Upwardly mobile

Abhijit Banerjee and Esther Duflo (pictured on the front page) are two rising stars among the development economists. They are professors at the Massachussetts Institute of Technology (MIT). He earned his first academic degrees at the University of Calcutta, she earned hers at the École Normale Supérieur in Paris. Together, they have taken a new approach to poverty studies. Basically, they test small interventions in poor communities and compare the results with data from similar groups without intervention. The idea is to understand how disadvantaged people make decisions, and what kind of support best helps them improve their lot.

By Hans Dembowski

Last year, Banerjee and Duflo published “Poor economics”. The book elaborates on a host of relevant issues. Drawing on empirical data, for instance, the authors argue that microcredit schemes help poor people manage their scarce finances more effectively, but are designed in a too risk-averse manner to allow for fast-growing companies. The challenge today, according to Banerjee and Duflo, is to find better ways of funding small and medium-sized enterprises and not only microbusinesses. This assessment makes more sense than the eulogies which, for three decades, praised microfinance as a panacea for misery. It also makes more sense than the condemnations that have become popular after a microfinance crisis broke in India two years ago.

Scholars must obviously specialise in their field, so the two MIT professors have little to say about issues like macroeconomics, judicial reform or climate change. But though they cannot answer every question, their work is an example of excellent scholarship.
– It is based on empirical evidence, making sense of data and refining theories.
– It is innovative, resulting in new insights about the world we live in.
– It provides advice to government agencies, civil society organisations and private sector companies.
– It delves deeply into social challenges in many different places, trans­cending national borders.
– It has global reach, relying on a vast network of scholars, including many institutions in developing countries.
– It invites people to think critically and not simply accept the conventional wisdom as the truth.

For these reasons, scholarship matters in development. Academic freedom is at the root of civic liberties. Reasoned discourse is the basis for democratic deliberation, and institutions of higher learning are, by definition, the places that most depend on such discourse. Social movements often start at universities, and they typically need some kind of intellectual leadership.

And there is even more to higher learning. In the rich world, colleges have been launch pads for upward mobility for more than a century. This trend set in large-scale in the late 19th century as science-based industries began to rise. As we move on for the industrial society to the knowledge society, the relevance of higher education will keep growing.

Many people in the developing world are aware of job and career opportunities depending on academic qualifications. Many are prepared to pay for tuition, but even more cannot afford to do so. Therefore, students in Chile and other Latin American countries have recently been protesting for free or at least easier access to colleges and universities. Governments must indeed assure broad-based access to higher learning – and not at the expense of quality.

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The UN Sustainable Development Goals aim to transform economies in an environmentally sound manner, leaving no one behind.