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The Bottom of the Pyramid Strategy for Reducing Poverty: A Failed Promise

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  • Aneel Karnani

Abstract

The movement emphasizing free markets to reduce poverty has found strong expression in the ‘bottom of the pyramid’ approach in recent years. It views the poor as “resilient and creative entrepreneurs and value-conscious consumers”. This romanticized view of the poor harms the poor in two ways. First, it results in too little emphasis on legal, regulatory and social mechanisms to protect the poor who are vulnerable consumers. Second, it overemphasizes microcredit and underemphasizes fostering modern enterprises that would provide employment opportunities for the poor. More importantly, it grossly underemphasizes the critical role and responsibility of the state in poverty reduction.

Suggested Citation

  • Aneel Karnani, 2009. "The Bottom of the Pyramid Strategy for Reducing Poverty: A Failed Promise," Working Papers 80, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:80
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    File URL: http://www.un.org/esa/desa/papers/2009/wp80_2009.pdf
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    References listed on IDEAS

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    1. Fafchamps, Marcel & Shilpi, Forhad, 2008. "Subjective welfare, isolation, and relative consumption," Journal of Development Economics, Elsevier, vol. 86(1), pages 43-60, April.
    2. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 963-1002.
    3. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    4. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151.
    5. Abhijit Banerjee & Angus Deaton & Esther Duflo, 2004. "Wealth, Health, and Health Services in Rural Rajasthan," American Economic Review, American Economic Association, vol. 94(2), pages 326-330, May.
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    Cited by:

    1. Eduardo Méndez-León & Tatiana Reyes & René Díaz-Pichardo, 2019. "PSS for the BoP: A Review from DfS to Sustainable Business Model [PSS pour la BoP: Une revue de DfS à Business Model Durable]," Post-Print hal-02435850, HAL.
    2. Lubna Rashid, 2019. "Entrepreneurship Education and Sustainable Development Goals: A literature Review and a Closer Look at Fragile States and Technology-Enabled Approaches," Sustainability, MDPI, vol. 11(19), pages 1-23, September.
    3. Foster, Christopher, 2014. "Does quality matter for innovations in low income markets? The case of the Kenyan mobile phone sector," Technology in Society, Elsevier, vol. 38(C), pages 119-129.
    4. Baumuller, Heike & Husmann, Christine Ladenburger & von Braun, Joachim, 2011. "Innovative business approaches for the reduction of extreme poverty and marginality?," Working Papers 147921, University of Bonn, Center for Development Research (ZEF).

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    More about this item

    Keywords

    Poverty reduction; bottom of pyramid; consumption choices; micro-entrepreneurs;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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