NCPA - National Center for Policy Analysis


October 17, 2006

The best way for third world villagers to tap "the vast pipeline of wealth from the developed world" is to sell their products to the world's largest retailer, Wal-Mart, says Michael Strong, the head of Flow, a nonprofit group promoting entrepreneurship abroad. 

In a recent article, Strong challenged anyone to name an organization that is doing more to alleviate third world poverty than Wal-Mart.  So far he's gotten a lot of angry responses from Wal-Mart's critics, but nobody has come up with a convincing nomination for a more effective antipoverty organization.  And certainly none that saves money for Americans at the same time it's helping foreigners.

Making toys or shoes for Wal-Mart in a Chinese or Latin American factory may sound like hell to American college students -- and some factories should treat their workers much better, as Strong readily concedes.  But there are good reasons that villagers will move hundreds of miles for a job, says Strong:

  • Most "sweatshop" jobs -- even ones paying just $2 per day -- provide enough to lift a worker above the poverty level, and often far above it, according to a study of 10 Asian and Latin American countries by Benjamin Powell and David Skarbek.
  • In Honduras, the economists note, the average apparel worker makes $13 a day, while nearly half the population makes less than $2 a day.

Some villagers prefer to keep farming or to run small local businesses, and they're lucky to get loans from the Grameen Bank -- winner of this year's Nobel prize -- and its many emulators.  But other villagers would prefer to make more money by working in a factory.  If you want to help them, says Strong, then "act locally, think globally: shop Wal-Mart."

Source: John Tierney, "Shopping for a Nobel," New York Times, October 17, 2006; based upon: Michael Strong, "Forget the World Bank, Try Wal-Mart," August 22, 2006.

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