The relevance of the market-based bottom-up approach in eradicating poverty

Introduction

William Easterly has become one of the popular economists with a significant interest in the impact of foreign aid in sub-Saharan Africa. Over the years, the West has focused on providing financial aid to Sub-Saharan Africa with the core objective of eradicating poverty. Specifically, the levels of poverty in Sub-Saharan Africa have proven to be astonishing. As a result, western countries have expressed their interest in providing solutions to the poverty tragedy in Africa. William Easterly gained a high level of familiarity with the systems of foreign aid while serving as an employee of the World Bank. He recognises that western nations have been unable to eradicate global poverty because they use the wrong approach. For many years, western countries have focused on adopting a top-down approach to the eradication of poverty through foreign aid systems. William Easterly believes that a bottom-up approach has proven to be more viable in registering positive outcomes in African countries (Easterley, 2006). For this reason, he has a great conviction that western countries should reconsider their approach in the provision of foreign aid. The bottom-up approach emphasises the need for market development as the only sustainable approach to addressing the needs of people in Sub-Saharan Africa. This paper will explore William Easterly’s bottom-up approach in foreign aid systems and present examples of how markets prove to be better approaches to reducing poverty. Evidently, the bottom-up approach is a market-based model that appreciates the existence of institutions in African countries and is more successful in registering positive outcomes.

Discussion

It is apparent that western countries have channelled a significant amount of money to needy countries as foreign aid. It is unfortunate that foreign aid systems have not been able to deliver the expected outcomes of reducing poverty and fostering economic growth in African countries. The purpose of providing foreign aid is to ensure that people in third world countries have access to basic services and that they do not succumb to preventable diseases (Simanis and Hart, 2008). Poverty is one of the outstanding problems in the third world countries. As a result, foreign aid systems have focused on introducing strategies to resolve the poverty issues in Africa. Organisations such as the World Bank, The United Nations, as well as The International Monetary Fund have expressed their commitment to eradicating poverty in African countries. These organisations have been working on resolving the poverty problems that the third world faces. William Easterly has the conviction that many of the foreign aid initiatives by these organisations have been unsuccessful (Easterley, 2006). Easterly believes that the top-down approach that western countries have been using has its basis in planning. Foreign aid work that focuses on planning perceives poverty as a technical engineering problem. For this reason, the planners in charge of the projects seek to provide answers to the identified problems. William Easterly criticises this approach and argues that a noninterventionist approach is more viable and compatible with the realities in third world countries. He presents his bottom-up approach that focuses on searching. The searchers seek to identify creative solutions while working together with the local people in Sub-Saharan countries.

The top-down approach that western countries have been using considers local institutions as operating under laws established by political leaders. Such a misconception ignores the relevance of social norms, belief systems, traditions, customs, and values of people in a specific society. The bottom-up approach that William Easterly introduces recognises local institutions as being the result of social norms, cultures, customs, and traditions of the people (Easterley, 2006). In the top-down approach, the focus is to discredit existing institutions and establish new laws that will govern the new institutions. On the other hand, the bottom-up approach emphasises the need for a gradual evolution of local institutions that eventually registers a significant impact (Simanis and Hart, 2008). In his text titled The White Man’s Burden, William Easterly takes time to present a critique of the top-down approach and suggest the relevance of the bottom-up approach. William Easterly’s bottom-up approach does not focus on the establishment of a plan in foreign aid systems. On the contrary, the approach highlights the importance of a spontaneous order that emerges when social networks prove productive, and people interact as they adjust to the changes in the environment.

The bottom-up approach conforms to a market-based model. William Easterly believes that the market-based model registers a positive feedback loop in identifying solutions that can resolve the problems of customers in the market. For this reason, he has the conviction that market-based approach is more viable in the foreign aid system. The market-based approach takes into consideration the various norms and social institutions that keep the market functional. The social institutions play a critical role in limiting some of the undesirable attributes such as corruption and graft (Thieme, 2010). In reality, William Easterly explains that markets emerge spontaneously. However, the emergence of markets conforms to the existing local traditions and circumstances. It is impossible for the market emergence to depend on the influence of outsiders. As a result, the reforms introduced by outsiders are less likely to shape market characteristics. In the view of William Easterly, the bottom-up development of complex institutions and social norms are the most critical determinants of the attributes of the market that emerges. Unfortunately, western countries do not consider the relevance of social institutions and norms that influence market development. Many foreign aid organisations expect that they will register a positive impact through the introduction of critical reforms through political structures (Simanis and Hart, 2008). In the African setting, it is practically impossible to eradicate poverty and enhance economic growth without a proper background understanding of the existing correlation between businesses and ethnic loyalties.

It is evident that William Easterly advocates for the bottom-up approach that will involve small projects initiated at the grassroots level. Such an approach will help western countries to understand the realities in Africa and establish projects that conform to the people’s needs. There is a need to register a shift from the top down approach to a more experimental approach that focuses on social investments with the participation of the local people (Roy, 2012). Donor countries and foreign aid organisations need to embrace William Easterly’s approach of starting with small social investments that conform to the local traditions and norms. The success of such programs at the grassroots level will provide the organisations with a remarkable model of replicating the projects in other areas (Gudeman, 2005). Undoubtedly, William Easterly presents his views regarding the appropriateness of the bottom-up approach to resolving poverty problems in Sub-Saharan Africa and other third world countries. William Easterly criticises the existing foreign aid systems as having failed to improve the lives of the people. He highlights that the existing foreign aid systems have adversely disrupted the local cultures and promoted various forms of crises in third world countries. There is evidence of the failure of the foreign aid systems in several countries in Africa.

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In Kenya, foreign aid organisations have been unable to register the expected outcomes because foreign aid organisations have been imposing reforms that do not conform to the local institutions and norms. In other African countries, foreign aid systems have registered minimal impact or outcomes (Elyachar, 2012). For this reason, the arguments of William Easterly are reliable. Based on his understanding of the foreign aid system, he has keenly observed that foreign aid organisations do not take the time to understand the local structures and significance of institutions in the developing countries (Easterley, 2006). The problem comes in when foreign aid organisations establish macroeconomic plans that seek to reform markets, governments, and financial institutions using a top-down approach. William Easterly proposes that foreign aid organisations and donor countries should reconsider the approach and allow the developing countries to register an improvement by using the existing institutions. It is more viable for foreign aid organisations to rely on the practical grassroots methods that empower third world countries to utilise the institutions they have and rely on market-type forces to adjust effectively to the changing environment.

It is evident that foreign aid organisations are less likely to register the desired outcomes if they do not establish projects at the grassroots level. William Easterly’s arguments make sense because he intends to enhance the level of accountability and responsibility among the local people. He seeks to ensure that local communities in third world countries can take up the responsibility for promoting positive outcomes once they receive foreign aid. William Easterly presents the case of Mexico in which the bottom-up approach proved highly effective in helping women to register positive outcomes in improving the health of their children and sustaining the children in school (Elyachar, 2005). The PROGRESA program in Mexico adopted the bottom-up approach that allowed mothers in local communities to actively participate in taking their children to school, playing a role in health education programs, and taking their children for regular health check-ups. The women who met these requirements received cash grants. Undoubtedly, the PROGRESA program registered desirable outcomes because it combined two important concepts. Specifically, the concept of free choice allowed the mothers to willingly participate in behaviours and programs that would enhance the health and education of their children. The second concept was a scientific evaluation that allowed the foreign aid organisations to evaluate the outcomes and expand the program as desired critically (Easterley, 2006). These case studies of successful bottom-up approaches only serve to demonstrate that William Easterly’s claims have a strong backing. It is true that foreign aid organisations need to emphasise on the participation of local communities in projects that will help them to achieve higher levels of economic independence and improved welfare.

Dambisa Moyo, a Zambian economist, agrees with some of William Easterly’s arguments. In her view, the top-down approach used by foreign aid organisations has only served to worsen the situation for many Africans. She believes that foreign aid systems need a complete restructure so that they can be more sustainable. The economist agrees that the current foreign aid system lacks sustainability and that it has failed to meet its objectives (Provost, 2013). It is important to recognise that some foreign aid projects in Africa have registered desirable outcomes irrespective of the top-down approach. However, economists such as William Easterly and Dambisa Moyo believe that adopting a more effective approach is likely to increase the overall impact of the foreign aid systems. In the view of Cross and Street (2009), the bottom-up approach can register positive outcomes at the community level. Using the bottom-up approach in anthropology demonstrates how the provision of products and services at the local level can register desirable outcomes in resolving issues related to disease and poverty.

The example of Unilever in India demonstrates the desirable impact of a bottom-up approach to transforming the lives of the local people. It is explicit that the bottom-up approach empowers local people to play a role in improving their lives and fostering economic growth. Similarly, Dolan and Roll (2013) have advocated for the bottom-of-the-pyramid approach that focuses on providing local people with the needed products and services. Moreover, the approaches seek to empower local communities to access employment opportunities and venture into micro-entrepreneurship projects. The approach seeks to utilise the talent at the local level and conforms to the existing market technologies and practices that enable people at the bottom of the pyramid to actively participate in life-changing activities (Applbaum, 2005). These views demonstrate that the bottom-up approach has the potential to register a positive impact on communities. The Unilever example is an evident case of how the bottom-up approach can transform lives and foster the development of desirable habits and social practices.

Conclusion

Evidently, William Easterly makes intriguing claims concerning the market-based model and its relevance in resolving the poverty issue in Africa and other third world countries. His criticism of the failure of foreign aid organisations has its basis on the use of the wrong approach. However, William Easterly does not appreciate the role of other factors that may be playing a critical role in preventing the success of foreign aid systems. It is true that the western countries may be using the wrong approaches. However, numerous factors determine the success of foreign aid projects. For this reason, William Easterly should have paid attention to other factors that may hinder the success of foreign aid systems. However, the emphasis on the bottom-up approach has strong backing from the available evidence. Specifically, the evidence demonstrates that the market-based model and the engagement of local communities are likely to register positive outcomes in eradicating poverty in third world countries.

Summary

William Easterly has developed a significant critique of the top-down approach that foreign aid organisations have been using in the past. He advocates for a bottom-up approach that is market-based and that emphasises the role of local institutions and norms. William Easterly has extensive knowledge of the foreign aid system after serving as an employee of the World Bank for 16 years. In his argument, William Easterly conceives that investing in the development of a market represents the most reliable approach to meeting the needs of local communities. The bottom-up approach focuses on empowering the local people to participate in various programs that improve their lives significantly. The participation of local people allows market development that conforms to the existing institutions.

William Easterly disagrees with the approach adopted by foreign aid organisations that seek to impose reforms on governments, financial institutions, and markets in third world countries. He demonstrates how such an approach has failed significantly in registering the expected outcomes. It is evident that William Easterly shares similar views with other scholars who have emphasised the appropriateness of the bottom-up approach. Notably, the bottom-up approach seems to be a viable option that can help foreign aid organisations to meet their objectives in eradicating poverty. Unfortunately, William Easterly fails to pay attention to other factors that may contribute to the failure of foreign aid systems. It is apparent that the approach used is not the only reason why foreign aid systems do not deliver the expected outcomes.