POVERTY REDUCTION FOR PROFIT?

Despite many years of development interventions global poverty still prevails. Traditional aid-based strategies, mostly driven by the public sector, have not produced the desired results and chances of meeting the Millennium Development Goals by the year 2015 are small. Given this reality, some academics have turned toward the private sector as an actor in development. Indeed, corporations have engaged in poverty reduction for several reasons and in different ways. Consequently, C.K. Prahalad and Stuart Hart developed the Bottom-of-the-Pyramid approach, which intends to achieve the alleviation of poverty by directing profitable business activities at low-income populations and incorporating them into the formal economy. The analysis of this approach, including its origins and points of critique, is at the core of this essay. As a prominent supporter of this theory, the Inter-American Development Bank founded the Opportunities for the Majority -Initiative, which is dedicated exclusively to the support of BoP business solutions in Latin America. A critical assessment of its activities is provided in the second part of the essay.

Autorentext

Elisabeth Schwartz holds a B.Sc. in Economics and an MA in Political Science from the University of Vienna. She studied abroad in Chile, Thailand, the US and Geneva. During her studies, she gained professional experience at Austrian Embassies, international NGOs and the Inter-American Development Bank. She continues working in development finance.