This video is from an organisation called Landesa that provides secure property rights for landless agricultural families in India and Pakistan. It is a prime example of a free market solution to poverty.
If we know that making markets free and property rights secure and stable in poor countries is the source of prosperity, then surely it should be easy to achieve a world without poverty?
Unfortunately it is not that simple. Firstly, many people in government foreign aid agencies don’t realise how important these institutions are to fixing poverty. They think the best way to solve poverty is the spend money building the capability of government departments in developing countries. For example, if there is a particular health issue facing a country, then the government’s health department should be assisted in fixing it.
This is treating the symptoms of poverty rather than poverty itself. The reason people can’t acquire their own health care is because there is low economic development due to a lack of economic freedom. This lack of economic freedom also means the government doesn’t receive enough tax receipts to provide public health care as governments in the west do.
Secondly, for institutions to work, they must reflect the cultural practical and social mores of the people. It is sometimes difficult to foster support for free markets and secure property rights amongst people who have never had them.
Nonetheless, there is plenty of opportunity for help poor people experience greater economic participation. The first way to do this is by removing the barriers facing poor people from participating in free markets. For example, sweeping away much of the restrictive occupational licensing system in India has enabled 138 million Indians to rise out of poverty since 1991.
Another barrier for many people in the developing world from participating in free markets is corruption. This IPA piece published in The Hindu Business Line in India talks about how eradicating corruption could lift even more Indians out of poverty.
As mentioned above, a lack of property rights is another barrier to economic participation. Landesa’s work is a perfect example of this. Duke University Professor Erica Field has found that property rights programs in Peru have increased women’s labour market participation, women’s empowerment, investment in urban infrastructure and investment in agricultural infrastructure. Danish economist Bjorn Lomborg believes that ensuring women have the same property and inheritance rights as men could achieve a great deal for women’s empowerment.
The second way poor people can benefit from increased economic participation is for charities, NGOs and philanthropic organisations to facilitate the development of markets that are beneficial to poor people.
A good example of this is the Human Capital Project (HCP) in Cambodia. The HCP has developed a market that provides finance for poor Cambodian students to attend university. Most of these students come from poor farming communities and are the first people in their family to attend university. You can read more about the Human Capital Project in this IPA Review article.
Pai Nai Hann receives her enrollment from HCP founder John Humphreys.
Another great example of this is microfinance which has created a credit market for hundreds of millions of families.
As free markets and secure property rights emerge in developing countries like Cambodia, entrepreneurs will lift millions out of poverty. All human beings will be able to enjoy the tremendous benefits of life in the modern world.