Creating equitable economic growth in under-developed countries

While not entirely related to venture capital, sustainable economic development is a concept that is near and dear to my heart. Having been there twice now, I see an urgent need to establish processes and procedures that would promote economic growth.

There was an article titled “Why Foreign Aid is Hurting Africa” in the Weekend Journal of WSJ last weekend. It was a well written article that talked about how much Africa has become desperately dependant on foreign hand-outs. If a country’s budget is made up almost entirely of foreign aid, what incentive would it have to create policies to promote growth? If it runs out of money, it would simply ask the donors for more. In doing so,it may inadvertently put mom-and-pop stores out of business.

Food delivered by the UN or other goods shipped from rich countries may provide momentary relief to the poor, but they also compete against local businesses that can provide similar goods. I understand that not everyone can afford to buy food and that they would starve without free hand-outs, but as Moyo points out in his article, foreign aid could cause detriment to the business owner who employs 15 workers who each support 10 family members, thus creating an unfavorable outcome for 150 people.

There is so much good to be done around the world. If you are worried about competition, go to Africa where that doesn’t matter because there is so much market opportunity. I remember talking to an entrepreneur at an MIT event a few months ago. His company was called Assured Labor. As I understand it, the company uses mobile technology to disseminate job information. Think of it as a classified ad for jobs on the go for those who may not have access to the Web or fancy resume papers. Certain jobs don’t require 3 rounds of interviews and can be advertised through mobile phones. A few examples that come to my mind are day labor jobs. Anyway, he told me that the idea originally began with developing nations in mind. Now that’s an idea that makes sense and is actually good for the mankind.

By: Jonathan Lee
Twitter: @hi5at5

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