| OCR Text |
Show HINCKLEY JOURNAL OF POLITICS SPRING 2001 Microcredit in International Development By Jeff Merchant The institution of microcredit represents a new and effective form of developmental assistance. Microcredit succeeds by putting money directly in the hands of the poor, adapting to their unique cultures, and stimulating personal empowerment. Although not a panacea for economic disparity, microlending holds a great potential for alleviating poverty when coupled with more traditional aid programs and the forces of global- nation. INTRODUCTION ¥ "% ajamma lives in India. For years she worked as a lowly 1-^ maid in an "upper-caste" household so she could feed JL V^her malnourished children the leftover scraps of food her employers left after dinner. Finally, she became so impoverished she borrowed money from one of the rich landowners in her village. When she could not repay the loan, her daughters were taken to his house to live in virtual slavery. Fortunately for Rajamma, her story does not end in tragedy. She joined the Bridge Foundation, a microcredit organization, which loaned her a milk cow for the equivalent of about $200. Through hard work and her own innovation, she purchased a half-acre of land, paid for the release of her children, and took out a larger loan to begin irrigation for groundnut production-all in one year. Now, her children are learning vocations and attending school. She has maintained her success as a businesswoman (Serageldin and Yunus 2000). Rajamma's story is not isolated. Today, microcredit institutions are popping up throughout the world, in both developing and developed countries, serving the poorest of the poor. With over 7,000 of these organizations worldwide, loaning more than 16 million people well over $2.5 billion (Srinivas 2000), microfinance has revolutionized traditional models of international development in just a few years (New York Times 1997). As countries look for ways to decrease spending and shore up deficits (Economist 1997), this innovative concept is beginning to catch on in the United States, the European Union, and many non-governmental organizations (Sarno 1998). Of the types of international aid, microfinance is the most promising. It is the only form of aid that empowers its beneficiaries, is customized to the culture it serves, and creates sustainability-and in some cases profit-for the organiza- Jeff Merchant is a senior graduating with a degree in Political Science and a minor in Asian Studies. He currently works as a legislative assistant in the United States Congress, specializing in foreign policy and international rela- tions that provide it. Microcredit, is not a panacea for the world's developmental problems, especially in the realm of poverty eradication. While microcredit is currently a necessary element of international development, it is essential that the United States and other countries provide more traditional forms of aid to supplement the economic and social benefits of this remarkable system. MICROCREDIT AND INTERNATIONAL DEVELOPMENT: DEFINITIONS IN CONTEXT It is necessary to create a workable definition of international development and microcredit/microfinance before addressing the complexities of these issues. International development is difficult to define. The Development Dictionary describes the process of "development" thusly: "There is nothing in modern mentality comparable to it as a force guiding thought and behavior. At the same time, very few words are as feeble, as fragile, as incapable of giving substance and meaning to thought and behavior as this one" (Esteva 1992). Of course, there are debates as to what constitutes "development," but it is true that "development defies definition" (Cowen and Shenton 1996). Although the meanings maybe complex, and diverse, for this discussion, development simply refers to the process by which the citizens of a nation-state become more economically and socially empowered. Cowen and Shenton's Doctrines of Development best depicts this definition by saying: Development can be construed as "a process of enlarging people's choices;" of enhancing "participatory democratic processes" and the "ability of people to have a say in the decisions that shape their lives;" of providing "human beings with the opportunity to develop their fullest potential;" of enabling the poor, women, and "free independent peasants" to organize for themselves and work together. INTERNATIONAL DEVELOPMENT THEORY Models of development have shifted dramatically over time. Originally, theories of development derived from European 21 |
