Bringing dignity to individuals, communities and nations in the developing world through meaningful employment sounds like a lofty vision. The question is, how can this be done on a massive scale? After years of working in the developing world, Newdea has discovered a little-known economic model that has historically created millions of jobs and delivered even more people out of poverty. Continue reading to learn how Newdea plans to turbocharge this model with proprietary technologies and methodologies in order to accelerate economic growth while providing bottom-up accountability.
THE CONVERGENCE THEORY
In the early 1960s, the economist Clark Kerr introduced three theories of economic development that described the developing world. The first was the Dependency Theory: countries that rely on aid and loans from the developed world’s governments for survival experience a loss of sovereignty and the reduction of their people to a managed state of poverty and dependency, robbing them of dignity.
His second was Convergence Theory: Countries that look to the developed world’s private sector for financing by converging with their needs, create the right economic environment and for businesses and investors to create jobs, pay taxes and build new infrastructure.
Kerr’s last theory was Divergence Theory: countries that cut themselves off from the developed world (whether due to conflict or dictatorship) experience extreme poverty and corruption prevails.
WHY THE WORLD IS READY FOR PLAZA™
We hear from many doubters about how corrupt leaders in developing countries are and how they will never change. But Newdea sees things differently. Dependency creates the perfect environment for corruption and short-sightedness. But pressure on the leaders in these countries to change is increasing. This pressure is being created by five major socioeconomic trends:
(1) Social Media is increasingly questioning the conventional, decades-old approach to aid and dependency and also observing that, after trillions of dollars of aid and loans, the results are appalling;
(2) The debt of the developed world is growing and pressure to reduce foreign aid is now causing aid to plateau;
(3) Aid organizations are being pressured to show better private sector solutions;
(4) The developing world is very young (Africa’s median age is 17.6 years old), has access to social media and sees the world differently – they want jobs, not aid, and are going to the streets and ballot boxes to demand it; and
(5) Globalization of business requires new resources of skilled labor, raw materials, and consumer markets. $1.3 Trillion of private capital has been allocated to developing markets – but only where the environment is right for business.
In the 1960s, Singapore, Taiwan, and South Korea were some of the poorest and most corrupt countries in the world. Their leadership pivoted to convergence and, after 35 years, they caught up with, or surpassed, many of their former aid providers. Today countries/city states such as Rwanda and Dubai are proving that the model still works. We find that many leaders from the developing world have traveled to these countries to explore “how” they did it. As we talk to these leaders we find that they are focusing on infrastructure development but missing the main point of convergence: that they must create an environment that is attractive to the private sector.
NEWDEA’S ECONOMIC CONVERGENCE METHOD
For over a decade, Newdea has been doing business in over 190 countries providing a software platform to help governments, businesses, charities, and foundations track social impact. The relationships we have built with heads of state, CEOs, and leaders from the social sector have helped us to gain insight on a better model for convergence and help developing countries pivot from dependency to convergence and a path towards true, sustainable economic freedom.
In addition to our deep international reach and experience, we have methodically analyzed countless efforts to provide economic prosperity in these countries. Global trends in big data have provided a new perspective on new opportunities for the developing world. Our work on both the data and development sides gave rise to our new business approach: a comprehensive model that melds growth-oriented policy, cutting edge technology and user communities to jump-start the convergence process. Our model combines top-down policy prescriptions, the power of big data (and its significance as a sovereign resource) and bottom-up user communities, all enhanced by Blockchain technology.
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