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Credit Where Credit’s Due: The Global Poor Should Be Integrated into the Formal Financial System
December 13th, 2010
The initial swell of enthusiasm for microfinance has somewhat subsided recently, as an elegantly simple idea founders on the rocks of reality. Despite the early successes of projects such as Muhammad Yunus’s Grameen Bank in Bangladesh, billions of people from Dhaka to the Dominican Republic remain shut out of the global financial system. The scarcity of credit available to the world’s poorest is still a significant impediment to ending global poverty. The current crisis in the Indian state of Andhra Pradesh is a case in point. A rash of defaults- and even suicides- among borrowers have led to...
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A Free-Market Approach to Development
October 7th, 2010
Aid doesn’t work. It’s a statement I hear a lot. Development aid often gets siphoned off by corruption. Aid in the form of money is inefficient, often getting lost in red tape and bureaucratic mess, while those in need see nearly none of it. Aid in the form of goods encourages dependency. Almost in response, private sector capitalists have responded with microfinance. Indeed, the microfinance has seemed like an answer to this conundrum. It the free-market’s response to one of the most difficult questions in development economics: how can we help without undermining the very goal we...
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