In today's LondonTimes
, Tony Allen-Mills writes World poverty guru ‘fails’ to spread wealth
, noting that...
"Microcredit is not a transformational panacea that is going to lift people out of poverty," said Dean Karlan, a Yale economics professor who studied the phenomenon in the Philippines. "There might be little pockets of people who are made better off, but the average effect is weak, if not non-existent." [and] While few dispute Grameen’s success in improving the lives of many Bangladeshi women -- the principal recipients of small loans intended to help them start their own businesses -- economists and poverty experts note that little research has been done on the net effect of microlending compared with, for example, constructing a rural factory that creates hundreds of jobs. In the Philippines study, Karlan and a colleague, Jonathan Zinman, examined users of a microcredit bank to see what differences existed between poor people who received loans and those who were denied. Their answer was disheartening. Not only were there few significant differences between the two groups over a number of months, but many of the loan recipients used their funds for household expenses instead of setting up businesses. Some bought new televisions."
MIT's own Jameel Poverty Action Lab
researchers weighed in...
"A similar study of micro-lending in Hyderabad, India, found no effect on health and education in families that received small loans. A study by poverty researchers at the Massachusetts Institute of Technology found minor benefits, but the real problem, according to Esther Duflo, an MIT professor, was the expectation aroused by the glowing image of Grameen. "Why did we expect all these things to happen?" Duflo told The Boston Globe. "Microlending is useful, but it’s not like the miracle drug to end poverty."
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