Ending poverty and boosting shared prosperity is about realizing human potential

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© Vikash Kumar

I have been fascinated by the concept of frontier all my life. What brought us here? What’s next? As a kid, my favorite book was “Ten Thousand Whys,” a pop-science series with all kinds of seemingly trivial questions like “Why are there fewer stars in the sky in winter?”

I wrote my Ph.D. dissertation on the Production Efficiency Frontier Theory — how to identify the most efficient units in a production network and measure the technical frontier. Later I became more of a macroeconomist and my interest expanded to identifying countries standing on the growth frontier. Subsequently, I began studying the deepest thinkers and became convinced that humanity is on an important new frontier of cosmic evolution.

At the International Finance Corporation (IFC), I feel I can pursue my deeply held conviction about the purpose of human life. I believe there are two advancing frontiers in today’s world: one social and another technological. Economic growth, more than ever, is driven by these two frontiers. The challenge is how to allow people to take advantage of their existing productive potential, and how to move the technological frontier to new levels.

These two frontiers are inseparable in the sense that growth is increasingly about maximizing brain power. Technological advances create more wealth and capital, which in turn enable more brain power to push the technological frontier. We are far from fully utilizing the existing brain power on Earth. Millions and millions of bright and motivated young people do not have the basic necessities of life, much less an education or proper working environment to utilize their talent. This is humanity’s biggest waste and biggest potential, a cruel reality where we hope we can make a difference, for the better.

Where can one find a better place to work, given IFC’s mandate in the mix of both frontiers? Our goals — ending poverty and boosting shared prosperity — are fundamentally about mobilizing human capacity and realizing human potential.

Pushing the two frontiers is easier said than done. The social and economic convergence between the rich and poor countries has been a painfully slow and uneven process, while productivity growth in the most advanced countries has slowed after a brief burst in the 1990s. Progress, in the sense of making oneself happier, more productive, and more meaningful than the prior generation, has become less achievable for a large share of the population.

We believe we know a lot about how to push the two frontiers, but we still have much to learn, through practice. IFC, being at the intersection of the private and the public sectors, has to speak the languages of finance and impact, of technology and culture, of local conditions and global trends. We talk about how we have grown tremendously since 1956, yet we are still “a drop in the bucket” in terms of investment in the developing world. The task is unbelievably challenging and fascinating.

I leave the following questions with you. How do we make sure:

  • The role of the private sector in pushing these frontiers is well understood;
  • Our role in promoting and supporting the private sector in these efforts is as strong as it can be; and
  • We work on the most impactful programs and projects in these areas?
How do we grow IFC’s business to have the biggest impact on these frontiers? 

Authors

Ted Chu

Chief Economist, International Finance Corporation