Out of Poverty: What Works When Traditional Approaches Fail

"The single most important step [poor people] can take is to learn how to make more money."

So writes Paul Polak, one of the founders of International Development Enterprises (IDE), a nonprofit that promotes market-based principles as the solution to poverty in the developing world. Polak started IDE with two other entrepreneurs twenty-five years ago — their first project was to build and sell five hundred donkey carts to refugee entrepreneurs in Somalia. Today, the organization has a headquarters staff of thirteen and global staff of 550, most of whom come from the nine countries where IDE has projects: Bangladesh, India, Nepal, Cambodia, Vietnam, Myanmar, Zambia, Zimbabwe, and Ethiopia.

Polak left IDE in 2007 to start a second nonprofit, D-Rev: Design for the Other 90%, to pursue a related mission: Launch a design revolution in which multinational corporations and the world's best designers "develop products and ideas that will benefit the 90 percent of the people on earth who are poor, in order to help them earn their way out of poverty." The transition to the next stage of his quest gives Polak a good opportunity to reflect on his twenty-five years with IDE.

In Out of Poverty he affirms the effectiveness of one of the biggest trends in international development: microfinance. Polak has listened to, talked with, and worked among more than three thousand poor families around the world who survive on less than a dollar a day, and his prescription with respect to what they need to escape poverty is "so obvious that people tell me...it is a perfect example of circular logic." Most of Out of Poverty consists of practical how-to advice regarding the use of microfinance funds to help third-world farmers work smarter, not harder, by creating new markets for off-season, high-profit crops and providing affordable equipment and methods suited to the prevailing realities of small plots, little water, and plentiful labor.

Not surprisingly, the book emphasizes rural and agricultural enterprise, IDE's specialty. But Polak also tries to show how the principle of "making and marketing labor-intensive, high-value products" can work equally well in urban slums. Indeed, slums are potentially more suited to grassroots enterprise, he writes, because they typically operate "on the edge of legality or beyond the edge." Absent child-labor laws or job-safety regulations, "these unlicensed grassroots enterprises often survive because they operate below the regulatory line, not in spite of doing so."

While he provides a few examples of legitimate slum enterprise, his argument, in this reviewer's opinion, is less than convincing — not least because he fails to connect the dots from startup to success as painstakingly as he does with his rural examples. Thus, the reader is left to wonder: Is Polak suggesting that illegal enterprise is the most direct path out of poverty for urban slum dwellers? And should global high-end markets ignore the conditions in which those products are produced?

Polak devotes plenty of ink to the past failures of international development aid — especially by larger, high-profile organizations. The main mistake they make, he writes, is to try to lift farmers in developing countries out of poverty with methods and equipment ill-suited for their small plots. He also lambastes humanitarian assistance policies that all too often direct relief funds into the pockets of corrupt leaders, as well as organizations that provide charitable relief and little else.

But because Polak draws his supporting evidence almost solely from IDE projects, the book sometimes reads like a sales pitch for the organization. Indeed, the greatest shortcoming of Out of Poverty is the almost complete absence of any mention of failures by Polak and his IDE colleagues. And though he alludes to one or two, he never shares any details or lessons learned from those failures. While it's a pleasure to read about IDE's successes, a reference or two to other groups' achievements in the war against poverty (there must have been some) would have provided welcome balance to his narrative.

Still, the book's shortcomings hardly negate the important work IDE has done and is doing to lift thousands of people out of poverty. Indeed, Polak has received financial and philosophical support as well as validation from none other than Bill Gates, elements of whose 2007 commencement speechat Harvard echo Polak's prescription for ending poverty: Cut through the complexity to find a solution and persuade the world's greatest minds to pitch in. Whether you're a seasoned international development pro or just curious about the rapidly growing field of microfinance, Out of Poverty is a stimulating account by one of the industry's true pioneers.

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