According to this study just released by the IFC, the private sector arm of the World Bank Group, and World Resources Institute, 4 billion people who live in poverty (i.e. per capita income of less than $3,000) have a collective purchasing power of $5 trillion. The study calls these 4 billion people, 60% of the world’s population, the Base of the Pyramid (BOP). The next pyramid layer is the 1.4 billion people with per capita income between $3,000 and $20,000. If you care to see where you rank in the pyramid check out the Global Rich List and how it is calculated.
One of the challenges of our time is to find ways to incorporate this 4 billion into the global marketplace without destroying the environment. One can only look at China’s pollution woes to see the downside of non-sustainable poverty reduction. 34% of children in China have blood-lead levels that exceed the World Health Organization limit according to a study by researchers at the Peking University Health Science Center as mentioned in this Wall Street Journal article.
The World Bank study states, “Most people in the BOP lack good access to markets to sell their labor, handicrafts or crops and have no choice but to sell to a local employer or to middlemen who exploit them.” They often pay higher prices for basic goods and services and the quality is less.
Reducing poverty will require a creative, market-based approach. One that focuses more on “enabling opportunity and less in terms of aid.” One that address market failures and impediments so that “BOP households can find their own route out of poverty.”
Many of the market-based solutions will be what Clayton Christensen calls “catalytic innovations – simpler, good enough solutions aimed at underserved groups,” such as the micro-irrigation technologies developed by KickStart.
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