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Independent research & practical ideas for global prosperity
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Independent research & practical ideas for global prosperity
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March 8, 2010Chapter 8: Development as Industry BuildingPosted by David Roodman in 8. Development as Industry Building Tags: draftsAt long last, a new chapter (.docx and .pdf). Each time I upload a chapter it feels like I am permanently lifting a weight off my shoulders with a mighty heave. This one took so long, I doubt it is worth the wait (or weight). It is the last of the trio of chapters that evaluate microfinance from different perspectives, this one from the perspective of what I am now calling “development as industry building.” Clunky, I know. Perhaps it should be “development as transformation.” In the interest if getting this durn thing done, I have decided to drop what was to be chapter 9, on the selling of microfinance. My greatest regret is the loss of the clever title: The Effects of Causes. That means I have finally arrived at the last chapter, the new chapter 9 on overall implications. It will have sections on the potential of new technologies and the role of donors and investors. Here is the conclusion. As always, I welcome comments. Thank you, loyal critics. 3 Comments »February 3, 2010Charting GrowthPosted by David Roodman in Uncategorized Tags: drafts, industry buildingAfter being waylaid by work on Haiti, I am back to toiling on chapter 8. One section surveys the commercialization of microfinance and the financing of microfinance. Unlike most of the book, it is rich in figures and tables. Here I share them with you. I’d appreciate suggestions of what to change, drop, or add. What is confusing? Two disclaimers: My purpose here is to document trends without assuming that up is always good or always bad. And I should be able to add another year of data soon. For me, the last display is most interesting. Number of borrowers, 20 largest microfinance institutions of 2007 5 Comments »November 20, 2009Chapter 6! Development as Proven Poverty ReductionPosted by David Roodman in 6. Development as Proven Poverty Reduction Tags: drafts, impactsI have just posted a draft of chapter 6 (.doc and .pdf). [Update: comments from Nancy Birdsall and Eben Lazarus incorporated.] More than any other so far, this draft incorporates text from this “open book” blog, forging a richer link between the two media. By the same token, regular readers of this blog will find less new in the chapter. The subject of the chapter is what we should conclude from the academic literature on the impacts of microfinance. I posted a draft of chapter 7 back in September. So now I have done 1–7. As always, I welcome your comments. Here’s the conclusion:
2 Comments »November 3, 2009Chapter 5: Microfinance as BusinessPosted by David Roodman in 5. Microfinance as Business Tags: drafts, microfinance as businessI’ve just posted the long-threatened draft of chapter 5 (.doc .pdf). To write it, I started with the text of Microfinance as Business which I wrote with Uzma Qureshi three years ago in response to a request (and grant) from the ABN AMRO bank in the person of Suellen Lazarus. My last act before posting the chapter just now was to go over annoyingly astute comments on the text form Suellen’s son Eben, who served me this summer as a superlative intern. The chapter argues that much of what characterizes modern microfinance, notably the emphases on credit, groups, and women, can be explained with recourse to rather crass commercial considerations. In other words, doing microfinance in the ways it is usually done helps microfinance institutions (MFIs) solve this problem: how do you mass-produce financial services without losing your shirt? By fully covering their costs, MFIs scale up and serve millions of people. Group lending to women, for example, turns out to be cheaper than group lending to men because women in many societies repay more reliably in the group setting. They may be more sensitive to the peer pressure, and may value access to opportunities to do business in public forums of the sort where men usually dominate. This thesis comes at the question of the impacts of microfinance through a back door. “If the common emphasis on credit over savings, for example, can be explained as a matter of business practicality, that should seed judicious doubt that credit is what the poor most need.” My chief influences in writing this chapter were Jared Diamond, famous for bringing an evolutionary perspective to human history in Guns, Germs, and Steel, and Pankaj Jain and Mick Moore, who wrote What makes microcredit programmes effective? Fashionable fallacies and workable realities. I welcome your comments. Here’s the intro: 3 Comments »October 7, 2009Confronting the Evidence on Microcredit and FreedomPosted by David Roodman in 6. Development as Proven Poverty Reduction Tags: development as freedom, drafts, self-help groupsChapter 7 of my book analyzes the impacts microfinance through Amartya Sen’s definition of “development as freedom.” It focuses on credit, the financial service whose impacts on freedom are most ambiguous. Perusing the thoughtful commentary on the blog post for the chapter draft, I was struck by how most of it deals in concepts. Rich Rosenberg points to the paradox of people exercising their freedom in order to limit it, by taking loans that oblige them to future repayments. Milford Bateman says that “The global rationale for this movement is…very clearly to disempower women (and men) by making them – more fully than virtually ever before – subject to the whims of brute market forces.” None of the comments directly confront the evidence at the end of the chapter draft, which consists mostly of summaries of and quotes from studies done by qualitative researchers who spent weeks or months among microborrowers. That’s probably my fault. I too spend a lot of pages wrangling concepts, and put evidence at the end. You are probably too busy to read through this long draft. The post only contains the draft conclusion, in its sweeping abstractness. But on reflection, I realize that the evidence needs to be exposed. I think it founds my conclusions. It, for example, is why I came away from the chapter most doubtful about classic solidarity group lending made famous by the Grameen Bank. (Also see Why I’m Afraid to Fund Group Microcredit, the post from which this section grew.) So here is a slightly condensed version. The draft has footnotes that link to the References. Comment »September 16, 2009Chapter 7! Microfinance through “Development as Freedom” LensPosted by David Roodman in 7. Development as Freedom Tags: development as freedom, draftsIt’s been almost four months since I posted a chapter draft (chapter 4). Now I’m posting chapter 7 (in Word format pdf). [Update: added quotes from CARE studies in Bangladesh.] So I have some explaining to do. I actually have drafts of 5 and 6, but I need to do more on them. I want to add some discussion of VSLAs to chapter 5 and move some of the material on insurance from 4 to 5. As for 6, all the new impact evaluations I have blogged have made the draft obsolete. I hope to have 5 and 6 for you by the end of the month. If you can’t stand the wait, you can read Microfinance as Business, on which chapter 5 is based, and peruse my posts on evaluations, which reveal the conclusions of chapter 6. Chapter 7 is one of the hardest things I’ve ever written. Maybe my struggle is obvious in the text, which is quite long. There are a lot of contradictory ideas—credit frees by giving people more control over their finances, credit entraps—and the evidence is fragmentary. The major last section goes through studies one by one, rather than themes one by one, which is much more my wont. I gave up on a comprehensive conceptual organization. Regular readers of this blog (if there are any) will recognize past posts in the draft. Please tell me what you think. By way of introduction, here is the Conclusion: 14 Comments »May 20, 2009Chapter 4!Posted by David Roodman in 4. Background Check Tags: drafts, historyI am happy to get this monkey off my back! I have just uploaded a draft of chapter 4 in This chapter is my attempt to survey the landscape of modern microfinance. It operates in two modes. Most of it, like chapter 3, tells history and individual stores, as a way of introducing the various types of microfinance. Solidarity group lending, for example, is introduced by telling Muhammad Yunus’s story, as well as that of Jeffrey Ashe of Accion. You’ll see the fruits of my learning about microinsurance, too. (HT to all commenters on that post.) At the end, the chapter shifts to a statistical survey of microfinance today. These numbers are not done yet. An intern starting this week, Eben Lazarus, is helping me, and we should post an update soon. 3 Comments »March 9, 2009Chapter 3 Main Post: Credit HistoryPosted by David Roodman in 3. Credit History Tags: drafts, historyMicrofinance is a modern phenomenon, right? Maybe thirty years old? Wrong. When what is now chapter 3 (.doc .pdf) was but a twinkle in my eye, I thought it would be just a few paragraphs near the top of what is now chapter 4. But as I delved into its subject–the long history of projects to bring financial services to poor people–the terrain expanded before me and drew me in. I do believe this is the fullest review of that history, but it is superficial relative to the richness of its subject. Someone should write a book on this topic. From the intro of chapter 3:
8 Comments »February 17, 2009Chapter 2 main post: How the Other Half FinancesPosted by David Roodman in 2. How the Other Half Finances, Uncategorized Tags: drafts, the poor and their moneyAside from the “bookend” chapters (now there’s an odd metaphor), this book is really a series of perspectives on microfinance: the historian’s perspective, the microfinance manager’s perspective, the economist’s perspective, and so on. The first perspective, in chapter 2 (.doc .pdf), is that of poor clients. To borrow the title of Stuart Rutherford’s great book, it is about the poor and their money. 6 Comments »February 17, 2009Chapter 1 main post: Introduction and overviewPosted by David Roodman in 1. Introduction, Uncategorized Tags: draftsAs I conceive it, Chapter 1 (.doc .pdf) motivates, introduces, and summarizes the book. Not surprisingly, I drafted this chapter first–back in June, in order to present the book ideas to my CGD colleagues. Since then I have written and learned much more. Once the rest of the book is drafted, I will return to this chapter and make it do a better job of distilling and communicating the conclusions. So I view the current draft as provisional. 2 Comments »February 17, 2009References main postPosted by David Roodman in Uncategorized Tags: draftsThe References section is available in .doc and .pdf. Comment »February 17, 2009Summary and outlinePosted by David Roodman in About the Book/Outline Tags: draftsHere are a short pitch and a working outline for my book. I will hotlink this entry to chapter drafts as I post them. You can also find drafts via the “Contents” list on the right margin of the blog home page. Microfinance is a remarkable phenomenon in the world of economic development. It blends the visual appeal of smiling women with the market-oriented ethos of entrepreneurship. At once radical in its suggestion that the poor are creditworthy and conservative in its insistence on individual accountability, microcredit has attracted billions of dollars from governments, private donors, and, increasingly, the capital markets. Its success in delivering savings, lending, and other financial services to millions of poor people has generated interest and excitement among donors large and small. But critics say the excitement is so much hype, that small loans rarely transform lives, and that debt is dangerous. And the microfinance movement is split by dissent. After the Mexican company Compartamos pulled in hundreds of millions of dollars going public in 2007, Nobel Laureate Muhammad Yunus, the founder of Grameen Bank in Bangladesh decried their practice of charging the poor nearly 100% interest per annum as moneylending, not microfinance. The book will probe many dimensions of microfinance, in order to find a firm foundation to judge its successes and failures and guide governments, foundations, investors, and private citizens contemplating whether and how to support financial services for poor people. While avoiding jargon, it will explore the history, impacts, ethics, and politics of microfinance. Chapter drafts are posted in Microsoft Word (.doc) and Adobe Acrobat (.pdf) formats. Chapter 1. Introduction and overview (.doc .pdf) Chapter 2. How the Other Half Finances (.doc .pdf) Chapter 3. Credit History (.doc .pdf) Chapter 4. Background Check (.doc .pdf) Chapter 5. Microfinance as Business (.doc .pdf) Chapter 6. Development as Proven Poverty Reduction (.doc and .pdf) Chapter 7. Development as Freedom (.doc and .pdf) Chapter 8. Development as Industry Building (.docx and .pdf)
Chapter 9. Implications 4 Comments » |
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