It is often considered that a country is poor because it is poor and that exogenous capital is required to break the vicious circle of poverty. Within a country, the poor may need this exogenous capital: “Nobody gives the poor the first dollar,” says Muhammad Yunus, the Nobel Peace Prize winner. Part of the reason lies in their lack of human capital and the inability to use technology, part of the reason lies in asymmetric information keeping banks from lending to them, and part of the reason lies in the small transaction size leading to high transaction costs. Click here to read the rest...
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