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NextBillion News vol.21 January 29, 2008
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The BoP Movement Goes Mainstream
[Contents]
1. Bill Gates Calls for Capitalism That Serves the Poor
2. Featured Blog Posts:
Google.org: Fuel the Growth of Small and Medium Sized Enterprises
Rob Katz
Emerging Market Multinationals: BoP or Not?
Abigail Keene-Babcock
Will 2008 Be the Year of 'Next Billion' or 'Bottom Billion'?
Rob Katz
3. Bogotá's Transmilenio and the Transformation of a City
4. Featured Event: "Creative Capitalism": Can It Meet the Needs of the World's Poor?
5. Jobs/Careers: Associate, New Ventures Program (World Resources Institute)
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1. Bill Gates Calls for Capitalism That Serves the Poor
Al Hammond
In a speech at Davos last [0] week, Bill Gates called for a more inclusive capitalism that "would have a twin mission: making profits and also improving lives for those who don't fully benefit from market forces." That is a major milestone in the evolving thinking of perhaps the most influential philanthropist of our time.
In 2000, I organized a conference in Seattle on Creating Digital Dividends [1] at which Mr. Gates, in a keynote address, famously said that "poor people don't need computers" and rejected a business approach to alleviating poverty. Within a year, however, he had changed his mind, and Microsoft became a leader in seeking ways to provide affordable services to low-income populations-in some small measure with WRI's help.
The beginnings of a more full-fledged belief in inclusive capitalism, according to the WSJ [2] today, came at a dinner in Seattle, organized by WRI, in which Mr. Gates spent several hours talking with BOP guru C.K. Prahalad (in his capacity as a WRI Board member). I was also at that dinner, and remember Mr. Gates saying to me that the question was how far towards the bottom of the pyramid could business approaches go-not too far, was his assessment. But again, his thinking evolved.
Now Mr. Gates is arguing that capitalism, appropriately pursued, is in fact the best hope to bring services and improve productivity and create opportunity for the world's 4 billion poor [3] - and that, accordingly, the world needs to invest much more heavily in the micro, small, and medium-sized enterprises that are close to the poor. If Mr. Gates puts the muscle of his foundation behind such enterprise development - which we have long argued is the principal bottleneck to a successful BOP business approach - then perhaps the world will really change.
Story link [3]
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2. Featured Blog Posts
Google.org: Fuel the Growth of Small and Medium Sized Enterprises
Rob Katz
Both the New York Times [4] and Emeka Okafor's Timbuktu Chronicles [5] point out Google.org's newly-announced philanthropic commitment to small and medium-sized enterprises. From the Google.org web site [6]:
Small and medium sized enterprises (SMEs) are critical for creating more equitable economic growth. SMEs create opportunities for more people to participate in the formal economy and help reduce poverty by creating jobs. In many developing countries large businesses have access to formal, bank-based credit and capital markets while households and micro-entrepreneurs have access to micro-loans. This leaves a massive gap known as the "missing middle."
While SMEs in rich countries represent half of GDP, they are largely absent from the formal economies of developing countries. Today, there are trillions of investment dollars chasing returns - and SMEs are a potentially high impact, high return investment. However, only a trickle of this capital currently reaches SMEs in developing countries. Our goal is to increase this flow.
Read more [6]
Emerging Market Multinationals: BoP or Not?
Abigail Keene-Babcock
The January 10th edition of the Economist takes note, in two separate [6] pieces [6], of the huge successes of a handful of large MNCs. It highlights how these firms have successfully shaken up their industries and acquired well-known brands in their efforts to capture large swaths of global market share. Usually this wouldn't mean much for the BoP. In fact, what does the potential acquisition of a luxury brand like Jaguar, or a deal for a steel giant, "cooked up... [by father and son] during their annual skiing holiday in St Moritz [7]," have to do with the BoP?
Maybe not much, but maybe the Economist is on to something. What the magazine was so interested in reporting was not the private sector's search for growth, but rather that all of these MNCs are from "poorer countries" (India, Brazil, China), and each one is making major headway in capturing rich markets. They have also done well in their home markets, meaning that while we are definitely talking about an internationalized business elite, we are talking about one that does business at home, too.
The emergence of ‘developing country' MNCs - Embraer [8], Mittal [9], Tata Motors [10], Cemex [11], and others - seems to turn on its head the anti-globalization movement's typical characterization of MNCs as Western neocolonial forces working to suck developing countries dry. One wonders if soon the "Western" element will be conveniently dropped from those arguments about capitalist imperialism, or if the arguments will have to be re-defined altogether.
Read more [11]
Will 2008 Be the Year of ‘Next Billion' or ‘Bottom Billion'?
Rob Katz
What's in a name, a brand, a catchphrase? In some sense, everything. But a brand/name/phrase is only as good as the content behind it. So when U.N. Secretary General Ban Ki-Moon recently declared [12] 2008 to be "the year of the 'bottom billion'," I paid attention - after all, Ban's declaration has the force of the U.N. behind it.
Upon hearing this statement, my first thought was actually a question: if 2008 is the year of the 'bottom billion' [13], does that preclude 2008 from being the year of the 'next billion' [13] as well?
I thought a lot about this, and came to believe that 'bottom billion' and 'next billion' need not be mutually exclusive. My conclusion is based partly on data [14]: if there are 4 billion in the base of the pyramid, then there's room for both a bottom AND a next billion. (I cringed when thinking about this - these data are quite daunting when thought about in this way.)
Read more [14]
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3. Bogotá's Transmilenio: Transformation of a City à la BoP?
Abigail Keene-Babcock
If you've been to Bogotá in the last seven years, you've probably noticed a city that is distinctly different from the metropolises of many other Latin American countries. It's cleaner, more efficient and easier to navigate. Not only that, many of the city's public spaces exist alongside, not in spite of, vehicle transit networks.
This is no accident. Bogotá's hugely successful Bus Rapid Transit [15] (BRT) system, the Transmilenio [16], has been the centerpiece of the city's urban regeneration. (Sidenote: I spent much of July/August 2006 traveling to Bogotá and other cities in Latin America, conducting independent research on urban transportation reform).
The Transmilenio system now attracts visits by city planners, engineers, development institutions, and politicians from the world over, all of whom come to learn about innovations in urban transportation. As many cities' privately operated, informal systems become increasingly inefficient, unsafe, and environmentally disastrous, Bogotá has been inundated with city planners looking for new answers.
Read more
[16]
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4. Featured Event: "Creative Capitalism": Can It Meet the Needs of the World's Poor?
Tomorrow, the Hudson Institute will host a lunch and panel discussion on "creative capitalism." NextBillion contributor Al Hammond will be featured on the panel, along with other notable scholars in the field.
Date: Wednesday, January 30, 12:00 - 2:00
Location:
Hudson Institute - Betsy and Walter Stern Conference Center - 1015 15th Street, NW - Suite 600
Lunch will be served. For more information, and the register online (required), click here [17].
Background:
Noting in his recent address to the World Economic Forum in Davos, Switzerland that "we have to find a way to make the aspects of capitalism that serve wealthier serve poorer people as well," Microsoft’s Bill Gates called for a new system of "creative capitalism" -- "an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities."
Others are not so certain that development pursued by well-meaning experts working from the top down can ever make a dent in world poverty. Long-time critic of international aid WILLIAM EASTERLY, for instance, argues that: "We don’t know what actions achieve development, our advice and aid don’t make those actions happen even if we knew what they were, and we are not even sure who ‘we’ are that is supposed to achieve development."
Can Bill Gates’ "creative capitalism," make significant inroads against world poverty? That will be the question addressed by WILLIAM EASTERLY along with Urban Institute Senior Fellow EUGENE STEUERLE and ALLEN HAMMOND, vice president for innovation at the World Resources Institute. Hudson Institute's own CAROL ADELMAN, director of Hudson's Center for Global Prosperity, will moderate the discussion.
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5. Jobs/Careers: Associate, New Ventures Program (World Resources Institute)
Location: Washington, DC
Organization: World Resources Institute, Markets and Enterprise Program
Job Description: The World Resources Institute (WRI) is seeking a dynamic Associate with relevant investment experience for a primary role in its New Ventures [18] program.
New Ventures is a business accelerator that works toward long-term, sustainable natural resource use by supporting environmentally- and socially-responsible enterprises in emerging economies. We identify profitable small and medium-size enterprises (SMEs) that generate unique social and environmental benefits and provide them with business advisory services and access to capital. New Ventures identifies transformative business models in critical sectors such as clean energy and water, and we work with partners to scale these business models in emerging market economies. Additionally, we work with local and international investment communities and networks to help further develop capital resources available to these enterprises.
In collaboration with local partners, New Ventures operates centers of sustainable entrepreneurship in Brazil, Mexico, China , Indonesia and India.
Read more [19]
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NextBillion News vol. 21 January 29, 2008
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World Resources Institute