Inclusive Economic Development

Rising incomes of the average citizen always seems like a great achievement for any government. Policymakers and economists are all in arms about trying to raise and/or sustain economic growth of a country or a region. Economic growth, put simply, is the increase in the average income of a region or a country. The belief is that with rising incomes, families become wealthier, and can afford more and better-quality good and services, which then can lead to economic development.

However, one flaw in this belief is that it puts too much emphasis on the notion that rising incomes is necessary for prosperity. Other important things need to be put in place to ensure that economic development, not just economic growth, is taking place. It is economic development that leads to prosperity, not just rising incomes due to economic growth. Besides rising incomes, other components of that promotes economic development are (the list is not exhaustive):

1. better access to healthcare that makes life expectancy longer and improves the quality of life.

2. improvements in the educational attainment of individuals, with easy access for all

3. better access to fresh, unadulterated food

4. ability of the citizens to life in a unpolluted or minimally-polluted environment. Ensure that environmental damage is kept to a minimum. 

5. excellent infrastructure facilities (roads, railways, air travel and internet)

6. ensure all citizens have equal rights

7. improvements in the governance, law enforcement and securing property rights. Reduction in corruption. Ensure transparency in government. 

Many other factors can be added to the list. Different indicators, published by different international and donor organizations, measure and rank countries based on each of these indicators. The UNDP's Human Development Index combines income, education and life expectancy together to create one single index that shows the development of the country. 

Instead of just focusing on raising income levels, developing countries should also focus on improving these seven indicators. The Millennium Development Goals tried to promote economic development in poor countries by promoting human development, but many countries failed to achieve the goals. Thus, international organizations and developing countries should make economic development their core mission to achieve prosperity, not just economic growth. This will enhance the quality of life of the average citizens, while making their incomes higher. This simple thought question shows the importance of overall development in a country - "What's the use of having a high income if most of it goes to health expenses because of the acute smog in the city where the person lives?" 

Governments should start to focus on economic development, not economic growth to make their country a better place. 

Social Business

The Nobel Prize winning economist from Bangladesh, Dr. Muhammad Yunus, has been promoting the concept of "Social Business" around the world. He has written a book explaining in details the concept behind social business and how it can operate and sustain. Briefly, a social business can be summarized by these points:

1. it is an enterprise that produces a good for the benefit of the society
2. the primary motive of the business is not profit maximization, but to benefit the society
3. the organization is run as a non-profit, and any profit that is earned is either invested to make the social good better, or spent for the benefit of the local community.
4. investors can invest in the firm, and they need to be paid back along with some interest.

Besides producing a product that benefits a society - like Danone producing nutritious yogurt in collaboration with Grameen Bank in Bangladesh - the social business provides employment to the locals, and improves the community by investing any profits earned by the firm. Investors will invest just as if they are giving money to a charity, except this time the investor will recover his/her investment, along with some profits. Dr. Yunus goes in depth in the book how a firm can raise capital from investors.  

In short, a social business is a concern that is not run by profit-motive, but for the benefit of the society. If this idea catches on, it can change the concept of charity. If charitable organizations were converted into social businesses, then they could invest charitable donations to produce a good that not only benefits the region, but also improves the local community. Thus this idea needs to grow. My one concern is the long term continuity of the idea of social business. If the idea becomes a worldwide phenomenon, then it can bring a huge improvement in all parts of the world.

The one important thing that will help the concept of social business to grow is to keep the idea of profit maximization away from social businesses. Even if the social business has the potential to become very profitable, the owners should refrain from changing the mission and vision of the firm.

Thoughts on Global Migration

Humans have always been on the move. One of the first professions adopted by humans was hunter-gatherers, which required them to move from place to place in search of food, water and shelter. Migration has populated different corners of the world, and have introduced ideas from one part of the world to another. This trend continues today - we see people moving to places where they have a comparative advantage. However, countries and regions have been trying to slow the pace of international migration. As legal migration, whether temporary or permanent, becomes more difficult, potential migrants have been taking dangerous routes to reach their destination countries. In recent years, we have read in the news about Rohingya boat people trying to escape persecution in Burma, Africans and Syrians trying to cross the Mediterranean to reach Europe, and a large number of children from Central America trying to escape to the US. The journey for a lot of these migrants is not easy - for example, Australia has been detaining asylum seekers in  Papua New Guinea before deporting them. Dangerous migration is not only undertaken by those who are persecuted, but also by economic migrants. These economic migrants just don't move from developing to developed countries, but also go the other way round.

Moving from place to place seems to be ingrained in us, so it would be futile to try to stop the flow of migration. Some countries are more willing to accept richer and/or skilled migrants. However, semi-skilled or unskilled workers can add some economic benefit to their destination countries. A new paper by Michael Clemens of Center for Global Development shows that existing barriers to migration cost the world trillions of dollars in terms of lost economic opportunities. Besides, those who are escaping persecution in their home countries need protection in a different country. Thus, there needs to be a more systematic policy that assists the inflow of economic migrants and asylum seekers from the developing to the developed world. The International Organization for Migration could take a more active role in facilitating the process of moving migrants, both economic and persecuted, from one country to another. Developed countries can issue more temporary work visas to facilitate migration. This would help to reduce people taking dangerous routes to move to the country of their choice.