Book Review #13 - Prosperity Paradox

Updated: Jan 5, 2020

This is a book about how innovations can lift nations out of poverty and for me, it's a must read for anyone who sometimes wonders if poor and developing nations can really be lifted out of poverty, and learn to an extent, how. The simple answer according to this book is “Yes, nations can be lifted from poverty”, and it may not be how you expect.

Five years ago, I started an NGO www “MeetANeedToday". In my mind it was an amazing idea to bridge the gap between people who wanted to donate funds and resources to vetted not-for-profits, and the causes they could help, using the ease technology provides: ease of funds transfer, confidence in the validity of the cause, clear visibility towards your impact, and accountability reporting. Though the idea morphed and instead of a technology product we carried out projects with partners, and continue to do so.

The experience of running an NGO taught me something:

NGOs are not the most sustainable way to lift people out of poverty.

Do not get me wrong, NGOs are amazing, and are life savers especially in nations where basic infrastructure and welfare to secure dignity of life are lacking. They play an important role in empowerment and basic survival for truly disadvantaged segments, but I became aware of something I hadn’t quite solidified in my mind, and this book expedited that whole process.

Here are four things I’ve learnt from this book that have accelerated my understanding of how developing economies can create lasting prosperity, and how the path there may be counterintuitive.

1. Push v Pull Push is Intuitive, Pull is Effective

There was a story in the book about how in India, to encourage the use of toilets and general excretory sanitation, several toilets were built for free around communities. To the sponsor’s utmost surprise, they lay unused, with people defecating on the street.

It required financial incentives, mass education and more to drive adoption, and sustaining the success was hard. This was a profound story to me. Push is you assuming the problem is lack of access to resources and assuming availability will drive adoption. Pull is creating markets, and incentivizing the adoption and growth as a consequence of more prosperity.

2. Corruption is more a symptom than a moral flaw

There is the assumption that corruption is more a human moral flaw than anything else, and that it is the disease in itself. The book highlights very clearly, using examples, that corruption is often employed to achieve goals because the alternatives are inefficient, unclear, and therefore disincentivized.

I’ve always been a strong believer of the fact that you cannot rely on human morality at scale, and what you do not incentivize you do not mean. The book clarifies this for me with such potency. It also shows how nations transition from very corrupt systems to transparent decent systems where corruption no longer needs to be employed to achieve things, and isn’t the desirable option for getting things done.

3. Non-consumption Markets Are the Key

The book talks about Celtel, a pioneer telephone service provider in Africa who saw the potential for a market that didn’t exist at the time and against all odds, pioneered the industry, went ahead to cascade the creation of other markets that gave rise to entire industries, and created jobs and opportunities at scale.

This takes time, effort, and definitely investment, as the lack of infrastructure is usually a deterrent. However, this approach promises great reward for everyone involved — investors, consumers, economies — and is a much more sustainable way to create value that lifts nations out of poverty, if done at scale.

Reading this book brought the question to my mind, what non-consumption markets currently exist across industries? Financial services, transport, healthcare, professional services, education, etc.?

This is where true value lies when it comes to creating prosperity for nations. How can we tap this at scale in Africa?

4. Role of Government and Policy Makers

The book doesn’t go into that much detail regarding the role of policy makers and regulators in incentivizing creation of markets at scale. However, one thing that becomes clear after reading the book, is how for a developing nation that needs to grow its economy, incentivizing market creation at scale is the sustainable option for creating prosperity that lifts people out of poverty.

Largely, if regulators cannot help by creating incentives that promote this at scale, they might at the very least “stay out of the way, as much as possible” as markets develop. They should also be careful to avoid the knee-jerk reaction of over-regulating markets before they are even developed enough and in so doing, undoing the hard work and positive effects private organizations have created over time.

I do think a sequel would be wonderful, digging into the details of not just why non-consumption markets are critical, but how to create these markets; perhaps hearing directly in detail from people who have created these markets, learning about the pitfalls they faced, and sharing that knowledge with those who may want to.

Regardless, it is an amazing book and I would rate it a 4.5, a must read.



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