From Aid to Trade to Transformed Nations
— by Reuben Coulter
Over the past 70 years there has been significant progress in raising living standards and quality of life around the world. Prior to Covid-19, it was estimated that from 1990 to 2015, the extreme poverty rate (less than $1.9 per day) dropped an average of a percentage point per year – from nearly 36% to 10%. A closer look at the numbers shows that progress has been unevenly distributed, mainly driven by the rise of China where GDP per capita went from $90 in 1960 to $10,000 in 2019. In sub-Saharan Africa more than 41% of people still live in extreme poverty. The impact of Covid-19 threatens to undo much of the progress that has been made.
History shows that enterprise and a transformed marketplace are the only way in which countries can escape poverty. For example, the Asian ‘Tiger’ economies (Singapore, Malaysia, Taiwan and South Korea) had GDPs lower than Ghana and Kenya in the 1970s. Fifty years later, despite sub-Saharan Africa receiving the equivalent of six Marshall Plans in aid, the ‘Tigers’ raced ahead.
Aid has an important role to play in addressing crises and ensuring basic access to essential services. However, it has had limited success in lifting people out of poverty. Despite philanthropy’s best efforts, children still lack basic education, families can’t access clean water or quality healthcare, and countless villages remain without electricity in much of Africa and parts of Latin American and Asia. Without inclusive economic growth driven by enterprise, these essential human services are unsustainable and unaffordable. The countries reliant on outside aid are unable to chart their own course.
A look at the amounts of capital also shows the same result. The United Nations estimates that the cost of achieving the Sustainable Development Goals will require an additional $2-3 trillion per annum. That is a staggering number if we are solely reliant on philanthropy. However, consider that global wealth is $150 trillion, and 55% of this is stewarded by Christians. If even a fraction of this is invested with impact, then social, economic, and spiritual transformation would be achievable.
Innovation and creativity have been central to the economic dynamism of the Western world. As shown in the Global Innovation Index, there is a high correlation between innovation and national GDP. Over a decade ago, the government of China commissioned an economist Dr. Peter Zhao to do an academic study to determine the reason why America has the largest and most powerful economy in the history of the world. His conclusion was that the church had shaped America’s culture and produced elements such as a tireless work ethic, honesty, suppression of corruption, a motivation for excellence, generosity, and the “spirit of creativity” which comes from worshipping a Creator (Wall Street Journal, Aug 8th 2008). We believe that when individuals and cultures are rooted in redemptive thinking this potential is unlocked.
The world stands at an economic, social, and spiritual crossroads. Capitalism without its Christian heritage and institutions of integrity has led to corruption, increasing inequality, and continued high poverty rates. However, enterprise rooted in Christianity can lead to inclusive and compassionate economic growth and be the single biggest contributor to poverty reduction and realising the Great Commission. Christian entrepreneurs and investors need to redeem the marketplace and in doing so transform nations by creating jobs, generating prosperity, driving innovation, and catalysing human flourishing.
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[ Photo by Chitto Cancio on Unsplash ]
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