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Tuesday, February 20, 2007

Creating Real Prosperity

Critics of "go local" movements warn that buying local deprives people in the Global South of jobs that could lift them out of poverty. But are multinationals really helping?

by Frances Moore Lappe

YES! Magazine (Winter 2007 Issue) Go Local!

There's only one thing worse for the poor in the Global South, we're told, than a job in a sweatshop: It's the alternative - no job. That's basically what New York Times columnist Nicholas Kristof argued recently. If true, then "buy local" campaigns in the North that cut imports could harm the planet's poorest people.

But before accepting this heart-rending story, let's ground ourselves in the real global economy.

Shedding corporate-media filters, we see that the poor are not languishing in their sad villages and grimy shantytowns just waiting to be saved by corporate giants from abroad. Many poor people are themselves creating the real job growth in much of the Global South. They are the small shopkeepers, street vendors, and home-based workers whose jobs make up what's called the "informal economy" not counted by authorities.

In Latin America, 85 percent of new jobs created during the 1990s were in this sector, not the corporate one. Informal jobs account for more than half of all jobs in Latin America and the Caribbean, and as much as eighty percent in parts of Asia and in Africa. {1}

"The informal economy is anything corporations can't make money on", social entrepreneur Josh Mailman quipped to me recently. "That's why it's invisible".

Many of the jobs the poor are creating are not what the wealthy minority abroad might imagine - one of individuals scrambling, say, to power a pedicab in Dhaka or sell fruit on streets of Caracas.

Millions are working together, through microcredit institutions and people's movements, to further both economic and social goals. Among the biggest are Bangladesh's largely self-financing Grameen Bank, BRAC (formerly the Bangladesh Rural Advancement Committee), and the Association for Social Advancement, whose combined microloans have gone to roughly sixteen million poor people, mostly women, enabling many to create their own village-level enterprises. {2}

Grameen - mostly owned by its borrowers - reports that more than half the families of its borrowers have "crossed the poverty line". Assuming Bangladesh's other two large micro-credit efforts come close to this success rate, rural Bangladeshis' self-directed initiatives have freed more than four times as many from poverty as the number employed in export garment factories, where insecure jobs offer eight to eighteen cents an hour.

Overall, the number of microcredit users worldwide - many of whom are creating their own work - is roughly four times the 23-million people directly employed by all multinational corporations.

BRAC alone employs almost 100,000 people, not in order to return a profit to an investor but, as BRAC says, "with the twin objectives of poverty alleviation and empowerment of the poor". With its members' groups now in more than 140,000 Bangladeshi village organizations, BRAC is creating not only health services and schooling but its own small enterprises, to - from fisheries to printing to a tissue-culture lab to an iodized salt plant. They operate mostly for local consumption and are controlled by BRAC itself.

We citizens of the North think of global capital as the only jobs-generator. But more people in the world are members of cooperatives - around 800 million - than own shares in publicly traded companies. {3} Many are helping build locally controlled economies. Over the last three decades, women in India have, for example, built a network of cooperative dairies raising the incomes of more than eleven million households. {4} Compare that to the one to two million jobs created by the high-tech corporate sector in India. {5}

Worldwide, co-op membership doubled in the last thirty years, according to the Geneva-based International Co-operative Alliance. In Colombia, the Saludcoop health care cooperative is the nation's second largest employer, providing services to a quarter of the population. {6}

And to those who still see global capital as the poor's savior, I am tempted to respond, "Let's get real!" Even if it were a path to real advancement, US direct investment in the poorest continent, Africa, is close to zilch anyway - representing about one percent of all US direct investments abroad. {7}

Benefits for North and South

Relocalizing economies in the North isn't an all-or-nothing proposition. Importing tropical products like coffee and bananas from the Global South makes sense, as does importing artisanal goods, linking cultures by spreading beauty and appreciation of difference. The real challenge is ensuring that exports don't undermine basic food security and that producers for export get a fair return.

That means, in part, expanding the fair trade movement, which is already making a huge difference in the lives of over one million farmers and farm workers. It also means challenging monopoly power among food processors as well as encouraging more local processing so that a bigger share of the end-value stays in producer communities. {8} (Today, just a tenth of the value of coffee stays in coffee-producing countries, down from almost a third of the value just ten years ago {9}.)

Getting serious about ending poverty in the Global South does not mean abetting the reach of global corporations. Instead, we can work to remove the barriers US corporate-driven policies place in the way of thriving local economies abroad - policies like NAFTA and US farm subsidies that have drowned Mexican corn farmers in a flood of subsidized US corn.

In building local, living economies here, we stand shoulder to shoulder with the citizens of the Global South.

Frances Moore Lappe is a YES! contributing editor. She is the author of Democracy's Edge: Choosing to Save Our Country by Bringing Democracy to Life (Jossey-Bass, 2005).


(Some of the figures given in this article have been updated from the print version)

1 Gustavo Capdevila, Dim Outlook Despite Economic Growth, Says ILO, IPS, 23 August 1999, Geneva.

"The incomes of the informal sector, crucial to the region's economy, also fell an average of one percent from 1990 to 1998 - a trend that has major repercussions, the report stressed, as a full 85 percent of new jobs in Latin America and the Caribbean were created in the informal sector. Indeed, the creation of new jobs remained stagnant last year in the formal economy, while the informal sector grew 4.5 percent, mainly due to the dynamic performance of micro-enterprises. The informal economy presently provides 58.7 percent of jobs outside of the agricultural sector, formal employment in large private sector firms 28.4 percent, and the public sector 12.9 percent.

See Also: Martha Alter Chen, Women and Informality: A Global Picture, the Global Movement, SAIS Review, Vol 21, #1, Winter-Spring 2001, pages 71-82, Johns Hopkins University Press

"Even before the crisis, official statistics indicated that the informal sector accounted for nearly half of total non-agricultural employment in East Asia, over half in Latin America and the Caribbean, and as much as eighty percent in other parts of Asia and in Africa. {1} In terms of urban employment, the informal sector accounted for well over half in Africa and Asia and a quarter in Latin America and the Caribbean.

[Table 1] Not only its size but the contribution of the informal sector in income terms is significant in many regions. For example, in several African countries, it accounts for nearly thirty percent of total income and over forty percent of total urban income. The contribution of the informal sector to gross domestic product is probably also sizable. For those countries where estimates exist, the share of the informal sector in non-agricultural GDP is between 45 and 60 percent.

2 Sixteen million estimate made up of the following: the website of Grameen Bank indicates that it has 6.67 million borrowers, 97 percent of whom are women. The number of borrowers from the Association for Social Advancement (ASA) is estimated at 4.6 million (see page 5 of ASA annual report, June 2006). BRAC borrowers were estimated at four million in a statement by Bangladesh UN Representative H E Dr Iftekhar Admed Chowdhury, to NGO briefing on 'Microfinance and poverty reduction' in New York, October 13 2005, and are listed at five million in a BRAC press release July 2006.

3 Estimate from International Co-operative Alliance and David Thompson, long time analyst and author about the global cooperative movement.

4 'State of Food Insecurity in the World 2004, Food and Agriculture Organization, UN, 26.

5 A conservative extrapolation from a statistic given by Vijay Joshi in "The Myth of India's Outsourcing Boom", published simultaneously in India Daily and The Financial Times (November 16 2004): "IT-related output is currently less than one per cent of GDP. More significantly the sector employs less than one million people."

6 Oscar Arias Si"?1/2nchez, The Cooperative Revolution, Ode, Issue 31.

7 S Bowles, R Edwards, F Roosevelt, Understanding Global Capitalism, 3rd Edition (Oxford University Press, 2005), 400.

8 For more information about on the impact of Fair Trade choices see

9 Bill Vorley, Food Inc: Corporate Concentration from Farm to Consumer, UK Food Group, 2003, 24.

Bill Totten


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