Jordan Jackson, Reginald White
Chapter 3: Role of Microfinance in Promoting Economic Growth, Development, and Sustainability
“Much of the underdeveloped world grows and produces agricultural products. Because many of these underdeveloped nations have very little political clout with the rest of the world, and because farmers in wealthy nations have lots of political power, the goods from these poorer nations are tariffed and quota'd right out of the richer nation's markets.” -Keith Brown, Free Trade & Foreign Policy: The Independent Institute, May 1, 2000 Introduction
The quote above provides a very nice generalization of exactly what we will discover in this chapter: the roles of microfinance in promoting economic growth, development, and sustainability. Microfinance can provide exactly what most of the underdeveloped world needs: capital to invest in themselves in order to reach themselves out of poverty, thus creating self sufficiency. However, as Mr. Brown stated, what microfinance has failed to do (albeit it was not designed to do) is make these poorer farmers globally competitive. They cannot be competitive due to larger countries' inability to make the free market free for all nations, not just those who control most of it. However, even without making major strides on the global market, microfinance has done most of exactly what it was designed to do. It has brought most of its participants out of a fruitless future, one full of deabilitating poverty.
There are many statistics out on the books about microfinance's effect on the poor of the world. Throughout the chapter, we will go into further detail on how these statistics reflect the exact influence of microfinance on the world, poor and middle class. The statistics will reflect exactly what has been stated in past chapters: microfinance works. It isn't the end-all, be-all solution to the world's poverty, but it is a solid start to eradicate it.
Another topic we will cover in detail is the paradox between economic growth and sustainability, and whether or not they are mutually exclusive. An article, brilliantly written by Dr. Karen Higgins of Claremont Graduate University in California suggests that “limitless economic growth counters sustainability”. If the economy grows too big, will we end up exhausting our resources, thus actually making the economy more short lived?
Furthermore, we will go in depth on the effects of microfinance on the world, and more specifically, developed and developing nations. There is a plethora of information on what impact microfinance has on the world, mostly in the form of a poor farmer receiving a loan to buy supplies in order to make more product, so that the farmer's family can actually live on as well as sell their stock. However, there are also stories in which an especially lucky person receives a loan, invests in a good product or business, and actually goes from abject poverty to middle class. Such stories will be told later on in the chapter.
As you read, keep in mind that, as stated earlier, microfinance will not solve poverty and all its ills. Whether you are a passionate skeptic or supporter of it after reading this book, know that there are many more obstacles in the way of a poverty free world, those obstacles including political corruption, power inequalities on a global scale, climate change, war and conflict, disease, education, and availability of resources. By no means does microfinance seek to save the world. It does not mean to take the place of charity and giving, nor does it mean to take the place of hard work and perseverance. However, it does hope to make it easier for those who struggle amidst hard work, perseverance, and charity. It means to give every child a chance to live and be educated. In a world where nanotechnology and outer space travel are taken for granted, why does three quarters of the world still live on less than a dollar day? While we know that there are many answers to...
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