What is a government's role in alleviating poverty?

Government can create economic structure, policies, and an institutional framework.
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TRANSCRIPT

Muhammad Yunus: Government can play a very important role. Government is what gives you the structure of the economy. Government gives the policies. Government gives the institutional framework. So in that way government plays an important role. In foreign aid, if you are a foreign aid giver, if you are a donor country, then you decide how you use your foreign aid money. You previously did something in infrastructure, in helping people in different ways. Now that another option came in a social business, you may prefer to give your foreign aid as a social business. Because here you know exactly what’s happening. You can avoid the corruption. Because it’s a business it has to have all the . . . You track your money all around, and you can bring your business skills and solving the problem . . . and helping solve the problem in the recipient country. And you encourage local talents to go into social businesses and creating institutions. It’s not just one shot money we gave. We spend the money, we build the roads, and we don’t have any other news about it. Bridge building is not an institution. It doesn’t have its own life. But now we build something as an institution when we go as a social business. So this will be one option to them to come forward – a very strong option. And if you’re a recipient country, you would also like to see more things growing out of economy. And social business will be one institution building that you would like to build up with assistance from foreign aid. Because you would like to see that these are the things which will have lasting impact in your economy; and you would like to address the most difficult problem in your country – how to design that social business. You will seek help from donor countries and countries around to . . . in designing, because designing will be the most critical part of the whole thing. So if they can help you in designing those things and you can implement it, you’ll be much, much benefitted from that. Once you are successful in a particular design, other countries will imitate you. Other countries will borrow from you. “Yes this is a great idea. I would like to do that.”

 

Recorded on: 1/23/08