Thirty years ago, the international development community was abuzz with excitement. This was because it appeared that the perfect solution to poverty, exclusion and under-development had finally been found in the form of microcredit. As originally conceived, microcredit is the provision of micro-loans to the poor to allow them to establish a range of income-generating activities, supposedly facilitating an escape from poverty through individual entrepreneurship and self-help. Perhaps nowhere more than in Latin America was the excitement so intense. Stoked by the uplifting claims of Peruvian economist, Hernando de Soto [1], that a vastly expanded informal economy would prove to be the economic salvation of the continent, the U.S. government through the World Bank and its own aid arm, USAID, along with the Inter-American Development Bank (IDB), led the charge to establish the microcredit movement as the dominant local intervention to address poverty. However, the sour reality that Latin America faces today is that all the excitement over microcredit was fundamentally misplaced. As I argue in a recent article [PDF] published in the Mexican journal Ola Financiera, the microcredit movement has likely proved to be one of the most destructive interventions brought to Latin America over the last 30 years. A growing number of Latin American governments and international development agencies are now finally reconsidering their once unconditional support for the microcredit model. So what went wrong? Let me point to a few of the most important problems. First, the overarching outcome of the microcredit model in Latin America has been an increase in the supply of “poverty-push” informal microenterprises and self-employment ventures. Yet rather than creating a De Soto-esque foundation for rapid growth and poverty reduction, the very worst possible foundation for promoting long-term poverty reduction and sustainable development was created. As economists such as Alice Amsden, Robert Wade and Ha-Joon Chang have convincingly shown, the now wealthy developed countries and the East Asian “miracle” economies found that what is really needed to escape poverty is for the state to engineer an entirely different constellation of the “right” enterprises: that is, enterprises that are formalized, large enough to reap important economies of scale, can innovate, can use new technology, are willing to train their workers, can supply larger enterprises with quality inputs, can facilitate new organizational routines and capabilities, and can eventually export. Economic history shows, too, that financing the expansion of the “wrong” sort of informal microenterprises and self-employment ventures will simply not lead to sustainable development. As Ha-Joon Chang brilliantly points out, Africa has more individual entrepreneurs than perhaps any other location on the planet, and many more are being created all the time thanks to rafts of microcredit programs backed by the developed countries, yet Africa remains in poverty precisely because of this fact. Likewise in Latin America: by programmatically channelling its scarce financial resources (savings and remittances) into informal microenterprises and self-employment ventures, and so away from virtually all other higher-value uses, the continent has actually been progressively destroying its economic base.
Thirty years ago, the international development community was abuzz with excitement. This was because it appeared that the perfect solution to poverty, exclusion and under-development had finally been found in the form of microcredit. As originally conceived, microcredit is the provision of micro-loans to the poor to allow them to establish a range of income-generating activities, supposedly facilitating an escape from poverty through individual entrepreneurship and self-help. Perhaps nowhere more than in Latin America was the excitement so intense. Stoked by the uplifting claims of Peruvian economist, Hernando de Soto [1], that a vastly expanded informal economy would prove to be the economic salvation of the continent, the U.S. government through the World Bank and its own aid arm, USAID, along with the Inter-American Development Bank (IDB), led the charge to establish the microcredit movement as the dominant local intervention to address poverty. However, the sour reality that Latin America faces today is that all the excitement over microcredit was fundamentally misplaced. As I argue in a recent article [PDF] published in the Mexican journal Ola Financiera, the microcredit movement has likely proved to be one of the most destructive interventions brought to Latin America over the last 30 years. A growing number of Latin American governments and international development agencies are now finally reconsidering their once unconditional support for the microcredit model. So what went wrong? Let me point to a few of the most important problems. First, the overarching outcome of the microcredit model in Latin America has been an increase in the supply of “poverty-push” informal microenterprises and self-employment ventures. Yet rather than creating a De Soto-esque foundation for rapid growth and poverty reduction, the very worst possible foundation for promoting long-term poverty reduction and sustainable development was created. As economists such as Alice Amsden, Robert Wade and Ha-Joon Chang have convincingly shown, the now wealthy developed countries and the East Asian “miracle” economies found that what is really needed to escape poverty is for the state to engineer an entirely different constellation of the “right” enterprises: that is, enterprises that are formalized, large enough to reap important economies of scale, can innovate, can use new technology, are willing to train their workers, can supply larger enterprises with quality inputs, can facilitate new organizational routines and capabilities, and can eventually export. Economic history shows, too, that financing the expansion of the “wrong” sort of informal microenterprises and self-employment ventures will simply not lead to sustainable development. As Ha-Joon Chang brilliantly points out, Africa has more individual entrepreneurs than perhaps any other location on the planet, and many more are being created all the time thanks to rafts of microcredit programs backed by the developed countries, yet Africa remains in poverty precisely because of this fact. Likewise in Latin America: by programmatically channelling its scarce financial resources (savings and remittances) into informal microenterprises and self-employment ventures, and so away from virtually all other higher-value uses, the continent has actually been progressively destroying its economic base.
Read More
Leer más
