Lant Pritchett speaks at the Sept. 24, 2010, conference organized by Australian Agency for International Development (AusAID).

Darren Boyd, ANU College of Asia & the Pacific




Before Lant Pritchett even took the podium at the Wheatley International Affairs Conference in Sundance, Utah, observers might have sensed that the former World Bank economist and Harvard professor wasn’t going to give a conventional speech on global poverty. A pair of blazing yellow socks signalled to the crowd that Pritchett is a man who marches to the beat of his own drum.

Over the course of the next 40 minutes, he made the case to a crowd of international development academics and students from around the country that everything they knew about poverty was wrong.

Pritchett joined the World Bank in 1988 after completing a Ph.D. in development economics at MIT. Development economics is the branch of economics that focuses on how to improve the economic and political institutions in Third World countries. Pritchett quickly became notorious for challenging truisms about poverty and international development.

“Before you get into a discussion about development, there are some things you need to know," he said at the conference.The things Pritchett thinks people should know about poverty are as unexpected, and interesting, as his yellow socks.

Rich people in poor countries are poor

When we think of rich people in poor countries, we tend to imagine billionaires living in opulent palaces, Pritchett said. In fact, the number of truly wealthy people in poor countries is statistically insignificant. “The truth is, rich people in developing countries are much poorer than the poor in rich countries,” said Pritchett.

While comparing wealth across borders is not easy, one method is to look at food spending. Historically, there has been a consistent negative correlation between a person’s wealth and the percent of their income spent on food. In other words, if you must spend almost all of your money on food, you probably aren’t doing that well.

The bottom 10 percent of Americans spend about 17 percent of their income on food, according to Pritchett. By contrast, the top 10 percent in India spend almost 40 percent of their income on food, Pritchett said. Even poor Americans haven’t spent this much on food since the 19th century — before the widespread adoption of cars, electricity and indoor plumbing.

People are poor because of where they live, not because of who they are

The typical unskilled laborer in Haiti makes about 80 cents an hour. If that same person moves to the United States, studies show they will earn about $8.50 an hour. So why are Haitians poor? It is not because they are lazy or uneducated, Pritchett said. Haitians are poor because they live in a society that cannot make productive use of their labor.

Pritchett outlined four aspects of society that are different in developed countries. These well-off countries have a productive economy, a government that is responsive to the citizens, a capable bureaucracy, and the rule of law. Digging wells in Haiti might provide a bit of relief to that country's poor, but it isn’t going to change any of these four things, Pritchett said. In fact, many kinds of humanitarian aid may short-circuit the development, he said. Until a country develops institutions that make productive work possible, its people will remain poor, he added.

Education and technology aren’t the answer

One common belief among people working in international development is that a poor country can be changed by improving its education system, but Pritchett’s research suggests otherwise. The problem in poor countries is that they cannot make effective use of their people’s skills, Pritchett said, so giving them more skills does lead to development. Counter-intuitively, his research has shown that countries whose education system improves actually grow slower on average. He suggests that one reason for this may be that putting more educated people into a corrupt bureaucracy may result in more sophisticated corruption.

Many technological developments are also counterproductive for countries trying to escape poverty, he said. Since unskilled labor is relatively expensive in countries like the United States, a lot of money has been spent on developing things like ATMs and self-checkout lanes in grocery stores to reduce the need for unskilled labor, he said.

After these technologies are perfected in the developed world, they often become cheap enough to be used in countries with a huge supply of unemployed, unskilled laborers, Pritchett said. This further reduces the demand for their labor and makes it much more difficult for them to escape poverty.

The best way to help the poor is to let them work in industrialized nations

So what can we do to help the poor in Haiti or India or Bangladesh? Pritchett advocates letting them come to developed economies as temporary workers. Whether a person lives in poverty is determined almost exclusively by the country they are born in, and the policies of rich countries exacerbate the problem, he said.

“The principal way rich countries disadvantage the poor world is not through unfair trade, or through intrusive and ineffective aid, or by forcing repayment of debts,” Pritchett wrote in his 2007 book, "Let Their People Come." “The primary policy pursued by every rich country is to prevent unskilled labor from moving into their countries. And because unskilled labor is the primary asset of the poor world, it is hard to even imagine a policy more directly inimical to a poverty reduction agenda or to 'pro-poor growth' than one limiting the demand for unskilled labor.”

Allowing for labor mobility won't solve problems in developing countries, but it is a way to help the people who live there, he said. Working temporarily, Prichett suggests, three-year visas would give the poor an opportunity to earn a substantial amount of money, money that could change the trajectory of their lives when they returned home.

Pritchett insists on the temporary nature of the visas. In part it would be essential because it would give more people an opportunity to work. But family responsibilities are also a consideration. He doesn't believe it is good for families to be split up for 20 years while the husband works in one country and the wife in another.
http://www.deseretnews.com/article/865576171/Everything-you-think-you-know-about-poverty-is-wrong.html?pg=all [/b]

Rubbish Article.

I wonder when this old man will retire.

Trying to tell us about how poor we are, that's why we tend to strive to get irrelevant things.

Mtcheeeew

Makes sense

The man is saying the truth, a yoruba adage says ''One rich man among his poor bethren is also a poor man''.

Chillisauce: Rubbish Article.

I wonder when this old man will retire.

Trying to tell us about how poor we are, that's why we tend to strive to get irrelevant things.

Mtcheeeew

Bookmarked! A very insightful read.

Chillisauce: Rubbish Article.

I wonder when this old man will retire.

Trying to tell us about how poor we are, that's why we tend to strive to get irrelevant things.

Mtcheeeew

So, u don't see any sense in that.

Its people like u that will see meaning to Pastors 'enpooring' the country via sucking the members dry!

You even hissed at the end!

SMH!

ayobase:

So, u don't see any sense in that.

Its people like u that will see meaning to Pastors 'enpooring' the country via sucking the members dry!

You even hissed at the end!

SMH!

Sharap dia you f00l, and what sense do u make of it? You never even state anything. Moving from thread to thread looking for who to spew ur trash on, u Berra move along now before I pour my venom on you! Id1ot

Chillisauce:

Sharap dia you f00l, and what sense do u make of it? You never even state anything. Moving from thread to thread looking for who to spew ur trash on, u Berra move along now before I pour my venom on you! Id1ot

I really did figure you out......that was effortless.....it hurts indeed Mr. viper!

dey there make pant dey wear u.....you think i have time for MYOPIC people like you!

ayobase:

I really did figure you out......that was effortless.....it hurts indeed Mr. viper!

dey there make pant dey wear u.....you think i have time for MYOPIC people like you!

Whatever mate, just move along. So long my statement give you e rection.

Now hop along!

Guys please it easy.

Hop alomg?
with a low life?

and who be ur mate?

I am out of here......Don8, I am very sorry for derailing.....how can I make it up to u?

Very interesting comments.
Especially that one about what is spent on food. I find that, despite earning a very high income even by global standards, I spend a lot on essentials because I live in Nigeria. All in the name of trying to be 'comfortable'.

Where I disagree is with his proposal for mass movement of unskilled labour to rich countries. Apart from being unrealistic (rich countries don't have much opportunities for unskilled labour anymore due to automation and modern technology), how do you manage the surge in population? If 20% of all poor people in Nigeria is allowed to move to the UK, the social imbalance would be cataclysmic.

What we should look at is why rich countries are rich. And the answer is twofold, in simple layman terms:

1. Rich countries produce goods/services and sell to poor countries. Virtually every single product we use in Africa daily is imported from somewhere. We spend our oil earnings importing everything, from staples, to food, to clothing, medicines, even refined fuel.

2. Also rich countries hold the savings for the rest of the world. The dollar is the reserve currency of the rest of the world. Especially the developed world. All monies earned in Africa is saved in the developed world, in their banks, which gives them the opportunity to utilize our funds to subsidize their comfortable lifestyle and provide infrastructure for their people at minimum cost.

Looking at those two issues, the answer is pretty obvious. Poor nations need to save their earnings within their borders, spend more on essential infrastructure that will make life easier for their people, make effort to produce what they consume within their borders and spend less on import. Also focus on mass education and upskilling that is relevant to their environment, and not necessarily what is trending in the developed world.

Nigeria and India have such policies in place, but the entrenched and widespread corruption prevents any meaningful implementation from taking place.

And finally, for countries like Nigeria and India, the whole concept of democratic rule a la Roman tradition is largely ineffective, because the citizens are mostly poor, ignorant and disempowered. A vicious cycle of sorts. A critical mass of poor disempowered people is a deadweight on the back of any efforts to trigger a ride to progress.

We also have a unique challenge especially in Africa. The West continues to create incentives to attract our best and brightest to their shores, at the expense of our home countries. This in itself can't really be helped, but there are ways in which a level playing field can be put in place to ameliorate the effects of this situation. We have just refused to address the problem.

AjanleKoko:

We also have a unique challenge especially in Africa. The West continues to create incentives to attract our best and brightest to their shores, at the expense of our home countries. This in itself can't really be helped, but there are ways in which a level playing field can be put in place to ameliorate the effects of this situation. We have just refused to address the problem.

What possible measures can be used to effect a level playing ground? The only thing I see is in trying to check the brain drain; i.e. make conditions in developing countries such that the talented ones are encouraged to stay back and help. I doubt there is anything like making a level playing ground.

Bawss1:

What possible measures can be used to effect a level playing ground? The only thing I see is in trying to check the brain drain; i.e. make conditions in developing countries such that the talented ones are encouraged to stay back and help. I doubt there is anything like making a level playing ground.

Of course you can create a level playing field. All you have to do is create the institutions, provide reasonable incentives, and make the environment conducive for those people who stay.

If I know that as a surgical resident (for example), I will have guaranteed opportunities for career advancement, plus the required training and access to research and facilities, and a very comfortable (by Nigerian standards) salary, why would I bother to emigrate? What we have in Nigeria is, zero opportunities for career development in many professions, thereby compelling our best minds to vote with their feet. Those who stay ultimately regret it.

You can make it up to me by apologising knowing that Chillisauce has every right to disagree
with the write-up, because as a human, we will always differ with an opinion.

ayobase: Hop alomg?
with a low life?

and who be ur mate?

I am out of here......Don8, I am very sorry for derailing.....how can I make it up to u?

Nice comment as usual, to add to your list of what we can do as a developing nation is simple, we have fallow lands
everywhere in this country, why don't we make farming attractive to our teeming youths to make a living, instead of
looking for a white collar jobs that are scarcely available.

AjanleKoko:
What we should look at is why rich countries are rich. And the answer is twofold, in simple layman terms:

1. Rich countries produce goods/services and sell to poor countries. Virtually every single product we use in Africa daily is imported from somewhere. We spend our oil earnings importing everything, from staples, to food, to clothing, medicines, even refined fuel.

2. Also rich countries hold the savings for the rest of the world. The dollar is the reserve currency of the rest of the world. Especially the developed world. All monies earned in Africa is saved in the developed world, in their banks, which gives them the opportunity to utilize our funds to subsidize their comfortable lifestyle and provide infrastructure for their people at minimum cost.

AjanleKoko:

Of course you can create a level playing field. All you have to do is create the institutions, provide reasonable incentives, and make the environment conducive for those people who stay.

If I know that as a surgical resident (for example), I will have guaranteed opportunities for career advancement, plus the required training and access to research and facilities, and a very comfortable (by Nigerian standards) salary, why would I bother to emigrate? What we have in Nigeria is, zero opportunities for career development in many professions, thereby compelling our best minds to vote with their feet. Those who stay ultimately regret it.

I understand your point. But when you mentioned a level playing field I was thinking that both the developing country(which has the skilled hands) and the developed country(which requires those skills) stood to benefit through some measure.

Ajanlekoko has said it all, just provide social amenities like health-care facilities, good road and power, etc (those are the level playing ground I think he's talking about) and see if brain drain will not stop and African youths will surely build their respective nations.

Bawss1:

I understand your point. But when you mentioned a level playing field I was thinking that both the developing country(which has the skilled hands) and the developed country(which requires those skills) stood to benefit through some measure.

dont8: You can make it up to me by apologising knowing that Chillisauce has every right to disagree
with the write-up, because as a human, we will always differ with an opinion.

I did think of that though, and I'm sorry for that.

I easily get pissed off when seeing/hearing our youths being lackadaisical over Nigeria matter.

Read days back that 20,000 or so died everyday due to low food production (not that they don't have money to purchase). Then, we question our once booming Agricultural sector.

".....they are not making productive use of their labour...."

And truly, Education and Technology are not the answers.

We import Engineers, when we have thousands of Engineers roaming the streets of Nigeria.

170 Nigerian Pilots unemployed cos we import Pilots.

We neglected Agriculture to embrace Crude oil at the detriment of lives.

We export the inadequate power supply, thereby leading to gradual de-industralization of Nigeria to neighbouring countries.

We import everything , even toothpick from China.

What do we even export?

Been seeing many projects/prototypes from Nigerians, but how many of them have been sponsored, encouraged, noticed or given appointment...even if na toy dem dey build.....instead, we lose them to countries that know their values, and with good compensation.

The youths wouldnt occupy Nigeria for lack of jobs, for importing Engineers and the likes, we wouldn't occupy Nigeria against "25 years of experience to have a job", no occupying against people in government like Arab Spring.

No wonder a MUMU article about Nigerians was released by Lagbaja....we are all MUMUs....we rather meddle in insignificant issues like oga at the top, Yerima, and others....what have we done about the ASUU strike so far...some are even praying for it to continue.

I guess "to your tent o ye Israel" is the rule of the game.

We need Ghana's revolution to make atleast China's revolution.

We youths here are failures.....check out Egypt atleast.....let's fight for a common purpose that has nothing to do with religion or tribe!

Bawss1:

I understand your point. But when you mentioned a level playing field I was thinking that both the developing country(which has the skilled hands) and the developed country(which requires those skills) stood to benefit through some measure.

That's some food for thought.
One other thing would be for the government to ensure some level of ties and a sense of ownership for those Africans in the diaspora. So that, if someone like you and I relocate, we still feel connected to the homeland, and also have reason to contribute something to the larger society, not just remittances to my immediate family members.

Something like the Technical Aid Corps, but for Nigerians in diaspora. Doctors, engineers, etc, who live abroad but are Nigerian by birth or by family ties, should be encouraged to come out and do some kind of furlough in Nigerian institutions. Doing so they can contribute and also learn.

The bolded seems to apply to Nigeria.

Education and technology aren’t the answer

One common belief among people working in international development is that a poor country can be changed by improving its education system, but Pritchett’s research suggests otherwise. The problem in poor countries is that they cannot make effective use of their people’s skills, Pritchett said, so giving them more skills does lead to development. Counter-intuitively, his research has shown that countries whose education system improves actually grow slower on average. He suggests that one reason for this may be that putting more educated people into a corrupt bureaucracy may result in more sophisticated corruption.

Lovely article 3 years on.

putting more educated people into a corrupt bureaucracy may result in more sophisticated corruption

^^ WORD

...hmmm. Where was I. Well I've grown up in those 3 years .

Rich and poor countries are not at absolute ends of the spectrum. I would imagine that most celebs in Nigeria earn and live a more comfortable life than I do. Although I think I barely make middle class. Lower middle class sef

Food is a good measure, but only one. In most countries I'd say housing was the koko. The following though;

well-off countries have a productive economy, a government that is responsive to the citizens, a capable bureaucracy, and the rule of law.

Without this, nothing else can really happen. No (not enough) security, no (critical mass), infrastructure, no (well functioning) institutions, no (readily & steadily available) utilities, no (quality) educational or healthcare delivery. No (thing).

I don't believe that mass importation of unskilled workers to developed nations will work. At least not in numbers that would make a meaningful difference.

First the indigenous poor/low skilled would hate it. It would disenfranchise them economically to a great degree. Not to mention possible social tumult. It's one of the reasons for the Trumprising.

It may actually work better to import lots of semi to highly skilled workers to developing nations. They would hopefully bring change and innovation. Not least because they would be used to, and demand good order and due process.

But would the entrenched corruption allow itself to be broken and give way? Maybe I'm too much of a pessimist regards the state of men .

Liked his 4 point thesis, but not his solutions. If those 4 could be tackled and al the no's become yesses. But to be honest, whatever level of development, if the people are righteous, they will prosper.

I see much of the prosperity of the West as due to legacy righteousness. I see decay and a falling away. I think many here feel it, but can't figure out why, hence things like Brexit and Trump. But these things will not save them either. It's just the flip side of the same coin.


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