REPORT #609 February 2003
SMALL IS EFFICIENT AND BIG IS CORRUPTION IN INVESTMENT MONOPOLIES


from Susan Garcia/Belize Culture Listserve debates

ECONOMIES OF SCALE DO NOT WORK EFFICIENTLY!

Monopolies are especially deleterious to rural development when they occur in countries whose political structures are set up in a way that encourages graft and corruption and has no checks and balances on the all too human tendency to steal, unfortunately including Belize. That is one of the reasons that large dams have such a poor track record with respect to providing the benefits they are supposed to provide.

If you do the research, you will see that smaller the public resources project, the more the benefits "trickle down" into the community. That is why projects that are community driven and small scale (like some of Peter's ideas for biofuel power as well as community-level wind/solar power) are much more likely to meet infrastructure needs at the basic level. The bigger the project, the greater the diversion of resources to waste, fraud and abuse.

I recently posted an article discussing locally driven projects that are bringing internet connectivity to rural communities in India. There are many projects like that worldwide and they nearly always have better results than the big projects funded by giant corporations, the World Bank, the IMF, etc. This demonstrates that the "economy of scale" theory does not always work. It should work, but not if the savings are diverted to pols and their cronies.

Do you know what bank has the highest level of repayment on new business loans? It is the Grameen Bank in India that makes tiny loans to micro enterprises run by poor women. ($2 billion in lending, in $400 loans )

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