Plutocracy pyramid4/25/2023 The entry of mobile phone companies transformed this picture. A market-based approach thus focuses on people as consumers and producers and on solutions that can make markets more efficient, competitive, and inclusive Ī decade ago phone service in most developing countries was poor, and few BOP communities had access to phone service or could afford it on the terms offered. Virtually all poor households trade cash or labour to meet much of their basic needs. A market-based approach starts from the recognition that being poor does not eliminate commerce and market processes. Market based poverty reduction? Traditional approaches often focus on the very poor, proceeding from the assumption that they are unable to help themselves and thus need charity or public assistance. Many in the BOP, and perhaps most, pay higher prices for basic goods and services than do wealthier consumers either in cash or in the effort they must expend to obtain them and they often receive lower quality service as well. As subsistence and small-scale farmers and fishermen, they are uniquely vulnerable to destruction of the natural resources they depend on but are powerless to protect In effect, informality and subsistence are poverty traps. The International Labour Organisation (ILO 2002) estimates that more than 70% of the workforce in developing countries operates in the information or underground economy, suggesting that most BOP livelihoods come from self-employment or from work in enterprises that are not legally organized businesses.ĭependence on informal or subsistence livelihoods Most in the BOP lack good access to markets to sell their labor, handicrafts, or crops and have no choice but to sell to local employers or to middlemen who exploit them. Ī key issue in understanding BOP markets is informality. And many lack access to water and sanitation services, electricity, and basic health care. Many live in informal settlements, with no formal title to their dwelling. Most people in the BOP have no bank account and no access to modern financial services. Rural BOP BOP markets are often rural-especially in rapidly growing Asia very poorly served, dominated by the informal economy, and, as a result, relatively inefficient and uncompetitive. This market is largely urban, already relatively well served, and extremely competitive. Urban midmarket The wealthier mid-market population segment, the 1.4 billion people with per capita incomes between $3,000 and $20,000, represents a $12.5 trillion market globally. dollars are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India.1 Yet together they have substantial purchasing power: the BOP constitutes a $5 trillion global consumer market. Total market The 4 billion people at the base of the economic pyramid (BOP)-all those with incomes below $3,000 in local purchasing power-live in relative poverty. New empirical measures of their aggregate purchasing power and their behavior as consumers suggest significant opportunities for market-based approaches to: better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy. Roosevelt in his Apradio address “ These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power.that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.” įour billion low-income consumers, a majority of the world’s population, constitute the base of the economic pyramid (BOP). Bottom Of The Pyramid B24b Business Modelsĭespite five decades and over $2 trillion dollars spent on foreign aid, the top-down prescriptions of the post-World War II “development regime” have proven ineffective.
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