“The accepted wisdom is wrong,” says James Tooley, winner of the FT’s recent essay contest, as he rips into the prevailing notion that developing country education problems can be solved with more aid. He continues his tirade, attacking development experts that on the one hand prioritize financial assistance for state education but on the other hand, acknowledge that benefits from this aid will have to wait until state education can be reformed and rid of corruption:

“It ignores the reality that poor parents are abandoning public schools en masse, to send their children to “budget” private schools that charge low fees – perhaps one or two dollars per month, affordable even to parents on poverty-line wages.” Tooley hits upon a central element of the BOP hypothesis- that in cases where the government is unable to provide needed services to the poor, the private sector can and should step in.

September is an exciting month for country ranking enthusiasts. World Bank’s 2007 Doing Business Report, and Cato/Fraser Institute’s 2006 Economic Freedom Report were released back-to-back, Sep 6 and Sep 7, respectively, begging for some compare-and-contract action. First, what are the purposes of these rankings?

It seems the DB rankings are more like athlete rankings more than anything—they serve as benchmarks for comparison and goals for improvement. Every year, policymakers look at the Doing Business rankings and set about to advance their position compared with the other 175 countries in the running. Mauritius, for example, aims to make the top-10 list in Doing Business by 2009. Doing Business measures 10 aspects of the business environment, oftentimes in terms of how many steps and how much time are involved in completing each of the following processes: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

Continue reading past the break for my comparative analysis of countries from both reports.

Formal, profitable SME financing is gaining momentum in India, as two articles in last week’s Indian financial press indicate:

ICICI Venture mulls 4 specialized funds
New SME Fund to Launch in India

Small and medium sized enterprise investment funds are not new; we’ve discussed the Shell Foundation’s successful African SME fund in the past. Other previous posts have covered the unmet demand for mesofinance. Last week’s announcements by BTS Investment Advisors and ICICI indicate to me that major players in commercial finance have finally begun to understand the need for and potential in SME finance.