What is the micro-oriented approach?
What is the micro-oriented approach? It’s the idea that poor people benefit more when you generate opportunities that are small in scale and low-tech.
Small-scale. Small factories as opposed to big factories. Small businesses as opposed to big businesses. Companies that are more informally organized, and thus typically do not put up artificial barriers to entry that poor people, without formal education, have trouble surmounting. Small-scale also evokes mom and pop shops that can be established, managed and maintained by ordinary people, with local knowledge aplenty, but without the formal education that bigger businesses require. Handicrafters who run businesses that support families even as they protect and nurture more authentic culture. Throughout the ages, have directly provided a range of services, from cleaning to childcare, from delivery to dishwashers, from farmworker to food preparation, from informal repair to industrial worker. The poor have served as butchers and bakers and candlestick makers.
In addition to scale, the micro-oriented approach also advocates generating opportunities that are lower in technology. Not “no technology” but as low technology as possible. Poor people typically have less formal education, and thus are often blocked from jobs that require high-tech skills. It is not even that such potential workers are poorly educated. It is that poor people, almost by definition, enjoy less opportunity to spend time in school, and the schools they attend tend to be lower in quality. Note: not less educated, but less time in school. In many ways, the education that they have had—in farming, say—puts many poor in better stead to survive than most of us—better prepares them for the arduous adventure in life. The hardships and adversities of being poor generates survival skills that most of us do not have. They are more likely to survive the aftermath of a nuclear holocaust.But it is this lack of formal education that renders them unqualified for high-tech positions.
Instead of building high-tech factories, where formal hierarchy pervades, where technology replaces labor, the micro-oriented approach suggests building low tech workshops. Instead of building highways that will speed people from one-way, one place to another, the micro-oriented approach suggests constructing smaller roads, even dirt roads, that will connect rural communities with marketing towns. Instead of scaling up agricultural production by combining land and using high-tech tractors and combines, the micro-oriented approach suggests encouraging, small scale, agriculture, conducted by owner-operators. The micro-oriented approach encourages the establishment of small businesses—even tiny businesses, businesses of human scale.
Thus, the core of the micro-oriented approach is to generate opportunities that poor people can access, that poor people can avail themselves of.
Generate opportunities that poor people can do?! An innovative pathway for poverty reduction?!
As a prescription, that’s pretty obvious, isn’t it? It doesn’t take a genius to understand the micro-oriented approach. Why write about such an obvious idea?
The main reason—perhaps the only justification—that the micro-oriented approach is worthwhile writing about, the only reason why the micro-oriented approach is in any way novel, is because the approach has been understudied, poorly understood. The idea of the micro-oriented approach has a long history, yet it has been seriously discussed in neither scholarly nor development circles since the 1960s. In fact, the idea flies in the face of the advice that most development experts and development organisations would give. The micro-oriented is, in fact, quite the opposite.
After all, development itself is about growing and scale, and increasing and technology—almost by definition.
The pursuit of development—of maximising growth, of industrialising rapidly, of increasing technology—is the backbone of the vast majority of development experts. The one thing that unites neoliberal economists like Milton Friedman, dependency theorists like Galal Amin, Andre Gunter Frank, or Theotonio Dos Santos, scholars associated with dependent development like Fernando Cardoso or Guillermo O’Donnell, advocates of the developmental state like Alice Amsden, Chalmers Johnson and Peter Evans, as well as Marxist scholars like — such as Paul Baran or, say, Karl Marx. The one thing that unites all these scholarly traditions is the commitment to the end goal of development policy—industrialization, urbanization, technological advancement and modernization. The micro-oriented approach varies from these approaches both in terms of goal, as well as the means to achieving that goal.
The generation of small-scale low-tech opportunities—the outcome of those efforts are rarely impressive. Such opportunities lack the shock and awe of the large-scale, the impressiveness of the high-tech. Such an approach seems to be, if not Luddite, then the opposite of what we mean by modern.
For these reasons, the contribution of small, low-tech firms to job creation has been overlooked. In rich countries, often 80 percent or more of employment in the private sector is provided by small-businesses. And while many small firms in rich countries are high-tech (think app makers) or require specialized skills (like doctor’s offices), most are not. Small firms are extremely good generation of employment; most families rely on such firms.
Yet, the contributions of small firms are often overlooked. Why? Many small firms are too small, too informal to even be counted in the economy. The informal economy, especially in poor countries, doesn’t register its businesses; doesn’t report tax information. Even if they did, their accumulated contribution to the economy is miniscule. By contrast, larger firms generate tremendous wealth—although generally for free. These branded, global giants are impressive to behold; they bring pride to a nation. In generally, larger firms, while generating less employment, generate the bulk of economic activity. Conversely, smaller firms generate employment, but little output. For these reasons, economists dismiss these as inefficient (by economic output per job, large firms win hands-down). But in terms of job-generators (jobs per invested dollar), it is small firms that win hands-down. With many exceptions not withstanding, small firms tend to more environmentally sustainable, less hierarchically run. Smaller business owners are typically unable to translate their economic weight into political power—doing so requires the wealth and market capture of large firms.
Yet larger firms capture the imagination and generate outcomes that count. As it turns out, the micro-oriented approach is almost the worst way to generate significant economic activity that will move the needle on an economy’s GDP. If you want to increase GDP, the economist will tell you to increase the scale and to add technology. By leveraging on economies of scale, and using the input-augmenting advantages of technology, GDP can be augmented to almost an unlimited extent. And like it or not, GDP is the scorecard of nations. It is the way that leaders know how well they’re doing. It is the core goal of economic policies of countries in nearly every corner of the world. In fact, the United Nations requires every member to collect GDP data in specific ways if they want to be a recognized member of the United Nations. Adoption of a stacked scorecard, in exchange for sovereignty. There are few countries that have rejected the goal of increasing GDP, of industrializing rapidly, of urbanizing, of ramping up technology—irrespective of whether doing so makes any real impact to anything that we really value.
To be sure, the micro-oriented approach, when successful, generates economic activity—not much, but it’s there. What characterises the approach, however, is that it funnels a greater portion of that economic activity into the pocket of poor families. Not through welfare. Not through high taxation and redistribution. Not even necessarily by empowering the power. (Nothing wrong with these ideas—it’s just that the micro-oriented approach is different.) Instead, the micro-oriented approach does so by generating employement opportunities that poor workers can partake in to ensure that a greater degree of the benefits of the economic activity that is generated will go directly to poor people.
This simple approach flies in the face of all that we think about when we when we consider what is modern. The micro-oriented approach suggests a new form of development, a place of human scale on economy, based on employment and production rather than slavish devotion to efficiency.