Imagine that global poverty was presented to you as a Harvard Business School problem. Here's the set-up: While the economies of the industrialized nations generally expanded in recent decades, commercial development remains stagnant in most of Africa, Asia, and Latin America. The developing world's primary work force of self-employed "small producers" - 2 billion entrepreneurs involved mainly in agriculture and low-tech manufacturing - aren't competitive in the global marketplace and have a hard time turning a profit. Most earn less than $2 per day; inefficiencies abound, resources are underutilized, business infrastructure is woefully lacking, and unsustainable production methods are damaging the environment at an alarming rate.
Now the exam question: What's the best strategy to enhance workers' productivity, increase their income, and help them connect with the global economy?
The answer: Fight poverty with profit - by employing the following principles:
*Focus on helping small producers in the developing world upgrade their businesses in economically and environmentally sustainable ways.
*Do this by sharing the industrialized world's most valuable asset: its technical knowledge of how to improve product quality, add value to products through innovation and better promotion, expand and streamline production, and create links with new and larger markets. This, not grants or hand-outs, will lead to higher incomes in the developing world.
*Link loans and investments to business planning assistance: Money with no business plan is wasted; a plan that lacks money won't get off the ground.
*Implement this strategy on a massive scale.
Pie in the sky? We're closer than you think. Our knowledge about how to stimulate commerce has never been greater, and many model enterprises are now up and running. In a dozen countries in Africa, for instance, new local manufacturing companies are producing foot-powered irrigation pumps that allow small farmers to expand their cropland - often doubling incomes. And in Bolivia, alpaca herders are tripling their incomes thanks to a new processing plant that spins fleece into cord and yarn for sale in Europe and Japan.