June 16, 2004

THE CAPITALIST FAITH:

Poor people of the world, start a business: World development bodies show newfound enthusiasm for using private enterprise to tackle world poverty. (David R. Francis, 6/17/04, CS Monitor)

Although the G-8 endorsement was overshadowed by concerns over Iraq and a Bush administration plan to push reform in the Middle East, it was cheered in other forums. At the United Nations, the World Bank, and other development bodies, the G-8 plan reflected their own newfound enthusiasm for harnessing private enterprise to tackle world poverty. World leaders breathed a sign of relief when even the Bush administration, skeptical of international action, endorsed the plan.

Mark Malloch Brown, head of the United Nations Development Program, was especially pleased that the G-8 endorsement backed a March 1 report of a UNDP commission.

That report has also got a positive reaction from developing countries, says Nissim Ezekiel, executive director of the UNDP's Commission on the Private Sector and Development. Further, it's being taken up this week at a session of the United Nations Conference on Trade and Development in Sao Paulo, Brazil, a meeting which gets far more attention in poor countries than in rich nations.

The basic thesis is that in developing countries the removal of red tape and other obstacles to private initiative and entrepreneurship has enormous potential to accelerate economic growth and thereby trim poverty. Supporters say it could prove particularly useful for small and medium enterprises and the "informal sector" - such as kids sent to street corners to peddle stuff and other "underground" business activities.

Unhappily, academic studies find no correlation between a high rate of formation of small enterprises in a developing country and economic success, says Mr. Easterly, now at New York University.

Though he cheers efforts to stimulate small business, he sees economic development as far more complex. It involves improving property rights, dealing with cultural barriers, improving the soundness of contracts and other business agreements, and helping big business, including multinationals, as well as small and medium-sized business.


Will not the existence of more entrepreneurs though create a wider number of citizens with a vested interest in property rights, enforceable contracts, etc.?

Posted by Orrin Judd at June 16, 2004 11:18 PM
Comments

Academics such as Mr. Easterly have a real big problem with cause and effect, or is it effect and cause.

They can, sometimes, see a correlation - then they guess. Since their 'guess' is rooted in leftist (or is it Leftist?) ideology, they almost always guess wrong.

Posted by: Uncle Bill at June 17, 2004 10:08 AM
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