How should the development of developing countries take place? Is micro-finance or macro-finance better?

Question

This question was asked at the Dropping Knowledge event on 9th
September by Delgersaikhan Jadamba, 37, Ulanbatar, Mongolia.

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Answer 1

Both should be part of a toolkit of development support.

Macro-finance is essential for large public works infrastructure schemes like hydro-electric power plants, bridges, airports, water treatment etc. This mechanism of funding has been around since the end of WW2 and ususally involves lending or granting billions of dollars from organisations like the World Bank on International Monetary fund.

The value of the system is the volume of cash that it can handle, but it has some real drawbacks where improvements need to be tailored to meet local needs. Macro finance has really fallen short in this regard, and there are some famous examples of how they have created some dramatic levels of debt in some very poor countries. No doubt there will be some very strong opinions against maco-finance in this thread.

Micro-finance in contrast, is about delivering benefit at the local level and picks up where the larger schemes leave off. These type of schemes tend to be designed to work in a very specific cultural and geographic setting. They cost a fraction of macro schemes but stall can provide significant benefit to the wellbeing of a developing community.

Loans through this system can be as small as $50 for a bicycle or a hand pump. They are usually aimed at creating income for the very poor. The repayment rate of these types of loans can be as much as 95%. This is usually attributed to the appropriateness of the loans. This is the whole "give a man a net and he will eat for life" argument.

Below is a link to the Grameen Bank, which has been making micro loans to developing countries like Bangladesh for years. They are doing some really good work bridging the gap between finance and capacity building.

Whichever method is choosen, it is essential that all parties involved stay commited to improving the wellbeing of the intended benficiaries. Both have real value, and both can develop an unhelpful level of funding dependency on the part of the recipient, whether that be a nation, a village, or the individual.

Best of luck with your research

Special Raoul

Answer 2

besides micro & macro financing, what needs to happen most of all is rain. Most developing countries are living in long (if not super long) drought periods. Believe it or not, there are ways of achieving rainfall (i'm not talking only about wookie hippy raindances (although that does help out alot) but rather proven scientific methods). Any interested in learning more about this can eMail me though my y!Answers profile.

also what needs to happen besides micro and macro financing is mega and supermega vollunteering and conciousness shifting. These people have been living in a poverty conciousness for all their lives and for all their grandparents lives. This will be the biggest road block to over come when authentically developing any country that is striken with poverty. The people's molecular structure and cullular activities are actually perpectuating their current scenario because that is all they know (messed up, eh?). To authentically develop, healing on a molecular & cellular level must take place in order to create the real belief in the people that something besides poverty can even exist in their lives.

Answer 3

Each country is different and requires unique fixes. The countries in the Middle East for example need a heavy guiding hand on how things are to be done. Any resistance should be met with total inhalation. Other, peace loving countries should be given the opportunity to develop the ways that they see fit.

Middle East countries and places like Sudan must be managed and developed by outsiders. They should be heavily occupied and directed how to live. Money coming into the nation should be managed by the occupation force.

Peace loving countries should be able to ask for money and it be given with very little input on how to spend it.

Answer 4

the issue of development is a bit more complicated than simply micro or macro finance. is capital infusion balanced or unbalanced? what is the role of agriculture? what is the role of civil society, governance, international institutions?

that being said microfinance is a wonderfull example of a social asset building approach blending in with an economic capital infusion approach. but it is not necessarilly a generalizable solution. studies show the model has failed in some african applications.

Answer 5

Micro-finance is better because the leaders of developing countries must be included in the process.

Answer 6

Both, You can't use just one method for a developing country. Anything that can help will be good for the country. And how is this even a good question? Are you running out of good questions

Answer 7

NO foreign aid
NO foreign loans
FREE trade

It is really not that complicated.