03 January 2012

Towards a Growth Strategy for Africa?

Long before all those randomised evaluations, my youthful enthusiasm for microfinance was killed by this:
"in the long-run, a growth strategy is the most cost effective way of dealing with poverty. This is true for two fundamental reasons: first, growth lifts many of the poor out of poverty; second, it generates the government revenues necessary for anti-poverty measures. A donor strategy that focuses exclusively on short-term poverty alleviation is a dead end, condemned to last indefinitely ... 
Food relief, micro-finance, improved wood-stoves, and reforestation are all examples of interventions aimed primarily at helping the poor to deal with their harsh environment.1 In nearly all cases these interventions correspond to a real need. In many cases they are effective in alleviating the worst effects of poverty. But by themselves they cannot lift the African continent out of poverty any more than food relief, micro-finance, and improved wood-stoves were responsible for lifting England, Japan, or Korea out of their poverty."
1. This is not to deny that these programs also have expected growth benefits. But it is probably a fair approximation to say that their primary effect is poverty alleviation.
Marcel Fafchamps, Francis Teal, and John Toye

(Of course, I've now come full circle and lean closer to the Banerjee-Duflo "we have no clue really how to do growth so lets focus on helping the poor deal with their harsh environment")

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