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Testing a hunch – online.

At Building Markets, we have a hunch, and we’re going to try and work it out online. With your help.

I’ve been working in aid and poverty for over 15 years in various capacities. First as a diplomat, then with the UN, then as the founder of Building Markets, and now with my new social enterprise Anchor Chain. My views on how aid works have evolved, and they’ve brought me to the idea that it doesn’t. At least not very well.

In the last 15 years, we’ve seen perhaps the single largest global leap forward in poverty reduction (measured either in relative or absolute turns). This has happened because of economic growth in China, India, and South America. But, it does not appear to be directly related to the trillions that we’ve spent on aid and development.

So what happened?

Based on what our teams see in the field, and the research we’ve been doing at HQ, our hunch is that it was primarily, if not exclusively driven by markets. Increased trade, expanded entrepreneurial classes, liberalized trade. In other words, the greatest alleviation of extreme poverty and suffering in human history may have been due to greedy capitalists.

The corollary of this hunch is that greedy capitalists, in particular those in the extractive industry, may be the best hope for those who remain in extreme poverty. And not aid.

To test this hunch we’re going to dive into a lot of questions. Like:

  • How do we account for the reduction in poverty over the last two decades?
  • How inevitable is the resource curse?
  • Why do natural resources lead to affluence in some countries and war in others?
  • Do different extractive companies (and different approaches) significantly effect local economic growth?
  • What is the current FDI impact of the extractives in Africa? The potential?

To organize my own thoughts on this, I’m going to share our research, my reading, my thoughts, and our data on this blog. More day-to-day discussions will be held on my Google+ account. And the hour-to-hour hurly burly will be tweeted. Consider this an ongoing, online, autopsy of an idea.

This is where you come in. To quote Captain Reynolds “I am to misbehave”. I want to spark a debate, so I will push the controversial sides of this discussion and see how far they bend. I want you to push back, to point out my mistakes, direct me to other views, and generally help me test this hunch. So weigh in. Poke me in the chest. Please.

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