Paul Romer is a senior fellow at the Stanford Center for International Development and the Stanford Institute for Economic Policy Research. He specializes in economic development.
Ikuemonisan Banabas Ayobami
I am the first of five children, all boys. We lived on $200 per month. My high school was so bad that we were taught English in Hausa — a local dialect. However, I was blessed to have a great father. He always told me I can be all I want to be. His words helped me to become a doctor, which was a long struggle.
In my country, Nigeria, years of corruption and bad leadership caused many to lose faith in the “Nigerian dream.” But my work as a social entrepreneur facilitates young people gaining the life skills to become self-reliant, make right choices and pursue their dreams. That eventually brings economic growth and less crime.
The work I describe began five years ago, when I, with others, started the Glimmer of Hope Foundation, while I was in medical school. We had an idea but no financial muscle. People thought our dream – to help Nigerian youth to be healthy and also to empower them to succeed in life – was grandiose. But today, we talk of spending close to 10 million naira this year on youth-funded projects.
The foundation helps homeless young people, some of whom have been involved in anti-social behavior as a means of survival. In South West Nigeria, we are bringing kids, between 9 and 15 years old, who are on the streets right now, back to school. We also give them vocational training. We have to keep young people from following bad leaders.
I see young people who do not believe they can amount to anything. A few years ago, one young man told me he could never go to the university. Now he’s in his final years studying for a degree in economics.
The young people in our country are intelligent and want change. They just need a push. They need to see someone like themselves, someone who came from poverty and became something. When they do, they follow that lead.
Paul Romer
Your blog post addresses an important issue. Human capital – the skills and knowledge embodied in the workforce – is central to economic development.
Unlike those who focus on specific job skills, you recognize that human capital also consists of important character traits. For example, the right education can instill in young people a sense of possibility instead of passivity.
Social norms – each person’s learned beliefs about what is right and wrong – are also part of human capital. Social norms influence our interactions with others. If the only available role models are the bad leaders to whom you refer, young people will internalize social norms that undermine Nigeria’s prospects. Your organization provides a much-needed alternative, offering a different standard of what is normal and right.
In the pursuit of human capital and economic development, changes in social norms are driving forces, not incidental side effects. Societies can get trapped by outdated or counterproductive norms that hurt everyone.
But societies can change. In the 1970s, Hong Kong dramatically reduced corruption in its police force partly by changing social norms. The government convinced citizens that police corruption is not normal or tolerable. As a result, ordinary citizens helped fight it by reporting requests for bribes to a special hotline.
Entrepreneurial organizations like yours play a role in the diffusion of more just and socially constructive norms within existing social settings. (With my new research non-profit, Charter Cities, I hope to convince people that newly chartered cities offer complementary opportunities to establish desirable norms in new social settings. In a sense, new cities can be like startup companies that establish new cultures.)
Working from both directions – reforming existing social systems and forming new ones – we can move all nations toward rules and norms that unleash everyone’s potential instead of holding them back.
capital and economic development is particularly suited to a world where the modern nation state is somewhat hamstrung in it’s ability to foster either effectively. While it is clear that reform is necessary, given the recent failures of the current financial system, for example, it is difficult to imagine a state being able or willing to institute any kind of global reform. In fact, as Paul has pointed out, it may not be desireable either, being simply too big a bite for society as a whole to swallow.
But a limited experiment, which would give the State a working model from which to potentially expand, might be just the ticket. The concept of an opt-in environment where human capital flows in by choice, in an environment where economic growth is favored and sustainable, might do so without being disruptive to the State.
Of course the costs for building out such a community could conceivably be massive. And there is competition for capital – not only from traditional business ventures, but also from ventures in current “free trade” zones. Those in control of investment capital are faced with a multitude of potential allocations; you don’t need to look far to find an enterprise in need of capital. What is difficult is finding a one where the investor can become comfortable with the risk.
But “comfort” is hard to come by. Today, instability is the norm. And the so called liquidity crisis is largely a crisis in confidence based on institutional insolvency: so many institutions are encumbered that the counterparty risk has rendered the act of capital formation tantamount to an act of faith. And faith is in short supply.
Yet the world’s concentrated wealth positions still exist. This is the “money on the sidelines” we hear so much about. Small family offices, for example, may represent significant available investment capital – yet the risk encountered by the decision makers is so palpable that they are frequently unable to execute.
So what may be necessary, in addition to the creation of the right environment, may be a new model insofar as governance is concerned. I’m not talking about regulation, but rather some new standard by which projects can be vetted and tracked. The development of a new lexicon is necessary, one which will provide a ready indication of risk and mitigation. What is it? This author doesn’t know, but has been reseaching the issues and asking enough questions to understand the significance. Capital must be put to work, and there is the strong desire on the part of investors to do so – but the current environment fosters a certain passivity. We need a new approach to get investment capital flowing.
But just imagine, a Charter City environment set up as Paul Romer describes, where human capital would opt in and participate, introduced to the challenge by men like Ikuemonisan Banabas Ayobami and the Glimmer of Hope Foundation, with a layer of governance enabling confident investment.
One could further apply the practical concepts of Resilient Communites, as developed by John Robb. Now you’re talking a real game changer.
Giddy-Up.
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The concept of a limited rules based society that is purpose built to induce growth of human
The street offers both opportunity and danger. There are many ways to be a child of the streets. Most work selling candy or popsicles, guarding cars, carrying groceries and other parcels, or shining shoes. While most street kids return home at night to sleep, some alternate nights of sleeping outdoors with sleeping at home.
Thank You