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On Point

"Micro-development" Offers New Hope in Third World Countries


by Austin Bay

It's a deceptive estimate, but nevertheless an estimate with too many zeros to ignore.

Since 1950, America and its allies have spent a cool trillion in U.S. dollars on anti-poverty and economic programs in poor and developing nations. Even though it's over a five decade span, that's a stack of tax dollars -- from plumbers, school teachers, you, me -- dedicated to improving the economic and social conditions of this planet's impoverished, ill and starving.

Let's first deal with the deceptive component of the cash pile. World War II didn't quite end. Instead of fading, the front lines froze in Central Europe, producing the Cold War -- a military, economic and political siege engaging Soviet East and Allied West.

The Truman and Eisenhower administrations saw "foreign aid" as a strategic weapon. Aid dollars -- for food, for basic infrastructure, for industrial development -- could fortify weak nations vulnerable to Soviet intrigue. Propping up the economy of a nation targeted by a Soviet-backed "liberation front" made strategic sense, politically and, yes, militarily.

Money could also buy other forms of "strategic influence," like the support of Third World elites. Who dared call it bribery, if the check came from the U.S. Treasury?

But when dealing with local autocrats, the potentates and presidents-for-life in the hard corners of post-colonial Africa, South and Central America, and Asia, Washington and the West didn't stress financial accountability. If money thwarted Soviet subversion, or bought a U.N. vote, that sufficed.

Gobs of developmental aid, gurgling through corrupt Third World autocracies, became personal deposits in Swiss bank accounts. Of course, aid wasn't the only source of cash for the various Mobutus, Suhartos, and Mugabes -- endemic corruption stunted business development and sapped non-governmental aid. Imagine Enron and Global Crossing as being the national government (with regulatory and police power), as well as secretive business enterprises. The term "banana republic" provides a fruit logo for the condition. "Kleptocracy" -- rule by systemic thieves -- is the gut description.

So that's part of the cool trillion's trail. Scads of it was wasted or purloined. What did the remainder buy, or not buy? Let's pick on Africa for a moment, because the stats there are so chilling. Expected life spans in Africa are no longer now than they were in 1960. Yes, AIDs is one terrible reason, but African incomes have also failed to increase.

With such dismal failures in the foreground, the U.N.-sponsored International Conference on Financing for Development, held this week in Monterrey, Mexico, seeks to reach what U.N. Secretary General Kofi Annan has called "a new global deal" for aid and trade in the post-Cold War era. It's a U.N. conference where jargon actually connects to real-world issues. On the table are economic incentives for addressing social issues (such as teen-age pregnancy) that hinder economic empowerment. Poor nations are discussing market-oriented reforms and promising to confront the paralysis of corruption. The "debt burden" is on the table, with the poor asking for debt reductions from the wealthy. Yes, debt from past abuses beggars the future. Expect "targeted" debt reduction (e.g., debt "exchanged" for eliminating corrupt practices) to occur.

However, recalculating "macro-economic" and political policies is only part of the new approach. In so many hard corners, hydroelectric dams and bad debt aren't the most pivotal development issues -- it's human economic expertise.

Enter the hottest buzz in developmental aid -- micro-finance and micro-development. "Micro-development" is a less grandiose, though demonstrably effective means for helping build the "local human infrastructure" necessary to support positive, long-term economic growth.

Mexican President Vicente Fox supports "micro-development" in a major way, but the most effective "micro" proponents aren't governments but religious and secular organizations.

"Micros" focus on direct aid that circumvents corrupt systems. The Grameen Bank is an exemplary "micro" advocate. Grameen provides economically creative individuals and communities with low-cost loans and advice. Grameen addresses the literally down and dirty issues that hinder development. Loan recipients learn to site and dig outhouses so water isn't polluted. Grameen also emphasizes individual accountability and integrity. Five Talents, a U.S.-based group associated with the Episcopal Church, is another "micro" advocate working in Africa and Asia.

Changes wrought by "micros" may be small, but they are victories of verifiable substance and build a human base for "macro-development" success. Micro mounts up. Grameen estimates its projects have added 1 percent to Bangladesh's GDP. They accomplished this with small loans and the sweat of local people motivated by genuine opportunity.

While the frittered trillion isn't chump change, these new, creative approaches offer something more precious: hope.

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