One sentence takeaway for Industry-driven Conditional Cash Transfer: We social entrepreneurs can end world poverty by paying people to learn in-demand skills and entrepreneurship, and achieving profits and scale when those people seize market opportunities.
About the Author: Gobi Dasu is the founder of learningdollarstalent.com and a CS PhD Student at Northwestern University. He holds a BS and MS in Computer Science from Stanford University. Born out of a masters research project, LD Talent (“Learning Dollars Talent”) is a network of engineers financially incentivized to engage in lifelong learning. The network is an instantiation of many of this article’s ideas around market-driven conditional cash transfer, majority world workforce development, and diverse globally distributed teams. It has helped hundreds of majority world engineers hone their skills and contribute to globally distributed software teams.
Castro Mbithii also contributed immensely by providing and iterating on feedback on this piece to improve it.
This article can be taken as an informal guide for aspiring entrepreneurs and knowledge workers who want to do impactful work to address world poverty and racial power imbalance.
This is a mega plan for a mega problem, which can’t just be solved by one person. Thousands of new entrepreneurs and millions of new knowledge workers from the majority world are needed to execute this plan. By majority world, I mean Asia, Africa, and Latin America in a broad sense and countries of nominal GDP per capita less than 10K USD in a more specific sense.
Finally, note that this is not a scholarly article. It is a back-of-the-envelope argument based on common knowledge and visible trends. Let’s get started.
In my life, I have seen 37 countries on route to my goal of 100. I have seen India almost every year since 2000 and it has developed considerably. But it still has a long way to go. I have seen China and found it to be a strong and well developed state. Over the course of the last 20 years, I have witnessed how different per capita GDPs physically manifest, in terms of roads, buildings, people, education, behavior, etc. I’ve seen the following:
The first time I remember visiting India from the US was in the year 2000. I remember the stark contrast in the quality of infrastructure between the dirty streets of Jaipur, Delhi, and Agra and the robust infrastructure of the San Francisco Bay Area in California. There were diseased and disabled child beggars on the street, as well as malnourished child labor. I remember being advised not to drink the tap water for it was not properly filtered. There were a lot of dilapidated buildings and slums. There were frequent power cuts. There was very poor bandwidth in internet cafés (i.e. poor access to information). I could tell that many people did not receive education or were even illiterate. It was the lack of organization, lack of order, and corrupt state of society that struck me.
Since, then I have been fascinated with the global distribution of wealth, and how it impacts the way a place looks. Here is a graphic displaying the world’s GDP.
Though one may see “race” and “region” as the predictive variable when looking at the GDP of nations above, what I have come to realize is that it’s almost always education, innovation, and intelligent use of resources that makes a country rich. Africa has so many natural resources and yet it is poor. Many of the poor states in Latin America have small populations and yet they are still poor. Iran, Iraq, and Libya have oil and yet they are poor. Much of South and Southeast Asia have fertile soil and yet they are poor.
It is the educated work force of engineers, medical professionals, scientists, researchers, designers, and entrepreneurs of the United States, China, Japan, Germany, and the UK that make those countries so wealthy.
Yet, I have found that there are smart people in every country, and that intelligence and most other attributes simply follow normal distributions. So why are people not able to catapult themselves out of poverty?
While Guns, Germs, and Steel explains the problem of the unequal wealth of modern nations, I have not seen reasonably fast and scalable solutions, with the exception of China’s manufacturing prowess of the last 20 years (which is not easily repeatable elsewhere). However given the world’s 57% internet penetration, the advent of high quality but underused MOOCs, the availability of almost all specialized knowledge on the internet, and the growing popularity of remote work, online freelancing, and digital payments, I hereby outline a plan for how millennials can end global poverty and inequality of the races.
1. Per Capita Wealth by “Race”
If you plot per capita wealth by race or color, you may find that they correlate eerily well in this post-colonial world. This is a back-of-the-envelope claim, but, as a loose proxy, just take a look at per capita wealth or GDP by region, think about what the majority of people (i.e. >50% of people) in each region might look like racially or ethnically, and you may be convinced that race and wealth correlate very well globally:
Note, by Asia sans IndoChina, we mean all of Asia except India and China.
The average Australian is 50 times richer than the average Indian, and the average Northern American is 140 times richer than the average African. You’d think that people should be more concerned about this degree of global inequality!
And let’s look at raw wealth:
Leaving aside definitions of intelligence, let’s say you argue that there are intelligence differences between continents (which Guns, Germs, and Steel strongly refutes). Even then, by virtue of the way normal distributions work and the sheer population sizes of Africa, India, Latin America, and non-China Asia (population 5B people), there are still numerically more intelligent people in the poor world than the rich world. You’d think these intelligent people could figure out how to get their continent rich.
2. Maybe Inequality is OK? Caveats?
Now after thinking about such stark inequality, you may wonder if this is a problem? What’s wrong if some groups of people are wealthier than others – what matters is happiness. For instance, the US has a GDP per capita twice that of Spain but the quality of life and HDI (human development index) of the two countries overall are not terribly different, nor does one country’s people look at the other’s as “inferior” or “superior”. In fact, I think that drastic wealth or per capita GDP inequality only becomes a problem under 2 conditions:
- if one individual group or race or location controls more than half of the wealth of the world
- if a non-trivial fraction of people of any group or race cannot have a respectable lifestyle; note, the vast majority of people in today’s developed countries enjoy a respectable lifestyle, namely:
- enough food
- clean water
- clean infrastructure and housing
- consistent electricity and energy supply
- quality healthcare
- freedom / exploration
- universal education
- access to MOOCs and K-12 school counts and suffices
Note, if these 2 issues are resolved, then inequalities may be okay because there is a global “checks and balances” of all groups, and because all peoples can lead respectable lives. We can then further reconcile some groups being richer per capita than others because those groups will most certainly be older and less populous as well, balancing the power out.
3. The Bad News
Unfortunately both of the above two issues are true right now.
- The West, whose significant wealth-holders are predominantly of the European diaspora, controls ~63% of the wealth of the world. The West also controls geopolitics, immigration, and international business transactions.
- Most people in the world do not live in developed countries with high HDI. They do not benefit from all of the necessities (described in listicle bullet #2.2), which are required for a respectable standard of living.
4. The Good News
Fortunately, this may change in 20-25 years optimistically and 25-35 years pessimistically. This is when millennials will be in their late 30s / mid 40s to late 50s / mid 60s, which means they’ll have plenty of time (30 to 50 years) to live in a more or less developed and balanced world. I’ll explain why I think so shortly. Moreover, at that point, no one group or race will control a majority of the world’s wealth.
5. Why this is Important
I believe the two issues (from listicle bullet #2) are important because if one group controls more than half of the wealth of the world, then you enter into a sort of global scale cronyism by race, group, or location, which is an obstruction to equal opportunity that can be subtle to infer. It also is bad for business.
e.g. Software companies hiring only within their geographic location (i.e. Silicon Valley, Manhattan, etc.) where the majority of developers fit a certain profile. As opposed to hiring from a more diverse and larger global pool of developers, particularly when all the work can be done online, from anywhere in the world.
6. Immigration Policies
Immigration policies can make it hard for qualified talent (such as engineers and doctors) from other countries to enter and work in the US or Europe. For every qualified immigrant engineer you see in the US and Europe, I surmise there are probably 10+ equally qualified ones in their home country.
I initially thought brain drain has sucked all those worthy out of the majority world, and India in particular. However, after working with many brilliant engineers around the world, I have found otherwise: there are many equally educated and intelligent knowledge workers left in purported brain-drained countries.
I am dumbfounded why people pay 10x for local talent, while there may be equal or even better vetted international talent. I surmise that either employers are unconsciously biased against remote talent, or that they lack awareness of the existence of high quality international talent, making inaccurate and sweeping generalizations before vetting talent. This is to the detriment of the employer’s business. While international talent pools may have noise for cultural reasons (i.e. people pursuing engineering because of social pressure rather than intrinsic passion), vetting filters should be merit based not location based, particularly in the current immigration climate, especially for remote-ok positions.
I think many businesses can benefit greatly from exploring remote international talent (90% of the world) rather than default for local talent, particularly because immigration is artificially tight due to political reasons rather than the free market and what is best for business.
7. Why Global Scale Cronyism May Be Bad for Business
In fact this cronyism by race, group, or location can sometimes undermine the free market and what is good for business! Of course, there is diversity in US-based knowledge workers and immigration exists. But those numbers don’t put a dent in achieving merit-based, global scale, equal opportunity in knowledge work — the way a true free market or optimal firm would.
For instance, check out how diverse actual software engineers are: insights.stackoverflow.com/survey/2019#demographics.
Let’s play devil’s advocate on the subject of IQ, even though it may not be a perfect intelligence metric; and, even though current studies reporting IQ differences across continents may not be controlled for environment, upbringing, access to education, and other non-genetic factors. Even if the majority-world (mostly people of color) has an average IQ of around 80-90 (<1 standard deviation shifted left) compared to the West’s 100 (mostly white), the sheer populations of nations and reasonable normal distributions tell us that there still should be numerically more “smart” people in the majority world (capable of engineering, designing, inventing, discovering, researching, startup founding, etc.) than in the West. Hence I think that the gap in wealth between races, groups, and locations would not exist if we didn’t consider borders when hiring or investing. This is practically true as well, given the rise of remote work and increasing global internet access (57%+), which enables more people to conveniently learn and earn online.
Positive Feedback Loop with respect to Education
The employer might have an implicit bias for a particular “cultural fit”. They might prefer a candidate who has gone through a similar education system (i.e. their fellow alum, frat brother or sorority sister, etc.). This feeds more similar minded people into positions of power who in turn recruit more similar people. This can become detrimental to an organization in the long run as they don’t optimize for merit and cost.
If organizations recruited based on true merit rather than local connections and cultural biases, we’d find more cost-effective, diverse, globally representative, and intelligent work places. Creating effective, truly global, distributed teams is critical for this.
8. Wealth flows like
Water Peanut Butter
If you are an entrepreneur or team leader in the US or developed world trying to hire talent, this section is as relevant to you as it is for the developing world knowledge worker or entrepreneur.
There are a lot of qualified people outside of the US and Western Europe who can do jobs just as well but for a lower cost than their local talent. The fact is that we don’t really have a meritocratic free market. If we had open borders, you’d see this happen immediately. Because of borders, wealth and opportunity seem to move more like peanut butter than water – still fluid but very sticky. There is really no reason a software engineer in Asia should make 1/10th the salary of that in the US. Yes sure, if you hire a random person from Upwork you may not find quality but that’s because Upwork doesn’t perform the vetting for you. In general, stereotypes around communication ability, quality, cultural fit, etc. are outdated in 2019, and if you look in the right places and do proper vetting, you can easily find international talent that is responsive, communicative, intelligent, and high quality.
This bias is a problem that you can solve and benefit from at the same time. Sure, you are contributing to global equal opportunity by hiring internationally, but you’re also going to benefit financially from the temporary unfair price differential that exists due to your peers’ bias against international talent. If you’re a smart entrepreneur who doesn’t want to run out of cash, I would highly recommend building a globally distributed engineering team of mostly international talent. You’re getting the best end of the deal. Right now, you can hire brilliant people who charge less just because of their location. And, by doing this, your economic advantage over competitors will drive more opportunity toward international talent, eventually creating a more meritocratic world and freer labor market.
9. The Millennial Generation May Actually Be Able To Solve This
Entrepreneurship, design, and product development by the poor for the rich, can solve global development and power imbalance in less than a generation. The internet, air conditioning, MOOCs, and modern conditional cash transfer can facilitate this creation of a more or less equal and developed world.
- Entrepreneurship, regardless of where it begins in the world, creates jobs. But if people in poor countries start enterprises and design products for rich countries, then they can benefit from standard business, magnified by huge differentials in cost of production and price of product.
- These SaaS companies in India (a fairly poor country by per capita terms) targeting US corporations (the greatest source of wealth in the world) are doing just that: hackernoon.com/massive-list-of-100-saas-companies-in-india-e96eb115cd2, think Zoho, HackerRank, etc.
- SaaS companies in India targeting US businesses are hence gold for global economic development.
- They avoid the bias that employers in the developed world may have against hiring outsourced talent. They just build the entire product and company in the majority world. That being said I think completely globally distributed teams are even better, if they are open to smart people with degrees from universities all over the world, rather than just from particular countries or regions.
- Internet makes remote learning and remote work possible.
- Air conditioning removes the discomfort hot weather has inflicted on the office workers of the global south for centuries.
- MOOCs allow anyone in the world to benefit from the world’s best educational resources.
- I believe all established knowledge can be gathered into one place, so I have just started an open source project around this idea: github.com/gobid/knowledge-map-cheatsheets (it’s very much in progress).
- Conditional cash transfer is the idea of financially incentivizing good behavior like studying or professional development.
We can probably reverse the perverse effects of Guns, Germs, and Steel in a generation if millennials from majority world countries make the right moves and start the right companies. My friend Benjamin Fernandes of Tanzania is doing just this with his fin-tech company NALA.
10. Is the problem poverty or inequality?
Poverty and economic inequality are arguably the greatest problems that our society has faced and still continues to face. We covered wealth in listicle bullet #1 but now consider the wealth produced per year: per capita and total GDP (nominal) figures:
By performing a simple cross-analysis between countries by nominal GDP per capita, countries by Human Development Index, and the list of developed countries, we find that most developed countries have GDP per capita figures above 10K and most countries with GDP per capita figures above 10K are developed. Hence millennials should go forward with the quite realistic and commendable goal that every continent and region of the world should achieve a nominal GDP per capita of 10K USD within a generation.
I choose nominal rather than PPP because it’s not just buying a home, food, and clothing that matters — it’s also acquiring technology for education and lifestyle that is critical. And technology and modern equipment do not PPP-adjust the way other commodities do.
As we can see above, the world produces slightly more than enough wealth each year: 11.6K USD per head, which is remarkable. Around 1/2 of the world is poor, 1/4 is very close to being developed, and 1/4 is already very developed. We are closer than ever in all of history to eliminating mass poverty, which was considered impossible to remove for the history of civilization. The local-scale poverty problem at this stage is literally just a global-scale distribution problem. We don’t even have to reduce bias and prejudice, just avert it. I’ll explain this detail shortly.
11. GDP and Wealth Trends
I would like to make a few notes with regards to the total GDP and wealth figures. For reference they are:
With a keen eye, you can see that while poor, non-developed, and almost-developed regions (Asia, Latin America, Africa) control much less than half of the wealth of the world (37%) they command almost half of the nominal GDP (47%).
Moreover people with origins from the majority world control a small but significant percentage of the GDP of the US and UK. For instance, 13% of US small businesses are owned by minorities and 8 out of the top 54 billionaires in the UK are South Asian. Given these figures, let’s say minorities (40+% of the US, ~7% of Europe) control 10% of the GDP of the US and minorities control 1.5% of the GDP of Europe. Then, we’d already have that the majority of global GDP is not controlled by any one group (with 49.3% controlled by the unmixed global European diaspora). Of course the definition of Hispanic and control of African wealth by Europeans may push the European diaspora slightly over 50%, but that is or will quite soon be offset by East Asian control of American debt, real estate, and technology businesses. Remember, while GDP is not the derivative of wealth, it is a very rough proxy for the change in wealth because it reflects how much wealth a country is creating each year. This calculus is very important because it means that at last as we reach 2020, no one group is producing a majority of global wealth.
One note – we need to be careful regarding the “Asia sans IndoChina” figure because much of that large wealth is held by 120M Japanese and 50M Koreans leaving the rest of Asia sans IndoChina poorer — 6.7K USD per head, which is below our 10K cutoff for “developed” status.
At this stage, it’s important to note that the global scale problem (inter-country) is much more important than the local one to solve (intra-country). As you can see from this human development index by country data, as countries get richer they tend to sort out grotesque issues and make sure that there’s some baseline safety net, minimum wage, or welfare benefits for the majority of citizens.
Also it is important to consider the GDP growth rate of the West versus the rest of the world. The GDP growth rate of the West is around 2.2%, because the GDP growth rate of the European Union is 2%, the GDP growth rate of Northern America is 2.4%, and the GDP growth rate of Australia is around 2.2-2.4% as well. On the other hand the GDP growth rate of the rest of the world is 3.5% (grew from $39.7T to $41.1T last year), because the GDP growth rate of the world is 3% (grew $2.4T last year to $88T total) and the West whose GDP is $46.9T contributed only $1T of that growth.
Extrapolating out 3.5% GDP growth for the majority world and 2.2% GDP growth for the West, we see that the majority world should be able to control a majority of the wealth of the world within a generation. However, it is important to understand the mechanisms by which the majority-world will be able to do so. Specifically, later in this article, we will describe how the majority-world can train knowledge workers, whose abundance is key to producing affluent societies.
12. The Global Importance of Racial and Ethnic Diversity in the USA
As you can see from the above points, the United States dominates the global economy, wealth, GDP, and corporate world. These factors have strong influence on the entire world. Hence it is important that urban areas and corporate environments in the United States are majority-minority, diverse, and balanced in terms of power. This is right because decisions made in the United States’ corporate world impact the entire world.
The good news is that the United States is going to be majority-minority within less than a generation by 2043, and the country is already almost below 60% non-Hispanic white as of 2019. How corporate offices look will also change.
13. The Importance of Religious Diversity Including Atheism and Agnosticism
One wonderfully balanced power dynamic, which is already in place, is religious diversity. The world has 2.1B Christians, 1.6B Muslims, 1.6B followers of Indic Religions (Hindus, Buddhists, etc.), 0.6B followers of other and folk religions, and 1.2B agnostics and atheists. This majority-minority balance is and will continue to be in place.
Of course the richest people in the world may be overwhelmingly irreligious due to their education level, but this is still good since irreligion is the most balanced and unbiased category in terms of religious affiliation.
Right now, the world’s largest religious group controls 55% of the wealth of the world, which is slightly over half the wealth of the world. However, agnosticism and atheism is growing amongst the wealthy and well educated. Also, the wealth of all other religious groups is growing much quicker than the European dominated wealth of the largest religious group. So, we will very soon (within less than a generation) have majority-minority control of wealth even on the religious dimension.
If you look ahead to listicle point #22 you will see that no one religious group will possess more than 35% of the wealth of the world in a generation. This is assuming Asia, the West, Latin America, Africa, and India continue moving along their religious and irreligious trajectories.
Now I will proceed to cover potential solutions to the global wealth distribution problem.
14. Solution A – Immigration?
In a borderless world, labor would immigrate to sparser countries with better paying opportunities and hence GDP per capita (and populations) would even out throughout the world.
However, this is not feasible as it would require political will in the wealthy portions of the world. If the large developed countries alone had open borders, the poverty problems of the world could be eliminated but this is not easily done. Perhaps this may change with the United States becoming majority-minority by 2043, but perhaps that may not have an effect. Feelings of racial or ethnic fraternity with poor nations, by a then plurality in the USA, may be trumped by strict physical and economic borders. Also 2043 is a long time from now and the USA is only half the wealthy world.
Hence, I do not think immigration is the solution toward mass economic development.
15. Solution B – Production Offshoring?
China has achieved almost-developed status (soon to be fully developed) through production offshoring. China has become the world’s factory and is doing a fantastic job at it, and it has a big enough population and streamlined enough infrastructure that it will continue to be the world’s factory for the next generation, as it’s efficiency can provide the world the best prices on common goods. So other countries will have to find other, perhaps more creative means of making money.
Perhaps one avenue for India, Africa, and other poor regions to engage in physical production is to produce new innovative 21st century products like robots, drones, IoT devices, aerospace equipment, medical devices, and pharmaceutical drugs. However this requires advanced knowledge. Majority worlders will need to self direct their study through online courses (MOOCs) and online materials (github.com/gobid/knowledge-map-cheatsheets). This is a huge feat that requires incredible amounts of self-motivation by large numbers of people! We will touch on how we can incentivize this in a bit.
16. Solution C – Outsourcing? Bad First Impressions?
It’s much harder to be an effective outsourcing partner than an effective source of production offshoring. With production offshoring you just have to make the goods and ship them abroad. With outsourcing you have to do quality work for large international corporations, communicate effectively over cultural barriers and temporal off-set, and be responsive and efficient. 20 years ago India tried this, but the generation that tried perhaps did not do sufficient quality control, thereby losing credibility and market share in the world of software outsourcing. Now, there were some success stories (TCS, Wipro, Infosys). Still, compared to these Indian software tycoons, their Chinese counterparts who would shuttle between China and California, did a much better job at assuring required quality to Western audiences, though it’s easier to mass produce a lamp (or computer for that matter) than write software.
That being said I think it’s worth another shot in a post-Slack, post-MOOC world. Digital Nomad culture, distributed teams like Zapier, Automatic, and Buffer, and We Work Remotely have made remote distributed software teams a cool thing in the Western world. However there’s one caveat. The culture of these teams is still disproportionately Western, not international. They are primarily Western peoples distributed across the Western world (or Thailand). Take a look at the bottom (“Where We Work From”) of zapier.com/about/ to get an idea of geographic distribution — fantastic mission but a better inclusion of bright minds from majority world countries would lead to even stronger teams and also spread opportunities in a more meritocratic way. If such companies could embrace a United Nations-esque style of internationalism and diversity, they could help achieve a more balanced distribution of opportunity as well as draw upon bright minds from all corners of the world.
I think we need to move away from traditional outsourcing and toward truly international distributed teams.
17. Solution D – Conditional Cash Transfer, Incentivized Education, Globally Distributed Teams, and a dash of A, B, and C above
To achieve universal development across the continents within a generation, say by 2050, based on the above discussion of wealth and GDP, I think we need to create a $20T per year cross-industry transaction from rich corporations and consumers with specific needs, to people in poor countries rendering useful service.
This $20T will be distributed between India, Africa, Asia sans IndoChina, and some parts of Latin America. Note, not all of the wealth may flow from rich countries. Some wealth may materialize through internal economies, automation, better use of natural resources and energy, entropy reduction, and more efficient business processes. This $20T will allow India and Africa to get to 10K in per capita GDP, as well as for Latin America and Asia sans IndoChina to close their gaps toward 10K per capita GDP.
Over the next few points I will describe methods by which we can create majority-world industries that will achieve this $20T / year in production. But before that why does this matter to you:
Well, if you are reading this, it’s likely that you already are part of the global middle class and enjoy a respectable lifestyle of enough food, clean water, clean infrastructure and housing, consistent electricity and energy supply, internet, quality healthcare, and universal education, and freedom / exploration. But odds are, particularly if you are a person of color or mixed race, there are many people who look like you who do not enjoy a respectable lifestyle or decent standard of living. And that makes a big difference on how you, your background, your culture, your intelligence, and your respectability are perceived.
Yes, simply because people who look like you are less likely to live a respectable life with a decent standard of living, there are serious implications on how people perceive you.
Many societies around the world put that which is Western European on a pedestal. This is entirely derived from unequal wealth distributions, which in turn was formed as a result of the West’s 500 years of colonialism. If the majority world controlled the majority of the wealth of the world, and housed citizens living respectable lives, this racial bias would, in my opinion, certainly disappear globally.
Progress is happening daily towards this end. See worldpoverty.io/index.html for an interesting and positive graphic of how majority worlders are increasingly living respectable lives.
18. Start with Software, Expand to High-Value Industries
Information Technology is a $3-5 Trillion industry in 2019 that is growing at 4% per year. Technology and software increasingly disrupt every industry: agriculture, manufacturing, mining, water, energy, transport, media, finance, healthcare, and education.
[$5T] Software and IT
We can extrapolate that this growth will only continue over the next generation, because technology and software reduce entropy and increase order and efficiency in every industry. Even the most popular advances in medicine are influenced heavily by technology and software — think bioinformatics, genetics, robotic surgery, and machine learning assisted drug discovery for that matter.
At the rate of growth given, software and technology will be a $16T industry in 30 years. If the majority world can contribute to one third of that through endeavors of intense mass-education, entrepreneurship, product design and development, [$5T] of our $20T goal are already covered.
The key is for every tech company started physically in the US, there should be a competing team distributed across the majority world, competing for the world market on price, quality, and speed. The majority world should be able to compete because it has a thicker tail of the normal distribution of intelligence due to sheer population, and it also benefits from the same education (thanks to MOOCs and widespread internet access). Trump-esque immigration policies ironically may help the majority world by preventing brain drain. Only the incentive to study and a culture of education and creativity have to be in place, and conditional cash transfer (CCT) efforts hope to help with that.
Within IT, software is a trillion dollar industry and a great industry for the majority world to penetrate since its work can be done from anywhere with internet. Software is going to grow into a multi-trillion dollar industry, so let us hope that the majority world can produce software not just for itself (i.e. Flipkart) but for the entire world (i.e. Zoho).
A great way to sell across borders is to sell online. Zoho acquires many of its customers through online advertising. There is a standard playbook that Hubspot’s blog covers for marketing, sales, and branding across the internet. SaaS is a great way to start. I believe India’s Freshworks is a great example of this. They just use standard online marketing strategies to sell to US customers. They don’t declare to the world that they are a majority world company. They just compete effectively on the product and reach customers the same way everyone else does in the SaaS space: online. If a majority world startup really needs to build strong ties with large US companies, it certainly can. It can build ties with big American corporations through a local branch (i.e. Cisco India, Microsoft Africa), or it can setup a small Silicon Valley office just for networking like Zoho does.
The other benefit of software is that it doesn’t have the high initial startup costs that other industries have.
Smart majority world entrepreneurs, please take this opportunity to start a software startup. Preferably a B2B SaaS product, targeting the US market, which is the largest market in the world.
Data Centers and IT Maintenance – India has started building a number of its own Tier 4 and Tier 3 data centers (like Pi) to support its huge internet-connected population (~600M, or half its population). Building high quality and secure, yet affordable and easy-to-migrate-into data centers and cloud infrastructure is a huge opportunity for entrepreneurs in developing countries. In particular, startup companies will seek to host their software on the most economical cloud possible, and majority world cloud hosting (like Pi) can provide economical alternatives to AWS and Google Cloud.
Smart majority world entrepreneurs, take up this challenge to provide the world significantly more affordable cloud hosting than AWS / GCP / Azure and easy migration from AWS / GCP / Azure.
That being said even if AWS / GCP / Azure win in India and Africa, it will still benefit locals as they will be employed by data centers. Still, it would be interesting if developing countries could run cheaper data centers than developed countries and compete for the global cloud market on price.
Beyond software and IT, entrepreneurs in India and Africa can help their regions achieve significant GDP gains by seizing opportunities in other industries, but they will be most successful if they use tech to disrupt these industries as they penetrate them:
[$1T] Agriculture and Fishing
Every country does these activities already and most developing countries have strict laws to protect farmers and fishermen, so further mechanization (there’s already a lot) will only come after significant urbanization. That being said in Africa (not necessarily India), there is tremendous arable land that is not used — more land than the total cultivated land in the United States. Africa holds 60% of the world’s remaining arable land. Considering agriculture contributes $1T to the US economy, Africa should be able to produce $1T more agriculture per year.
African entrepreneurs, do some data analytics to find the locations and crops that will yield best returns globally. Then start some farms.
[$1-4T] Complex Manufacturing, Reducing the West’s Cut on Textiles
A significant amount of manufacturing is already outsourced to China, and you can see why poorer countries will have trouble seizing much of the manufacturing industry.
[$100B-$2T] However, I do think the poor countries like India can make some strides by manufacturing pharmaceuticals to sell to both the West and China. If one adds opportunities in medical device manufacturing and healthcare services, the majority world medical manufacturing and services industry could be much larger (in the trillions), especially as internal economies develop (consider that the US alone spends $3.5T on healthcare). The critical thing here is to focus on the education and training of a medical industry workforce capable of research and development. Incentivizing this education is the purpose of conditional cash transfer endeavors, whose goal is to produce educated teams that can create such sophisticated technology.
Smart majority world entrepreneurs, please start some impactful pharmaceutical and medical device companies.
[$1-2T] Other high value manufacturing industries, penetrated but not yet saturated by East Asia, are aerospace, extremely innovative electronics (think iOT devices, VR devices, deep learning hardware, and other new areas), biotech, robotics, and certain types of computing equipment. These are very high value industries that can bring in considerable wealth. However, startups out of the majority-world can’t compete outright with Korean, Japanese, and Chinese electronics giants. Startups will have to focus on promising but niche and specialized research areas that can command big wins if done right.
Some good news on this front is that Apple is now manufacturing iPhones in India, Russia is going to manufacture nuclear fuel in India, and that India is looking to attract medical device manufacturers. Hopefully India and Africa can soon design and manufacture electronics and devices of their own as well.
Smart majority world entrepreneurs, you have the unique advantage of an incredibly affordable price on skilled labor. Take advantage of this to design and build unique physical technology and sell to the world.
With respect to other less education-intensive manufacturing, poor countries are already doing textiles, though they can probably take more of a share (and cut) away from Europe. Companies like H&M may hire a few designers in Sweden, but the majority of their workers are in garment factories in Bangladesh. Bangladesh and India make a huge fraction of the clothing of the world and yet they see very little of the money. Why can’t South Asian entrepreneurs design, make, and sell clothes to the rest of the world, without European and American corporations (Calvin Klein, Banana Republic, etc.) taking such a big cut? What is stopping majority world designers from trend setting around the world, turning both standard and ethnic inspired fabrics into products that are appealing to global markets? If you can partner with retailers like Target, Walmart, Macy’s, TJ Maxx, and Nordstrom then do so, but if you need a foot in the door then take advantage of e-commerce and some computer vision startups that let customers try on clothes virtually.
Smart majority world entrepreneurs, start some unique clothing brands that highlight your region's creativity but also have global appeal.
“Made in the USA” and “Made in Italy” are statements of pride.
“Made in Ethiopia”, “Made in Vietnam”, “Made in Bolivia”, “Made in Indonesia”, and “Made in India” should also be symbols of pride.
Or, how about a new powerful and uniting label:
“Majority World Made”
“Made in the Global South”
“Made by People of Color”
“Product of Africa”
“Product of South Asia”
“Product of Southeast Asia”
[$1T] Mining, Forestry, Oil
Africa can gain a significant amount of GDP from mining and forestry. Currently the world mining industry does $0.6T per year and the forestry industry does $0.3T. Africa holds 30% of the world’s remaining natural resources and 17% of the world’s forest (but only 9% of the world’s forest use). It is a controversial suggestion environmentally-speaking. It is important that African entrepreneurs who take up the opportunity in forestry plant many trees to ensure sustainability, for both the environment and business. Reforestation can be part of successful business models.
The global oil industry does $2T per annum. Africa has at least 105,000 million barrels of oil in reserves, if not much more, but does not produce nearly as much oil as the USA which has considerably less. Hopefully oil production like forestry will be done in a measured way, with the eventual goal that it will fuel economic and human development, which in turn will lead to a society capable of clean energy investments.
In total, I believe there is a $1T opportunity here for Africa.
Smart African entrepreneurs, please use your natural resources for economic gain before other countries do!
* EDIT. Perhaps I have been a tad too bleak regarding India’s natural resources. I took a look at the world’s most important natural resources and found India is certainly not poor in natural wealth:
- coal (India 2nd/1st)
- oil (Africa and Venezuela are strong)
- natural gas
- phosphorous (Morocco dominated)
- iron ore for steel (India’s steel production is 2nd)
- arable land (India 1st)
Thankfully corruption is also reducing in India (perhaps due to the Modi government) so such natural resources can be extracted and used more efficiently. Overall India seems to be in 4th place in natural resource development. India also has lots of sunlight. India can use coal and solar to power its economy, steel to grow its infrastructure, and its arable land to feed its people. It really shouldn’t need to import much oil and refined products if it builds out an electric transportation infrastructure (intra-metro and long distance), and if it builds its own refined products and factories.
[$3T] Tourism and Travel, especially for Millennials
Millennials world-wide, and in particular rich and diverse American millennials, are open to traveling to new places, in search of fulfilling experiences over sheer material luxury. Chinese millennials are also traveling a lot. Unlike previous generations, Americans and Chinese are as open and able to travel (respectively) as their European counterparts. Millennials in general are less prejudiced, more thoughtful, well educated, and more open to exploration than previous generations.
They increasingly use Airbnb and hostels rather than traditional hotels. They seek social interaction and rich experiences. They carry a “backpack of apps” such as Yelp, Zomato, Google Maps, and Ways. Many millennials and up to 2% of US workers say they are digital nomads with another 11% saying they plan to be, and 27% open to it.
This is an incredible trend. Once millennials start leading corporations, workers will have more freedom to “go remote” and enjoy their life while building a career. Remote Year and Hacker Paradise are leading this endeavor but they are costly. Self-organized trips involving Airbnb and living like a local are also popular.
Travel and tourism account for $8.8T or 10.4% of global GDP, and comprise a burgeoning sector, growing at 3.9% per year. Within the next 20 years, the travel and tourism industry should grow a full $10T to $18T total. The main poor countries (not counting Mexico and China which are almost developed) that attract tourists are:
Majority World Winner: Thailand (38M)
African Winners: Morocco (10M), South Africa (10M), Tunisia (6M), Egypt (5M), Zimbabwe (2M), Algeria (2M), Nigeria (2M)
African Total: 58M tourists
American Winners (Developing Countries Only): Dominican Republic (6M), Cuba (4M), Peru (4M), Colombia (4M)
American (Developing Countries Only*) Estimate: 50M tourists
Asian Winners (Developing Countries Only): Thailand (38M), India (15.5M), Indonesia (12.9M)
Asian (Developing Countries Only) Estimate: 102M tourists
Middle East Winners (Developing Countries Only): Iran (5M), Jordan (3.8M), Lebanon (2M)
Middle East (Developing Countries Only) Estimate: 8M tourists
*By “Developing” we mean <~10K GDP per Capita.
From the above, we can see that the world’s countries overall attract 1.3B tourists but half of the tourists are just going to Europe and 1.1B tourists are just going to already developed areas. Only 210M (of 1.3B total) tourists are visiting developing countries, which is a shame since developing countries are more diverse, more authentic (less commercial), and significantly more affordable travel experiences.
All developing countries need to follow Thailand’s example in creating attractive tourist experiences. They need to attract millennials using social media advertising and discounted airfare packages. They need to promise unique experiences that cannot be found elsewhere: experiences that will attract millennials and their experience-hungry minds.
Developing countries should master such tactics. They need to embrace the tourism market like Iceland does. India’s 15.5M tourists for its population size is pathetic. There need to be 10-50x the number of Taj Hotel quality enterprises, but better tailored, packaged, and marketed (think social media) to millennial tastes for authentic experiences. Same for Africa. India and Africa need to make the animal safaris, nature, and villages easy for millennials to desire, access, and experience. Conveying safety is also critical.
Of the $10T growth in travel and tourism, developing countries should capture at least $3T of that growth. Its tourism entrepreneurs should offer ridiculously appealing experiences, competitive on price and authenticity. Majority world hospitality entrepreneurs, you can even make the long plane ride there a cultural experience for your audience. And remember your audience comes overwhelmingly from the following countries so cater to whatever they want and serve them like gods, so they don’t want to leave and keep coming back:
- China – $257B spent on tourism (5% growth rate)
- USA – $135B spent on tourism (9% growth rate)
- Germany – $89B spent on tourism (9% growth rate)
- UK – $71B spent on tourism (2% growth rate)
- France – $41B spent on tourism (1% growth rate)
- Australia – $34B spent on tourism (8% growth rate)
- Canada – $32B spent on tourism (9% growth rate)
- Russia – $31B spent on tourism (30% growth rate)
- South Korea – $31B spent on tourism(12% growth rate)
- Italy – $27B spent on tourism (9% growth rate)
[$1.5T] Transport, Particularly International
Ethiopian airlines is to international transportation as Zoho is to software. They are the developing world’s trailblazers in capturing international markets. If majority world entrepreneurs can offer Americans, Europeans, and East Asians much more competitive airline prices than their local airlines and Middle Eastern airlines do, then there are considerable opportunities. Locally built planes that are locally staffed and locally fueled can make running an airline much cheaper. One interesting strategy may be to connect popular but Tier 2 cities (Chicago => Algiers => Geneva).
If Africans can refine their own petroleum (rather than rely on the Middle East) then they can save a lot on the costs of running an airline. And, expose them to local culture so they make a dedicated tourism trip down the road. Think about what Nguyen Thi Phuong Thao did with VietJet in Southeast Asia and extrapolate internationally.
It’s not just human transport. Can the majority world disrupt the airline shipping industry for express shipments across the world? Perhaps, African and Indian entrepreneurs may need to investigate if and how they can compete with FedEx, UPS, and DHL.
The airline industry supports $2.7T of global GDP today. In the game of prices, African and Indian airlines may be able to participate. With more and more of the world flying, the airline industry should double in size, and if poor countries’ entrepreneurs can capture just a bit over half that value by starting airlines, then they should capture at least $1.5T. India has such a huge intelligent workforce and it should be manufacturing its own planes. It shocked me a lot that there is no Tata Motors of airplanes. There are no Indian companies producing airplanes, despite the fact that cars are manufactured in India (though not nearly enough).
What about ships? Well, it turns out that Western and East Asian corporations control a good fraction of the merchant ships of the world. As with air transport discussed above, perhaps entrepreneurs in Africa and India can investigate building more ships at home and entering the global shipping market.
In summary, India and Africa have potential to contribute significantly to the growing global transportation market.
Smart Indian and African entrepreneurs, let's introduce some healthy competition into global transportation and logistics.
There is not a huge amount of money to be made from the world in this sector, but if an entrepreneur can figure out how to affordably sell water filters to poor communities so they benefit from cleaner drinking and bathing water, then that would be a remarkable feat, that would make people healthier and more productive. Making them see the benefit (to want to pay for it) is a challenge. Or, one can take a B2G play in some countries where the ‘G’ is reasonable.
Construction is primarily a product of a positive feedback loop of successful development rather than a primary driver of development. China’s GDP from construction is around $0.8T, and since the rest of the developing regions of the world combined are about twice the size of China, natural development should automatically spur a construction GDP of $1.5T at least.
[$1T] Real Estate Development
Claims have been made that real estate in China is up to 20% of the GDP. This may be quite high, but it’s established that real estate contributes to 6% of US GDP. Like construction, real estate development is a natural consequence of overall development and part of a greater positive feedback loop. Hence, I would say real estate should be another $1T or 5% of the overall goal of $20T.
Smart majority world entrepreneurs of means - convert land into quality high rises, and if demand is high, you will profit like DLF. This is a crowded market, though, particularly in India.
It seems that a developed society spends around 5% of its GDP on energy, so in order to achieve a $20T total GDP, entrepreneurs and governments will have to create a $1T energy sector. China has a sector that is 30-40% “clean” (renewable or nuclear, better than the US), and it would be good for sunny developing countries to adopt portfolios that are dominated by cheap solar and other clean energies. Now, that India is fully electrified thanks to the Modi administration, it needs to generate enough electricity to get round-the-clock power.
Clever majority world entrepreneurs of means - invest in strategic solar, wind, hydropower, geothermal, and nuclear plants in increasingly strategic locations (think about industry and housing).
[$0.25T] Medical Tourism Packages
Thailand and Mexico are leading in this sector, bolstered by its huge tourism industry and its plethora of accredited hospitals. It derives $5B from medical tourism each year. India also benefits from $2B of medical tourism. Many countries have JCI-accredited hospitals, which make them able to serve customers from the United States. However, this only scratches the surface of demand for quality healthcare from rich countries, particularly the USA. Poor countries must take a few measures to truly seize this opportunity.
First, they must train a surplus of qualified doctors (which they currently don’t have) and create a number of JCI-accredited state-of-the-art hospitals. The benefit of JCI-accreditation is that such hospitals would be able to take Medicaid and Medicare.
- Cuba you may notice has a huge number of doctors (almost 1% of their population) and should certainly seize this opportunity to attract more medical tourism. Its problem is political – it doesn’t allow private hospitals.
Second, majority world medical entrepreneurs must market medical packages, akin to all-in-one tourist packages, in a manner that assures safety and trust as well as appeal (think American accreditation seals and partnerships). I googled “heart surgery in India” and got one result from “Indicure“. When I googled “heart surgery too expensive” sitting in Madison WI, I got nothing. No Indian, African, or Southeast Asian hospital marketed to me what flight-included medical packages they could offer me. There was no streamlined online booking process the way Expedia or MakeMyTrip would offer. No “Joint Replacement in India – $3000”, giving me an option so I don’t have to pay $30K locally.
That being said most Americans have private health insurance or medicare, so people don’t care – it’s the private insurance companies and Medicare that majority world entrepreneurs may have to target. The advertising and marketing should be so strong that private insurance companies and Medicare should be able to offer discounts to Americans who are willing to accept equally good healthcare abroad. It is important for Indian, African, and majority-world medical entrepreneurs to do everything possible to convey trust to private insurance companies in the US (and then to Medicare itself). This is so that the West feels confident enough to embrace the cost benefits of medical tourism and collaborates on medical tourism packages.
Thirdly, telemedicine is an excellent route to building up trust and also creating more income. If I’ve never used a doctor in India, when I’m struck with a heart ailment, would I take the risk to fly across the world and get treated there? Even though it’s cheap, perhaps I still may pay 5-10x more for that local guarantee.
But, what if majority world medical practitioners and entrepreneurs could earn the trust of the residents of the US and Europe over the course of time through telemedicine for smaller ailments. Consider an Upwork for Doctors. There are platforms for asking local doctors one time questions, like WebMD, JustAnswer, and HealthTap. But, why is there no way to build a long term relationship with international doctor(s) online?
I should be able to login and view all my conversations with my globally distributed doctors of various expertises across different areas of medicine. I should be able to ask them questions over quality video chat (Zoom has telemedicine capabilities it seems). I should be able to deal with all my usual ailments in this way. This would be a way for patients to affordably (say $10-$50/month) talk to medical experts from all over the world, without having to spend exorbitant amounts. If such platforms could create partnerships with private health insurance companies and government provided health insurance programs, that would be even better. Such telemedicine has a serious cost appeal.
If the need ends up requiring a prescription medicine, perhaps an online doctor can even do that. Making this work across borders, where a foreign doctor can prescribe you a drug, may be legally difficult, perhaps even if that doctor’s institution is JCI-accredited. I have asked this question on Quora but am still waiting for decent responses. That being said, smaller over-the-counter issues should be possible to resolve through such an “Upwork for Doctors” via telemedicine, who may be able to point to online but physically local doctors who can write the actual prescription if needed.
Once a patient has built up relationships with a few doctors across the majority world, he or she may be more inclined to visit JCI-accredited hospitals abroad for surgery or other more serious treatments.”
One final trick to get people on board would be free trials. I’ll discuss free trials as an approach for marketing services and products made in the majority world at the end of this bullet point.
Medical tourism will apparently soon achieve double digit yearly growth. Right now, Thailand and Mexico are dominating with India coming in third but India can train a huge number of qualified doctors due to its sheer population, and it can create a large number of JCI-accredited hospitals to cater to a large number of medical tourists and telemedicine customers. Medical tourism is set to grow to a $50B industry by 2023. It would be good if the medical tourism industry can maintain a strong 13% growth rate with the above measures in aggressive marketing and branding for security and trust — building trust through telemedicine, packaging deals with flights, and perhaps even Buddhist-inspired “relaxation” tourism and recovery. At this rate medical tourism can become a $0.25T (250B) industry within the next 20 years.
Smart majority world entrepreneurs, please take these opportunities in medical tourism.
[$3T] Banking and Fintech
‘Global Banking Penetration is at 69% and is growing at around 2% per year. Recent growth has been driven significantly by India, which has reached 80% banking penetration. Since 2009, Aadhaar cards have identified Indians. Since 2014, Modi’s Administration has helped most Indians open bank accounts. That being said, many bank accounts still need to be used and connected to mobile payments.
This article by Plug and Play captures a lot of what’s going on in the African fintech space with M-Pesa and Flutterwave. If only India’s banking penetration could be combined with African use of mobile payments would developing countries be able to leapfrog toward efficient modern payment and increased efficiency in agriculture, services, and industry.
Banking and Financial Services comprise a significant fraction of global GDP (16%). So, overall we expect $3T of the $20T to come from banking and fintech. Unlike real estate development however, banking and fintech are high-tech areas where entrepreneurs can build something great from almost nothing. Fintech endeavors have another positive externality: accounting for money can reduce black money and strengthen government, as well as reduce overall entropy and create more opportunities for entrepreneurship in areas like e-commerce and online work.
Still, it seems that cash is king. To get people to store more of their money in the bank and go cashless with apps like PayTM, it may be important to incentivize them to do so with good returns or amazing services and products that are bought online. This may simply come naturally with a more advanced economy, but it may also come due to increasing use of apps to buy products (e-commerce), pay for transportation (public transit and ride-share), pay for groceries and food (delivery apps), pay for rent and utilities and healthcare (more franchised and larger scale apartments and hospitals), and pay for telecom services.
As companies scale up, they may prefer their consumers to pay in a lower entropy way: digitally through an app. This is something that millennials of the growing global middle class will pick up easily.
In essence, much of the success of the $3T banking and fintech industry will rely on scalable franchises taking control of all aspects of life from retail to transportation to real estate (like they do in developed countries). As people value their time more, become more educated, and trust banking more, they will also naturally go cashless. They will better appreciate the returns on investment that banks provide through interest rates that cash sitting at home cannot. Also as more people work online for distributed global teams, they will begin to receive and manage their money digitally, and hence be more inclined to spend it digitally as well.
- Side note: It’s incredible when you realize that 36.7% of global currency transactions or $1.85T per day move through London. Why should an intermediate country still get a cut of money that moves between say Indians and Africans for instance? Whether fintech entrepreneurs in India and Africa use technologies like blockchain or use standard digital money moving methods, they should not have to rely on banks in London. Indians and Africans should set up their own forex services and compete aggressively with overpriced forex. The wealthy city of London will do just fine without those extra commissions.
Smart majority world entrepreneurs, take these fintech opportunities.
[$1T] Destination Retirement & Expat Services
This is an extension of construction and tourism, but worth noting. The average retirement of a person from a developed country costs roughly around $1 million. The cost of an upper middle class retirement in a developing country on the other hand is just $100K. The cost of a luxurious retirement may be $300-500K, still much cheaper than retirement in a developed country. Think of the packages majority world entrepreneurs of developing countries could offer seniors. Getting the marketing right and targeting it to the social media and traditional media channels seniors in rich countries are looking at is absolutely critical. Free trials may help, as well. Why Pensacola when you can retire in Tanzania for 1/4 the cost and much more luxury?
You can do much better than The Best Exotic Marigold Hotel. You can even let them split time between their home country and expatriated one. You can couple the packages with healthcare and promote the medical tourism industry.
400K Americans are retiring abroad and the trend is growing. Think of the world exploration packages you can offer retiring late Boomers and GenX’ers. You can sell to company retirement plans and other retirement groups to create expat communities. Many Westerners end up in retirement homes, but you can make the retirement experience much more comfortable, luxurious, and happy than the current state of retirement homes in the West. Plus, you can afford to fill the homes with lively youth that will take care of the elderly — something unaffordable in the West. Bundle the packages with pre-paid periodic flights for their family members to visit, with tourism benefits included. Make the retirement experience all about exploration, luxury, and zero stress, and you will succeed in attracting the increasing number of people who want to spend their retirement exploring in luxury and being able to afford healthcare. If you can raise 400K expatriating retirees or 0.1% of the US (0.04% of the West) to say 1% of the US (or 0.3% of the West), you can give people meaningful retirements while also gaining 3M*$300K = $1T in GDP.
Smart majority world entrepreneurs, please seize this opportunity.
An Aside: Customers from developed countries are naturally wary of important products and services being outsourced. One trick that majority world entrepreneurs can use to get developed world customers to trust your service is a substantial free trial. You can do free trials for everything: freelance work, software development, manufactured products with a return policy, international transport via your country, cloud services, tourism packages (like Singapore’s free day tour for layovers), medical tourism, retirement experiences, etc. Majority world entrepreneurs – use the free trial strategy to build the trust of Western and East Asian customers.
So we made it to $20T
And so, if smart Asian, African, and Latin American entrepreneurs can orchestrate all the above within 20 years, then the total GDP gains come out to be at least $21.25T, which is slightly more than our desired $20T.
The real crux of embracing any of the above opportunities (that are all available today by the way) is having a large population of smart, educated, and capable majority-world entrepreneurs, engineers, scientists, medical professionals, and designers to orchestrate all the above.
As we have seen, there are plenty of opportunities above, and what’s really needed is a few people in the majority world who have entrepreneurial and scientific intelligence to start enterprises. They must understand the nature of their own people and cleverly navigate through bureaucracy, and sell quality products and services to the rest of the world.
But, we cannot depend on governments to educate such a population or develop the countries because not all countries are going to be as lucky as China who had brilliant economic leaders like Jiang Zemin, Hu Jintao, and Xi Jinping. India, some may say, is lucky to have Amit Shah and Modi. Still, instead of blaming corrupt governments, majority world entrepreneurs must treat government as a standard expense to minimize or obviate entirely through clever use of technology.
Ensuring that the majority world can pump out enough smart and educated people (who can capitalize on the opportunities above) is the major challenge. How do we produce this population of smart entrepreneurs and knowledge workers who will take the above opportunities? This is where we hope to propose a solution by combining traditional conditional cash transfer with massive online courses (MOOCs), distributed teams, and internet-mediated business.
19. Create a STEM workforce and Entrepreneurs through High Tech Conditional Cash Transfer (CCT)
When I was in my masters at Stanford from 2016-18, I did a passion project called Conditional Payments Incentivize Online Freelancers to Learn Skills (with some advice from Prof Michael Bernstein). This project provides insight into how we can produce a population of smart, majority-world entrepreneurs and knowledge workers.
“Conditional cash transfers (CCT) are payments made conditional on the actions of the receiver upholding the condition at hand.” For instance, learners are only paid if they meet an objective or pass a test. This conditional nature has been found to be crucial.” Literature suggests that conditional cash transfer is not a silver bullet but it does work. In traditional CCT, payments are made for school attendance or performance, behavior that has long-term benefit. As my report mentions, conditional cash transfer has resulted in improved performance in high school and college students, particularly minorities. CCT has been very effective in non-OECD countries such as Mexico, Colombia, Kenya, India, and Bangladesh.
I performed a study where online freelancers (developers and marketers) were paid to learn, and demonstrate abilities in, a series of skills required for their respective positions. While in traditional CCT, payments are made for school attendance, our CCT paid online freelancers for completing learning milestones in a contract that converts to an hourly-rate job immediately upon training completion. There were 4 payment brackets — low, medium, high, and capacity — the last of which was the self-reported earning capacity of the freelancers. We hypothesized that freelancers would be okay with lesser-than-capacity payments for learning than for doing regular work, since the learning increases their future earnings. In particular, the hourly-rate available after the paid training pipeline was significantly higher than their existing capacity.
What I found was that all freelancers made non-trivial progress thanks to the paid training milestones, despite most of the milestone payments being lower than their earning capacity. Moreover, payment level actually predicted milestone completion for more complex work like software development. We thought this was the case because learning software development (compared to marketing) takes a long time. One has to learn the syntax of a language like Python, learn debugging, and learn how to architect and write an application. A greater financial incentive can really help one keep at it.
Based on the above short research project, and the wealth of convincing research on the effectiveness of conditional cash transfer, I believe that paying people to learn complex skills can produce the skilled, majority-world knowledge workers we need for global economic development and achieve the universal development and power balance stated at the beginning of this article. Specifically I propose the following MOOC-driven pipelines for the following professions:
SOFTWARE ENGINEER PIPELINE (this pipeline is in active use at LDT)
|$15+||English Language, Grammar, Idioms|
|$30+||Introductory Computer Science, Source Control, Internet Concepts, UNIX|
|$15+||Computer Science Lab Practical (i.e. via Codility)|
|$30+||Resumé and Portfolio Project Prep|
|$40+||Elective Demo Project 1 (instructions)|
|$40+||Elective Demo Project 2 (instructions)|
|$170+||Total Incentives Paid to Successful Candidate|
|$400+||Total Cost to Incentive Giving Organization (CTIGO) |
covers for the sunk cost of program dropouts
Now the pipeline above ^ for training software engineers is actually live and functional. Hundreds of bright people, particularly from majority world countries, go through the paid training pipeline, and become professional software engineers, deployed onto contract or full-time roles. So in fact, the research project I did during my masters was converted into a workable business model.
Initially we can pay the amounts stated above because there are lots of people in the world who are “almost job-ready” or extremely self-driven, and just need a little financial boost to fully educate themselves and attain professionalism. However, as we saturate the low hanging fruit, we will need to offer more financial incentive to produce more professionals out of less and less “job-ready” / formally educated people. These people will need to spend more time studying and hence will need more of an incentive.
Now, there is one other cost. For every success story, we’ve found there are around 10 dropouts, who go part way through the pipeline and end up costing us some money. Overall, to cover for dropouts, if we’re paying out $170 in incentives then our CTIGO (cost to the incentive-giving organization) ends up being around $400 (~2.35X). This is still a reasonable cost for producing a software engineer. Saturation of people for whom such incentives are appealing will only happen when their nation is getting close to being a developed state.
Now that is the cost of producing a job-ready software engineer. What about other high demand roles, needed to economically develop a society?
Well I’ve sketched out a couple:
|$15+||English Language, Grammar, Idioms|
|$15+||Design Theory / “Design of Everyday Things”|
|$60+||Arithmetic, Algebra, Geometry, and Calculus Fundamentals|
|$15+||Mechanical Engineering Fundamentals|
|$15+||Electrical Engineering Fundamentals|
|$15+||UX Design Fundamentals|
|$15+||UI Design Fundamentals|
|$15+||User Research Fundamentals|
|$30+||Resumé and Portfolio Project Prep|
|$40+||Elective Demo Project 1|
|$40+||Elective Demo Project 2|
|$305+||Total Incentives Paid to Successful Candidate|
|$700+||Total Cost to Incentive Giving Organization (CTIGO) |
covers for the sunk cost of program dropouts
|$15+||Startup School (YC)|
|$15+||Design Theory / Design of Everyday Things (if needed)|
|$15+||UX Design Fundamentals (if needed)|
|$15+||UI Design Fundamentals (if needed)|
|$15+||User Research Fundamentals (if needed)|
|$15+||Branding Fundamentals (if needed)|
|$15+||Business Operations Fundamentals|
|$15+||Business Development Fundamentals|
|$15+||Engineering Management Fundamentals|
|$15+||HR and Recruiting Fundamentals|
|$15+||Customer Success Fundamentals|
|$15+||Understanding Feedback and Strategic Decision Making|
|$15+||Pitch Deck and Executive Summary and Business Model Canvas|
|$200+ INVESTMENT||MVP Demo|
|$1000+ INVESTMENT||Product that has Paying Customers|
|$255+||Total Incentives Paid to Successful Candidate (doesn’t cover investments)|
|$600+||Total Cost to Incentive Giving Organization (CTIGO) |
covers for the sunk cost of program dropouts
(doesn’t cover investments)
So far we’ve given a brief sketch of how a CCT might work for training software engineers, designers, and entrepreneurs. However, it may be possible to train scientists, traditional engineers (Mechanical, Electrical, Civil, etc), and doctors with such pipelines as well.
Note, such market-driven CCT programs, which leverage online learning resources, are not intended to replace existing schools and colleges, but rather to make them more effective by providing incentives to learners to hit rigorous milestones. These proposed CCTs hope to bridge the gap between student status and professional practice. The idea here is to augment existing learning infrastructures with a focus on market-driven talent needs.
In fact for such a pipeline to work for these more “lab intensive” professions the CCT giving organization will need to be at a large enough scale so that it can arrange for partnerships with local colleges and high schools (which likely have some existing infrastructure) to offer visiting lab space for participants (who are not necessarily affiliated with the institution).
Now, let’s take a step back and look at the cultural impact. Wouldn’t it be a dream to live in a world where the streets of Mogadishu, Addis, Accra, Abuja, Karachi, Caracas, Medellin, Managua, Indore, Dhaka, Kanpur, Patna, Pune, Vientiane, and so on were plastered with styled billboards reading:
- $150 Reward for Learning Multivariate Calculus
- $300 Reward for Learning UNIX
- $150 Reward for Learning UX Fundamentals
- $600 Reward for Learning Biostatistics
- $300 Reward for Learning Quantum Mechanics
- and so on, …
People just have to pick and choose, learn and earn – easy. For motivated people, such CCT would be more lucrative than the informal economy or criminal activity selling cocaine or joining gangs, the mafia, or pirates.
The motivated people will self-direct themselves through whatever online materials, MOOCs, and question answers they need, because they’re set on earning an intermediate cash reward and also establishing a lucrative career long term.
Now, even the developing world has a huge university-attending population, but the quality of the universities is questionable. The commercial CCT we propose will help this population, as it will provide motivated students with a cash incentive to achieve specific scores on standardized examinations that ensure mastery of subject material.
This conditional cash transfer is distinct from other government sponsored CCT’s because it plays well with capitalism. It’s part of a scalable, for-profit business model which connects these trained people to well-paying jobs. (Or it leads to successful new business in the case of the entrepreneurship pipeline.)
The intent of this CCT we have presented is to create a class of individuals of the majority world who possess entrepreneurial and scientific intelligence:
This group of majority world entrepreneurs needs to be well educated, bold, persevering, charismatic, clever, frugal, cognizant, self-aware, informed, resourceful, empathetic, and strategic with time.
They should have mastered a significant fraction of established knowledge through MOOCs, but they should also be well-read, film-aware, well-traveled (i.e. poor country denizens can visit other poor countries visa-free and cheap), well-networked, startup-aware, physically healthy, emotionally balanced, groomed, inspired, fun-loving, exploratory, politically plugged-in, and financially smart.
The MOOC craze is underrated, not overrated in my opinion, for it offers the poor of the world scientific wealth and indirectly financial wealth. Entrepreneurs of the majority world must capitalize on these free, high quality knowledge sources.
Daily they must articulate a problem or need, estimate its market size, analyze competition, and iteratively execute on unit economics and revenue generation. The majority world entrepreneur must know who has money and who does good work. They must do marketing, sales, operations and finance, bizdev, tech, hr, design, branding, and customer success. They must know their impoverished country is the underdog but turn that into a strength.
In summary, the opportunities are there. The problem is the majority world doesn’t have enough enterprising, educated people to take these opportunities. Hence, we have proposed a market-driven conditional cash transfer to produce that population of majority world entrepreneurs and knowledge workers.
20. Hide the Team and its Color behind its Product, if Appropriate
While in some cases brandishing “Majority World Made” or “Made by People of Color” may have a positive business result, in other cases it may have a negative one. Entrepreneurs will have to figure this out. In some cases, it may be key to build amazing products and services (like Zoho), but not make the team’s race, color, or location the focus (like Andela). Let the product speak for itself. Most customers won’t care whether the person working at the company is black, brown, or white, or poor or rich. All they care about is that they get a good price on a quality product or service.
Majority world entrepreneurs must take advantage of their greatest resource: intelligent, young, and extremely affordable labor. “Conditional Cash Transfer” inspired talent development simply hopes to educate this talent so they can be deployed onto real world problems and projects as discussed above.
21. Invest Heavily in R&D and Develop Institutional Knowledge
Majority-world entrepreneurs and scientific leaders must invest heavily in differentiated niche R&D. Just as East Asian companies (esp. the Tigers, China, and Japan) have focused on specialized electronics and advanced manufacturing (cars), majority world companies must find their niche. Perhaps it will be innovations in software or products in the space of Human-Computer Interaction and Artificial Intelligence. Perhaps it will be in intelligent software systems that are able to strategize real estate development or natural resource usage. Perhaps it will be R&D in affordable aerospace equipment, easy international payment methods, solar power, or medical drug discovery. While entrepreneurs and large majority-world companies will have to invest a larger fraction of money into R&D than they are used to, they also will benefit from having a much less expensive research workforce to support than developed nations.
Some discoveries may not be research / R&D, per se, but a form of uniquely deep institutional knowledge, which most great world corporations are in possession of. Walmart, McDonalds, Amazon, CVS, J&J, and Wells Fargo may not be unique ideas but they have a great deal of deep institutional knowledge about the American people to whom they serve and sell products and services.
In the same way, majority world entrepreneurs must be focused about developing institutional knowledge about their developed world customer base and their majority world work force.
Such practices solve immediate business problems in the short term, but as they grow they become the business’s competitive advantage, and they become so complex and intricate and far-reaching, that the business becomes immune to copycat competition.
Majority-world businesses will have to develop robust institutional knowledge of how to coordinate local labor and global customers.
22. What will we have in the end?
After a generation of doing all the above (20-25 years):
- Control of wealth will be “majority-minority”. In other words, no one group or race should control more than half of the wealth or GDP of the world. What I think it will work out to be:
- Asia sans IndoChina – $65T GDP, $275T Wealth
- the West – $70T GDP, $500T Wealth
- by then racially diverse:
- minorities constituting 55% of US, 20% of EU, 32% overall
- China – $40T GDP, $200T Wealth
- Latin America – $10T GDP, $30T Wealth
- Africa – $15T GDP, $60T Wealth
- India – $15T GDP, $60T Wealth
- Note I expect the strategies mentioned above will generate wealth growth in majority world countries, similar to that which China experienced between 2000 and 2016 or around 17% per year (much higher than GDP growth by the way).
- I reduced it a bit for India since it has few untapped natural resources.
- I expect half the growth for Asia sans Indochina since it’s further along than India and Africa in terms of development on average.
- I expect a third of the growth rate (5.7%) for China going forward since it’s almost developed as well.
- I expect a smaller growth rate for Latin America since it’s almost developed, but I expect its wealth to go up to a good multiple of its GDP as its nations fully develop.
- I expect some steady growth (5%) for the West.
- Universal development of the continents:
- All regions should have a nominal GDP per capita >= 10K USD.
- Citizens of all regions should have:
- enough food
- clean water
- clean infrastructure and housing
- consistent electricity and energy supply
- quality healthcare
- freedom / exploration
- universal education
- access to MOOCs and K-12 school counts and suffices
- It’s decent but not a utopia. People all over the world should live like the current day Turkish, Chinese, Malaysians, and Kazakhs — i.e. reasonably developed but not extravagantly wasteful.
As you can see from the above predictions, the West will still have a disproportionate amount of wealth and GDP for its population, but the West will control a large minority, not a majority, of the wealth and GDP of the world. That being said, the West is very diverse due to immigration, and the US is becoming majority-minority (within 25 years), so such wealth will be somewhat distributed across different racial groups even within the West.
The above predictions will allow all cultures (from Norway to Chad) to live in a decently developed fashion, and hence be able to respect each other, eliminating much of what is the cause of racial power imbalance. The disproportionate wealth differentials will not matter as they will be balanced by population sizes (i.e. the West is wealthier per head but has less heads – Asia+Africa will still control more wealth / GDP).
23. Achieve Global Development and Balance of Powers
One of the most beautiful outcomes of this plan will be that no group, no race, no religion, and no continent will control a majority of the wealth of the world. Moreover, all continents will be developed, and their citizens in general will be able to live quality lives with consistent: food, water, infrastructure and housing, electricity and energy, internet, healthcare, freedoms, and education. This will make mutual respect of different races and groups easier.
Of course European-background people will still control a disproportionate amount of wealth per capita, but that does not particularly matter because the majority world will control more wealth overall. We will have economic and political checks and balances in place globally, and while the world won’t be some utopia, it will be a decent place for all, and will have balanced power dynamics.
24. Sustain the High Standard of Living and Mutual Respect
In these 24 points, I have attempted to provide a clear strategy to address world poverty and racial power imbalance by financially incentivizing the education of bright majority-world minds who can act upon the diverse business opportunities described throughout this blog post.
Win-Win: Why all people (including today’s rich) will benefit:
We will find that there will be no losers, by following the guidelines of this blog post. There are only winners. The rich will win and the poor will win, and everyone will become richer. What’s the catch? Well we’re just reducing entropy. We’re making people more educated and their use of time more organized. We’re making their societies more organized, efficient, and effective.
Perhaps this article’s overall goal in reducing wealth inequality, particularly those on continental and racial lines, is simply an inevitable regression to the mean. Because majority world countries have a lower price of labor, they will work more, earn more wealth, grow faster, and eventually become competitive with established wealthy countries.
But perhaps there is something more to it:
Guns, Germs, and Steel has explained to us that the rise of the West is primarily due to luck (of being in Eurasia, where agriculture and horses arose, but the western most part, with easiest access to plunder the Americas and its indigenous people). And it has explained to us how Western civilization came to control most of the world.
Given such a context, I have conjectured that the internet can democratize information and opportunity in a fraction of the time that it took for this global inequality and power imbalance to accrue.
What this piece proposes is a concrete plan to, in a single generation, level global inequalities and poverties that have built up over the last 500 years. This is in order to create a better world of politico-economic balance, racial equality, mass education as a recurring financial investment, distributed and diverse workforces, research and development as a culture, broadly high human development, and mutual respect of well-informed peoples.