Many organizations, regardless of industry, are often so focused on their immediate tasks that they don’t find the time to take a step back and see how their activities impact their overall mission. The global development industry is no stranger to this struggle, but given what’s at stake it’s essential that organizations reflect on their efforts to ensure they’re delivering the kind of impact that’s needed. To that end, our research on innovation and economic development has uncovered three questions that we believe could significantly increase the efficacy of many development projects. These questions are not rules per se, but more like guiding lights that can help increase the odds of success of improving the lives of those living in poverty. Let us explore each one by one.
- Does our mission align with the mission of those we seek to help?
Sometimes the mission of an organization is in conflict with the mission of the people it is trying to help. When this happens, the work of a development organization can unintentionally impede progress in poor countries.
Consider the United States Agency for International Development (USAID) food assistance program which seeks to “feed the hungry and transform lives” around the world. According to USAID, more than three billion people have benefited from this program. In 2016 alone, more than 4.4 billion pounds of in-kind food were donated to poor countries. How can this not be a good thing?
Upon closer observation, we begin to see how pursuing the program’s mission may solve an acute problem in the short-term, but have detrimental long-term effects. How will these poor countries develop their own agriculture, food processing, distribution, sales, and so on, if they continue to get free food from the United States? It becomes clear that the mission of the USAID food aid program and those of the local farmers and others in the community are in conflict. Although the USAID food aid program may celebrate feeding more and more people, the people being fed will find it increasingly more difficult to develop market-based solutions to their food problems. Aid programs can be more effective, long-term, if they focus on aligning their mission with those of the people they are trying to help.
- Are we creating dependence?
In 1961, President John F. Kennedy called for “aid to end aid” and for American aid to “help people help themselves. Safe Water Network seems to be pursuing a similar strategy. The organization is committed to solving the access to water problem in poor communities, but rather than create dependence, it’s working to extract itself from its projects over time by ensuring their sustainability.
Safe Water Network understands that the solution to a water problem is not to simply “build a well” or “provide water.” The organization has found that there must be a system, or a market, that can sustain the water investments it makes. As such, Safe Water Network identifies entrepreneurs within the community, provides them with the necessary equipment for pumping and purifying water, and trains them on how to sell their services. In essence,
What if we only pursued projects after first thinking about our exit and what we would need to do to make our projects more sustainable?
- Is our intervention creating or connected to a market?
The creation of new markets is one of the most viable and sustainable ways to eradicate poverty and create prosperity in poor countries because markets not only provide income for people to lead better lives, but they also generate necessary taxes for public services such as, education, healthcare, and so on. Barely 200 years ago, almost everyone in the world was poor (most lived on less than three dollars a day) but the process of creating new markets caused hundreds of millions of people to rise from poverty to prosperity. Today however, poor people in low-income countries are mistakenly considered too poor to purchase, create, or innovate—activities which are critical in helping them begin their journey toward prosperity. But here’s an example of what could happen if we made development aid more market-based.
In a very impoverished Taiwan in the 1950s, USAID provided the necessary capital to help establish Formosa Plastics, which has grown into one of the world’s leading plastics companies today. By the mid-1960s, Formosa had partnerships with several international firms and had diversified into making different products including rayon and acrylics. By the 1970s, it was Taiwan’s top manufacturer of manmade fiber.
Formosa wasn’t the only company USAID supported, however. Around the same time, USAID provided a loan to Tatung, to enable the company to manufacture and assemble electrical products. Today, Tatung makes everything from transformers and commercial air-conditioners to IoT products (like Wi-Fi cameras) and electric motors. Sales in 2017 surpassed $2.5 billion.
In order to double down on its market-based development efforts, in 1958 USAID set up the Office of Private Development to “promote a business climate which would encourage private local and foreign investment…” in Taiwan. Thanks to investments like these, Taiwan was able to transition from poverty to prosperity in less than 50 years.
We understand that not every development project, market-based or not, will work. But projects that either create or connect to a market have a better chance of surviving and growing because of the market’s ability to sustain them. Over time, just like Taiwan, these regions will no longer rely on development assistance.
From improving education to providing accessible healthcare, development organizations are tasked with solving some of the world’s most pressing and complex problems. However, by stepping back and asking these three questions, they can improve their odds of success.
