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ILRIC 635 Lecture 12

ILRIC 635 Lecture 12 - ILRIC 635 Lecture 12 Final's Q A...

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ILRIC 635 Lecture 12 Final’s Q & A session: Monday, 3-4 in 237 Catherwood and Tuesday, 4:45-5:45 105 Ives The role of the private sector in poverty reduction Two ways people can benefit from economic growth - Creation of more high wage jobs - Increase the profitability of self employment o Start up capital – may need a loan to get a business running o Working capital – paying for electricity and so forth Not-for-profit micro lenders – generate enough profit to lend out more money - Think of Muhammad Yunus’ Grameen Bank – lending at reasonable interest o Loans to a member of a group who is jointly responsible for repayment Once repayment is made, that money is then re-lent out Incentive compatibility – incentive of borrower is to repay lender - Profit banks – look to maximize profits in the way in which they lend money Former Mexican welfare head: best things firms do is create jobs + pay taxes from profits - Government provides the role of aligning these goals with good jobs o
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