Milford Bateman writing in the Conversation:
The core problem everywhere in developing countries is quite simple: the microcredit model actually works as a fundamental block on sustainable development and growth at the local level.More here
The economic history of developed countries and the East Asian “tiger” economies shows one thing very clearly. The key to sustainable growth and development is the financial system’s ability to intermediate scarce financial resources into growth-oriented enterprises. These are enterprises that:
- operate formally,
- are big enough to reap some economies of scale,
- can deploy some key technologies,
- innovate,
- make use of trained labour,
- export,
- cooperate horizontally through networks and clusters as well as vertically through supply chains and subcontracting, and
- can facilitate the creation of new organisational routines and capabilities.
The microcredit model actually sends developing countries off in completely the wrong direction. It does this by absorbing the financial resources, time, effort and policy attention which should have gone into supporting the most productive enterprises.
