The Bottom of the Pyramid Strategy for Reducing Poverty: A Failed Promise

This paper critically examines the Bottom of the Pyramid (BOP) strategy for alleviating poverty. The paper states that a Libertarian movement that emphasizes free markets to reduce poverty has grown in recent years. This approach to reducing poverty assumes that the poor are fully capable and willing participants in the free market economy. But, this view of the poor as resilient and creative entrepreneurs and value-conscious consumers is empirically false. It actually harms the poor by:

• Laying too little emphasis on legal, regulatory and social mechanisms that ought to protect them as vulnerable consumers;
• Overemphasizing microcredit and under-emphasizing the development of modern enterprises that would provide employment opportunities for the poor;
• Not giving enough importance to the critical role of the State in poverty reduction.

Finally, the paper states that there is a need to impose limits on markets to prevent exploitation of the poor. The State must also provide basic services such as infrastructure, public health and education. These responsibilities of the State are even more critical in the context of poverty reduction.