Sir, While I agree with Martin Wolf's premise that no greater
challenge confronts us today than solving the plight of the billions
of people living in poverty and insecurity ("We cannot ignore
failing states", June 8), I do not agree with the underlying
assumption about where to look for a solution. He implies that this
will be provided by government.
A number of countries in eastern Europe, Africa and Latin America
have done what Mr Wolf suggests (ie, "stabilise, democratise,
privatise and liberalise") yet they are still not able to create
prosperity for their citizens.
The idea that it should be left to governments to provide a
solution to poverty has led to the failure of development efforts
over the past 50 years. A thriving private sector is the missing
piece in this puzzle. A culture of uncompetitive behaviour is
prevalent in both the developing nation itself and the institutions
seeking to reduce poverty levels.
Therefore, developing a culture that encourages companies to stop
relying on comparative advantages (eg, sunshine, cheap labour,
location, subsoil assets) and start relying on their ability to
create more complex products that meet the needs of more demanding
and sophisticated consumers is crucial.
This cultural change builds upon the fact that security, basic
citizen services and legitimacy of the government are important,
while expanding the responsibility of a healthy state to include the
private sector.
In order to succeed, companies in the developing world must
compete on competitive advantages. Employing sound business strategy
instead of an over-reliance on cheap labour is a prerequisite to
creating sustainable and profitable growth and a rising standard of
living.
Development funds should be spent on programmes that focus on
private-sector competitiveness rather than trying to artificially
prop up a failing government. Real change in government will happen
hand in hand with a competitive private sector.
While I salute Mr Wolf's enthusiasm to find a solution, his
underlying assumption (all responsibility rests on the government)
is deploying the same strategy of the past 50 years. Instead, we
must put the locus of responsibility for innovation and prosperity
in the private sector.
Andreas E. Widmer, President and CEO, OTF Group, Boston, MA
02472, US
