Poverty reduction depends on entrepreneurs, not aid

Published Thursday, Jan. 26, 2012–The Globe and Mail 

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Aid is ineffective. By some estimates, more than $2-trillion has been spent fighting poverty since the 1950s, with little direct impact. The stories of failure are illustrated with hydro dams that never worked, crops that never grew and roads that went nowhere.

Entrepreneurs, however, are changing the world. Since 2005, an estimated half-billion people or more have been raised out of poverty, mainly by small business, trade liberalization and gains in productivity. In China, Pakistan, Indonesia and Nigeria, booming local economies, oblivious to the latest schemes of aid programs, are creating millions of jobs.

The Brookings Institution recently predicted even more dramatic gains ahead: “Between 2005 and 2015, India, Bangladesh, Vietnam and Ethiopia are each expected to grow by at least 6.3 per cent per year, and in the process, each is likely to see a quarter of its population lifted out of poverty.” Entrepreneurs, not aid spending, are driving this growth…

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