Another failed development policy in the works?

A few headlines regarding the World Bank recently caught my eye, mostly because they are not the usual development headlines I am used to reading.  In the Business Standard‘s “Migration to urban areas is good, says World Bank,” and domain-b.com‘s “India’s rural job schemes are barriers to development: World Bank news,” the focus is on a new World Bank report that encourages a population shift from villages to cities.  More than that, the World Development Report 2009: Reshaping Economic Geography says that current schemes to improve rural life are contrary to development, as pointed out by domain-b.com:

The central government’s National Rural Employment Guarantee (NREGA) scheme and other poverty alleviation schemes act as policy barriers to economic development and perpetual alleviation of poverty, according to the World Bank.

In short, the report encourages the process of rural-urban migration.   This approach seems to be the  opposite of the upswing of efforts to address rural poverty and improve rural life so that the majority of India’s population has the same economic opportunity as in urban areas.  Instead of focus on rural schemes, the report advocates improving infrastructure in cities to boost economic activity.   Here is a quick look at the reasoning, as quoted by the Business Standard article:

“The world’s most geographically disadvantaged people know all too well that growth does not come to every place at once,” said Indermit S Gill, director of the World Development Report (WDR) and chief economist, Europe and Central Asia. “Markets favour some places over others. To fight this concentration is tantamount to fighting prosperity,” Gill added.

What does it mean for India when an international force such as the Bank supports a shift from rural to urban areas?  Will improving basic infrastructure in urban centers really address the pressure of large increases in city population?  While I’m not against migration as a whole, I remain skeptical about putting emphasis on encouraging rural to urban migration and discouraging rural schemes for poverty alleviation.  This debate also points back to an earlier post I wrote on urbanization.  Is this another development report gone bad?

Soundbites from Nancy Barry, former President and CEO of Women’s World Banking

Last night I had the good fortune of sitting in on a talk given by Nancy Barry, a pioneer in the field of creating private, market-based solutions to poverty alleviation for women across the globe. Her talk was very powerful and on many points, spot on accurate in my opinion.

A veteran of the World Bank, she was the second president of of Women’s World Banking from 1990 to 2006. In the fall of 2006, Nancy started launched Nancy Barry Associates–Enterprise Solutions to Poverty, which works with major corporations, emerging entrepreneurs, and leading business schools to build business models that engage low income producers as suppliers, distributors and consumers of products that build income and assets. Simply put, her views come from a career of practice knowledge and her points should be taken with great seriousness.

Below are some highlights from her speech, which was titled “Microfinance and Beyond: Enterprise Solutions to Poverty,” and some of my own disagreements.

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From Sex Workers to Successful Entrepreneurs

We reported here on TC-I couple of months back about India’s first sex-workers bank being set up in Mumbai. A group of sex workers in Mysore have gone a step-further and emerged as successful entrepreneurs. Organized under an organization called Ashodaya Samithi, the group of 150 female, male and transgender sex workers have set up a successful community kitchen which sells lunches. The initiative recently won the ‘Development Marketplace‘ competition conducted by the World Bank [via Rediff.com]

The short-listed 75 finalists from among the 1,000 were invited to Mumbai to set up a stall, exhibit and explain their proposal to a team of jurors and convince them on their proposal. A sex worker and Ashodaya secretary Bhagyalakshmi did the promotional work. She convinced the jurors on the innovativeness, replication and sustainability of their project and made Ashodaya qualify to receive the World Bank grant of $40,000 on May 15 in Mumbai from actor and UNICEF envoy Shabana Azmi

Its interesting to note that the theme of the comeptition this year was “Tackling HIV/AIDS Stigma and Discrimination”. For the sex worker community, running a successful business not only provides them a rerliable income opportunity, but also a better chance to tackle stigma and discrimation – a welcoming side-effect.

TC-I Tidbits

  • Technology and Education: IIT and YouTube have tied up to post video lectures for undergraduate engineering courses online.
  • Health:
    • According to a WHO survey, the Indian workforce is on the whole pretty unhealthy. 47% of workers were overweight while 27% suffered from hypertension.
    • Abhijit Banerjee, an economist from MIT, said that the country’s maternal and child health is worse than that of Sub-Saharan Africa. As a result, nearly half of the country’s children aged below five will suffer from stunted growth.
  • Economic Development: A World Bank study revealed that Orissa has made a positive fiscal turnaround in the last six years and lifted 3 million people out of poverty.
  • Education: With a view to harness skill potential across the country 1,500 more Industrial Training Institutes (ITIs) and 50,000 Skills Development Centres will be set up under the proposed ‘Skills Development Mission’ of the Government of India. [Source: iGovernment]

Using future markets for social entrepreneurship?

  • A McKinsey & Co. report on prediction markets quotes James Surowiecki: “I wouldn’t be surprised to see prediction markets used in many more companies than today, not least as a tool to forecast sales. Consumer-facing companies should be particularly interested.”
  • Knowledge Management gurus Tom Davenport and Dave Snowden jumped into the fray to cool easy enthusiasm.
  • An article in the New York Times introduces the concept of futarchy. According to Robin D. Hanson, an economist at George Mason University and a fan of alternative institutions, futarchy is “a form of government enhanced by prediction markets. Voters would decide broad goals of national welfare, but betting in speculative markets would determine the policy steps to achieve those goals.”

When I read this post, I could not help but wonder if future markets could be applicable to social entrepreneurship. The first bullet point spoke to the use of such markets to predict the changing consumer preferences for companies. It would seem as though such information would be useful for understanding the evolving needs and desires of BoP customers as well. Can future markets be modified to be applicable to the BoP? Or is modification necessary, can we use them out of the box today?

Likewise, for social investors prediction markets could figure out what innovative approaches to specific problems are most likely to be effective and help guide them in their investing decisions. Anyways, just some food for thought. I need to think further about this, but I am sure you will hear more from me about this in the ‘future.’

Headlines Digest

  • Food Shortage Crisis: Union Agriculture Minister Sharad Pawar said that the country has sufficient food to feed the people and that prices should reflect that soon. Sending conflicting signals, PM Singh may call a meeting with Chief Ministers on controlling prices. Shockingly, another article highlighted the extremely high amount of crops wasted annually — RS 55,600 Cr!
  • Education and Quotas: Fresh off the recent Supreme Court case, the IIT’s have agreed on a plan to accept the 27% quota over three years. With regard to IIT’s, 3 new institutions are slated to open up this year.
  • Civil Society, Peace and Rights: A roundtable has been called to increase democratic participation and wrest power away from the military actors in this area. In a related article, Muslims across India have held various forums for public discourse denouncing terrorism and voicing its incompatibility with Islam. In Mumbai, the High Court recognized the right for indigent and poor people to have legal counsel by dismissing the sentence against a man convicted for murder.
  • Environment: Environmental groups have begun pressuring the World Bank to delay implementation of a new coal power plant. Also, in Kashmir the Wildlife Trust of India has developed ways to minimize human encroachment on native bears and also encourage greater conservation by residents. Also, five Indian coastal cities have joined Greenpeace’s efforts to call atention to global warming and the climate crisis.
  • Health: Global perception of HIV/AIDS victims in the workplace appears to be improving. Along similar lines, the Government of India modified its drug policy focusing on prices and access.

Solid Waste Management – A PPP Opportunity?

Meena Gupta, a secretary at the Ministry of Environment and Forests, claims that the Indian government will soon add amendments to municipal solid waste management regulations, and highlighted the private sector’s role in exploring new projects. Merinews, a citizen journalism news portal, quoted Ms. Gupta as saying:

sustainable waste management could materialise only if service delivery was linked to private sector participation. “It is imperative that the private sector comes forward and enables the public sector stakeholders to devise appropriate frameworks that result in a win-win for both sides,” she said, adding that the private sector could also play an important role in building the capacities of municipal bodies. The municipalities, on their part, need to provide guidance for the selection of appropriate technologies.

Solid waste management, along with recycling, presents plenty of opportunities for partnerships. For example, EXNORA is an NGO in Chennai that focuses on the environment through their SoWAM program, which works in muncipalities throughout Tamil Nadu. An India Together article also provides a good background into the various policies in place, as well as the benefits and drawbacks of private sector participation.

Risks of private sector involvement may include a lack of transparency, a commercial failure that would then lead to disturbance of public services, or low cooperation between stakeholders. A World Bank presentation offers different options for contracting mechanisms and other processes to offset these potential risks, and Vinay previously discussed a primer on PPPs.

The opportunity is there, but is it best for the private sector to get involved in offering what can be considered an essential public good? And do the benefits really outweigh the risks?