Tuesday, March 11, 2008

Good article on microfinance

James Surowiecki has an excellent article on why microloans make individuals in poor countries better off, but not the countries themselves. He argues that the loans smooth consumption (which benefits the individual), but do not support companies larger than single owner-employee proprietorships. Therefore, business never enjoy any economies of scale, and workers stay as (un)productive as before, limiting real income growth.

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