A study financed by the private sector affiliate of the World Bank finds that the world's four billion poorest people represent a huge under-served market for business. VOA's Barry Wood reports.
Entitled "The Next Four Billion," the report finds that the world's poor people comprise a relatively untapped $5 trillion consumer market.
University of Michigan professor C.K. Prahalad says the poor are increasingly drawn to business activities and want to be beneficiaries of globalization.
Capitalism, he says, is becoming more inclusive and the poor want to be part of the system. He says in South Asia poor people are financially prudent, with almost all micro-credit loans being paid back on time.
Prahalad says the public sector has largely failed to deliver proper health care and education to the poor and that the private sector often does a better job. He suggests that governments in developing countries should confine themselves to setting standards while letting the private sector do the work.
"I think it is a much better solution for the public policy makers to recognize that the private sector is growing rapidly, but to establish tough standards and enforce those standards. That may be a lot better for ordinary consumers," he said.
The study finds throughout the world the poor pay more for services than do their better off countrymen.
In presenting the report to an audience at the International Finance Corporation, the researchers said businesses would like to better serve the poor but often don't know how.
The report finds that the poor devote a very high percentage of their meager incomes to food followed by housing and transportation.
IFC chief economist Michael Klein says China's stunning economic growth over the past two decades has had a huge impact. "Hundreds of millions of people (worldwide) within the span of decades have come out of poverty. Incomes per capita can double over a 10-year period. This was impossible in previous times. Fifty years ago there was no country that did that. Today a whole series of countries are able to do this," he said.
The poorest people are defined as those with incomes of under three thousand dollars per year.