Just head to the metal shack where Frida Nembwaya, mother of seven, has opened a bakery. She calls her business “Good Life After Struggle,” which pretty well sums up her story. Struggle is commonplace in Namibia, where more than half the 2.1 million inhabitants live on less than $2 per day. Once part of South Africa, Namibia has the most unequal income distribution in the world. It’s a place of “sheer hunger next to incredible wealth,” according to Bishop Zephaniah Kameeta, a longtime political activist. For Nembwaya and nearly 1,000 others in her village, life took a turn for the better two years ago when Otjivero became the pilot site to test an aid concept known as basic income grants (BIG). The program gives every villager — from birth to age 60 — a monthly stipend equal to $13. (Older villagers already qualify for government pensions.) Money for the pilot comes from a coalition of churches, labor groups, and aid organizations eager to find out whether a rising tide can truly lift all boats. BIG may sound like old-fashioned welfare, but it’s actually the… Economic Development 2010-02-24T06:00:02+00:00 http://www.ssireview.org/articles/entry/grassroots_concrete/ http://www.ssireview.org/articles/entry/grassroots_concrete/ On the morning of Jan. 26, 2001, a magnitude 7.6 earthquake struck the western Indian state of Gujarat. More than 20,000 people were killed and 160,000 injured, many of them crushed by falling buildings. International aid agencies flocked to the scene and began reconstruction. One year later, civil engineer Elizabeth Hausler traveled to Gujarat on a Fulbright scholarship, hoping to learn how she could use her skills to build homes that withstand tectonic shifts. She found that many survivors didn’t want to live in their new, donor-built earthquake-resistant houses because they were made from odd materials and in strange styles. “One approach I kept seeing over and over was designing a house with the toilet inside,” says Hausler. “People don’t want the toilet in the house, because the houses are so small. So that ends up being wasted space. And they don’t use the toilet, so they don’t have a toilet.” It wasn’t enough for a house to be solid, realized Hausler. It needed to fit. Even when donor-built homes suited people’s needs, they were frequently too expensive. “I didn’t see a single example of a technology introduced by a local or foreign organization that continued to be used without… Economic Development 2010-02-03T22:39:18+00:00 http://www.ssireview.org/articles/entry/grow_your_own/ http://www.ssireview.org/articles/entry/grow_your_own/ The year 1987 is one that most residents of Littleton, Colo., would rather forget. Their town’s largest employer, Martin Marietta, eliminated 7,000 jobs—half the company’s local workforce and about 20 percent of the town’s population. By year’s end, more than 1 million square feet of retail and office space sat vacant. Many towns would have taken the usual cure: attract another big corporation to the area. But Chris Gibbons, Littleton’s newly hired director of business/industry affairs, was fed up with chasing footloose companies. So, with support of the city council, he threw out the economic development playbook that most cities and states use. No longer would he hunt down big companies and lure them back to Littleton with tax incentives and subsidized space. Instead, he would focus all of his his department’s efforts on growing hometown businesses. The only problem? Gibbons didn’t know how to grow hometown businesses. Following a brainstorming session at a local think tank, though, he did have a name for his endeavor: “economic gardening.” After years of experimenting with economic gardening, he has formulated a fertilizer that cities and states can use to cultivate bumper crops of local businesses. First, they must identify the local companies… Economic Development 2009-11-19T06:00:00+00:00 http://www.ssireview.org/articles/entry/helping_the_poor_save_more/ http://www.ssireview.org/articles/entry/helping_the_poor_save_more/ While teaching at Bangladesh’s University of Chittagong in 1976, Muhammad Yunus interviewed a stool maker named Sufia Begum.1 Because Sufia did not have the 22 cents she needed to buy bamboo, she borrowed bamboo from a middleman every day. The middleman then purchased her stools for only 2 cents more than the cost of the bamboo. Yunus asked Sufia if she could borrow money elsewhere to buy her own bamboo. She replied that she could borrow from the local moneylender, but he charged up to 10 percent interest per day. She also noted that the moneylender’s clients only became poorer. Because of his experiences with people like Sufia, Yunus founded the Grameen Bank in 1983 and began making small business loans (microloans) at lower interest rates to poor people. Through these microloans, clients could get the working capital they needed to keep more of their profits. But giving people credit is only part of banking the poor. Savings gives people the ability to turn irregular cash flows into lump sums for larger purchases, emergencies, and investments. Where there is no health insurance and no social security, savings are critical for poor people’s welfare. Credit can satisfy these needs, too, but… Economic Development 2009-11-18T06:00:08+00:00 http://www.ssireview.org/articles/entry/public_private_alliances_transform_aid/ http://www.ssireview.org/articles/entry/public_private_alliances_transform_aid/ In 1994, 800,000 Rwandans were murdered in the last genocide of the 20th century. When Paul Kagame became president of Rwanda, the nation’s economy was still in shambles, with few resources other than its people and its coff ee crop. But Rwanda’s coff ee beans were of such poor quality and unappealing taste that they were sold at the lowest possible prices. Traders made most of the modest profits, leaving growers impoverished. To make Rwanda’s coff ee crop more profitable, the United States Agency for International Development (USAID) and the Rwandan government organized an unusual alliance between coff ee farmers and several international coffee companies, including Starbucks Corp. and Green Mountain Coffee Roasters Inc. The alliance trained the farmers to process specialty coff ee beans that would fetch premium prices. USAID played a central role in linking the coff ee farmers to U.S. coffee retailers, as well as in training farmers in how to grow and process the coffee to meet high specialty coff ee standards. USAID also helped coffee farmers secure bank loans to buy or upgrade equipment. By 2006, exports of Rwandan specialty coff ee had grown to $8 million, and coffee farmers’ per capita income had more… Economic Development, Government 2009-10-26T20:02:00+00:00 http://www.ssireview.org/articles/entry/behind_the_curve/ http://www.ssireview.org/articles/entry/behind_the_curve/ In 2004, the US. government-backed Millennium Challenge Corporation (MCC) certified the West African nation of Senegal as eligible to receive hundreds of millions of dollars in foreign aid. Initially, Senegal seemed like an excellent choice for a grant from the MCC, which targets aid to poor countries that are committed to good governance, free markets, and investments in people. Senegal is one of the few African states that has never had a coup d’état. And since the nation became independent from France in 1960, Senegal’s leaders have peacefully transferred power two times—most recently in 2000, when citizens elected the current president, Abdoulaye Wade. In addition, the country has encouraged private sector-led development and has at least offi cially welcomed foreign companies. Since Wade’s election, however, Senegal’s enthusiasm for economic freedom, poverty reduction, and sustainable growth seems to have flagged. For instance, after giving the French and Canadian consortium Hydro Québec International-Elyo a 34 percent stake in senelec, Senegal’s monopoly electricity supplier, the Senegalese government would not allow the company to recoup its investment by raising prices. Frustrated in their attempts to turn a profit and to modernize the ramshackle power system, the investors were forced to accept a government buyout… Economic Development 2009-10-08T23:27:00+00:00