Poverty Reduction for Profit? A Critical Examination of Business Opportunities at the Bottom of the Pyramid
Leading management thinker C.K. Prahalad argues that selling consumer goods to four billion poor people at the bottom of the economic pyramid (BoP) both generates sizeable profits for large businesses and eliminates poverty. A welcome, innovative and influential perspective, but an opportunity missed, I argue here. First, selling to the poor may do little to eradicate poverty, but potentially hurts small businesses and threatens local jobs and incomes. Second, a more precise analysis using household surveys shows a much smaller BoP market size, less than 5% of previous estimates. Third, virtually everyone in developing countries is classified as a 'poor' consumer in much of the BoP literature. The focus and the bulk of Prahalad's new purchasing power rests with the emerging middle class in India, China and Brazil, while the 2 billion people below $2 a day, especially those in Sub-Saharan Africa, are marginalised in this debate. Data for consumer prices confirms that the true challenge is to serve the latter group, those that are completely cut off from the global marketplace. This paper concludes that big businesses have a central role in shaping and expanding these future markets by generating employment and incomes.
|Date of creation:|
|Contact details of provider:|| Postal: Queen Elizabeth House 3 Mansfield Road, Oxford, OX1 3TB United Kingdom|
Phone: +44 (1865) 281800
Fax: +44 (1865) 281801
Web page: http://www.qeh.ox.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maloney, William F., 2004.
Elsevier, vol. 32(7), pages 1159-1178, July.
- Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
- Kiminori Matsuyama, 2002. "The Rise of Mass Consumption Societies," Journal of Political Economy, University of Chicago Press, vol. 110(5), pages 1035-1070, October.
- Kiminori Matsuyama, 1999. "The Rise of Mass Consumption Societies," Discussion Papers 1289, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 2000. "The Rise of Mass Consumption Societies," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 23, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Kiminori Matsuyama, 2000. "The rise of mass consumption societies," LSE Research Online Documents on Economics 6656, London School of Economics and Political Science, LSE Library.
- Rao, Vijayendra, 2000. "Price Heterogeneity and "Real" Inequality: A Case Study of Prices and Poverty in Rural South India," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 201-211, June.
- Patrick Honohan, 2001. "Does PPP-adjusted data exaggerate the relative size of poor economies?," Applied Economics Letters, Taylor & Francis Journals, vol. 8(12), pages 799-802.
- Honohan, Patrick, 1998. "Does PPP-Adjusted Data Exaggerate the Relative Size of Poor Economies," CEPR Discussion Papers 1865, C.E.P.R. Discussion Papers.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-1026, October.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988. "Industrialization and the Big Push," NBER Working Papers 2708, National Bureau of Economic Research, Inc.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
- Camelia Minoiu & Sanjay G. Reddy, 2008. "Chinese Poverty: Assessing The Impact Of Alternative Assumptions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(4), pages 572-596, December.
- Sanjay G. Reddy & Camelia Minoiu, 2005. "Chinese Poverty: Assessing the Impact of Alternative Assumptions," Microeconomics 0509002, EconWPA.
- Sanjay G. Reddy & Camelia Minoiu, 2006. "Chinese Poverty: Assessing the Impact of Alternative Assumptions," Working Papers 25, International Policy Centre for Inclusive Growth.
- Subramanian, Shankar & Deaton, Angus, 1996. "The Demand for Food and Calories," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 133-162, February.
- Subramanian, S. & Deaton, A., 1994. "The Demand for Food and Calories," Papers 175, Princeton, Woodrow Wilson School - Development Studies.
- Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
- Harriss-White,Barbara, 2003. "India Working," Cambridge Books, Cambridge University Press, number 9780521007634, October.
- Kunreuther, Howard, 1973. "Why the Poor May Pay More for Food: Theoretical and Empirical Evidence," The Journal of Business, University of Chicago Press, vol. 46(3), pages 368-383, July.
- Jerik Hanushek & Dennis Kimko, 2006. "Schooling, Labor-force Quality, and the Growth of Nations," Educational Studies, Higher School of Economics, issue 1, pages 154-193.
- Dennis D. Kimko & Eric A. Hanushek, 2000. "Schooling, Labor-Force Quality, and the Growth of Nations," American Economic Review, American Economic Association, vol. 90(5), pages 1184-1208, December.
- World Bank, 2006. "World Development Indicators 2006," World Bank Publications, The World Bank, number 8151, May.
- T.N. Srinivasan & Jessica Seddon Wallack, 2004. "Globalization, Growth, and the Poor," De Economist, Springer, vol. 152(2), pages 251-272, 06.
- Harriss-White,Barbara, 2003. "India Working," Cambridge Books, Cambridge University Press, number 9780521809795, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:qeh:qehwps:qehwps160. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rachel Crawford)
If references are entirely missing, you can add them using this form.