A Critical Review on the documentary “Poverty, Inc.”

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The documentary “Poverty, Inc.” has become so influential that it is now part of many courses at the university level. The good news is that at universities we apply critical thinking to the information we receive (or we are supposed to). As a development economist, I share here my views on this famous documentary.

On the positive side, the documentary does a good job in making some points for an audience unfamiliar with economic theory, such as the idea that dependency does not end poverty, or that current foreign aid (money flows between governments) has “unintended consequences that do more harm than good.” However, both ideas are not new in development studies. The much quoted “teach a human to fish” is an idea associated with many philosophers, including Maimonides (about 850 years ago). This criticism of the structure of current foreign aid is a relatively old idea in the development literature. Perhaps the best point made by the documentary is the argument that Non-governmental Organizations (NGOs) can do a better job if they base their strategies on effective communications with local entities, although this idea is not new either.

What are, then, the problems with this documentary? Many. Firstly, the development literature has two main perspectives; namely, the conservative and the progressive. A documentary that omits a whole branch of argumentation is not responsible and carries “unintended consequences,” such as misinforming that unfamiliar audience. Besides mentioning supranational entities, the documentary did not expose crucial structural problems: there is no serious analysis on geopolitics, global power relations, or class issues, among others. A class analysis would not, for instance, focus on stressing that “NGOs need the poor to exist” but that “the rich need the poor to exist”.Read More »

Premature Deindustrialization and its Consequences for Human Welfare

Seagate_Wuxi_China_Factory_Tour.jpegRecent research suggests that late industrializers have not been following previously observed patterns in terms of sectoral change and employment, but the effect of these changing structural patterns on well-being and the distribution of gains from growth has not yet been systematically examined. There is a global shift towards both lower employment in industry at all levels of income per capita and de-industrialization, the shift from manufacturing to service employment, taking place at significantly lower levels of income (See work by Timmer, de Vries, and de Vries; Subramanian; and Rodrik here, here, here and here).

Deindustrialization, Employment Generation, and the “Precarization” of Global Labor
There are many reasons why these new patterns may have negative effects on inclusive development; some recent research emphasizes the important role that periods of high levels of manufacturing employment have played in now wealthy countries, and the dearth of wealthy countries that have skipped such a phase; there are concerns about the effects of lower levels of manufacturing output on both growth and employment generation ( See again Timmer, de Vries, and de Vries and Rodrik).Read More »