[MUSIC PLAYING] MALDEN NESHEIM: I'm glad to see that you've all braved the rain to come out for our first CIIFAD lecture series in the fall of 2011. And I'm very happy to be able to introduce our speaker today. Ralph Christy joined the Cornell faculty in 1991, so he's been here not probably as long as many of us have, but he's on his way.
He's the Jay Thomas Clark Professor in Entrepreneurship and Personal Enterprise, and he's in the Dyson School of Applied Economics and Management. I've known that school go through from ag economics to [INAUDIBLE] to now the Dyson School, and Ralph has been here through those changes. He's an ag economist, got his PhD at Michigan State, and he's now director of the Cornell Institute for International--
RALPH CHRISTY: Food.
MALDEN NESHEIM: --Food and Agriculture--
RALPH CHRISTY: Agriculture.
MALDEN NESHEIM: --and Development at CIIFAD.
RALPH CHRISTY: Come on.
MALDEN NESHEIM: And he's had that responsibility since about 2010. And he's going to talk to us today-- his title is on the board-- it's going to be Why Small is Beautiful, and Establishing a Micro-Economic Agenda for Agricultural Development in Africa. Ralph, it's very nice that you've been able to come to us, and we're looking forward to hearing you.
RALPH CHRISTY: Thank you.
Thanks, Mal. It is a real pleasure to be here this morning to talk about a topic that has been a part of my career for a long time. As an agricultural economist, I got very interested in this question of economic development. And that started all about 30 years ago, when I was a sophomore at Southern University in Baton Rouge, and was sent to Cameroon, West Africa to spend a semester abroad. And through that experience, sort of the passion, the light went off in my head about the possibilities of working in international development. And of course, that led to graduate school at Michigan State, and then finally here at Cornell.
Well, I think it's fair to say that most people in this room would have read or would have remembered or would have heard something about this little book entitled Small is Beautiful. I checked the other day, and this book was published, oh, in the '50s, '60s. And it is perhaps one of the 100 most influential books written since World War II.
I remember in graduate school, after a full day of economic theory and equations and math, all the graduate student would run to this little book, because the subtitle the book is something to the effect of Economics as if People Mattered. And it didn't have equations, but it had powerful insights, and it was almost like poetry reading. And we loved this book. But the professors didn't like it. It wasn't theoretical enough, and it's almost a cult reading, if you will. We all enjoyed reading it.
So when I've given this talk in the past, I've discovered graduate students and younger people in the profession had not heard of it. And so hence, I come back to this title. Not Small is Beautiful, but Why Small is Still Beautiful. And here, I'm having reference to small enterprises and small businesses as they litter the landscape of many developing countries. They are the employers. They create the income. They, indeed, add value. Oftentimes, small businesses are strategically located along a value chain. But they are neglected because, for a number of reasons, we think that that's perhaps not the best way to go.
So I want to convince you today that working with small businesses is a big part of the international development agenda. I think it's even more a part of that agenda today because, now, we live in a global economy. And because we live in a global economy, their markets are certainly contested through additional levels of competition, which makes it very difficult for these businesses to survive and do and make the contributions to their economy as one would hope.
That said, I want us to understand that, over the last 30 years, economic development as a theory, as a science has made tremendous strides, but there still exists roughly a billion people on the planet today who are food insecure, who are [? eeking a ?] living out with less than $2 a day, in many cases $1 a day, and that economic development is still a pressing issue.
So then if we were in an airplane looking over the Earth, and we wanted to know where poverty was most persistent, we would focus on the redder spots. And you see sub-Sahara and Central Africa and West Africa over to the East Africa. We see parts of South Asia, where there's endemic and high degrees of poverty and food insecurity still very persistent.
But to get closer to this question, we could come down on that airplane to about 10,000 feet in the air, and we would begin to see that this poverty, particularly in Africa, is still a rural phenomena. Now, many other parts of the world, in South America and indeed Asia, urbanization has taken on. You go to Brazil, to Rio and San Paulo, you go to Mexico City, these cities are 8, 10, 12 million people. You go to Jakarta in Asia, you find the same thing.
So poverty has now, in those places, has become an urban phenomenon. In Africa, it's still rural, but it is changing fast. In the next 20 to 30 years in Africa, we are going to have urban poverty. That is, you go to Johannesburg, Nairobi, Lagos, Accra, all of the major cities, you're beginning to see an urbanization phenomena. That will spell tremendous challenges for food system and for our efforts to market and distribute food, and indeed a role for the small businesses to play under those set of conditions.
But ladies and gentlemen, I want us to go even further down on our airplane, and I want us to get on the ground. And I would like for us to put a face to this poverty, because sometimes looking at it 40,000 feet in the air and looking at it 10,000 feet in the air, we must now put a face on this phenomena that we all read and talk about.
And what we have here is, in rural area in Africa, still today we find women being a big part of the agriculture production. But what I want you to notice about this lady-- and let's call her Mrs. Banda-- I don't know her name, but Banda sounds like a good name to me-- and we must begin to understand it through her sights, through her lenses.
And what we will see is that this is a poor woman who's trying to produce food. We could perhaps make some assumptions, those of us who are soil scientists, and see something about the quality of her soil. Those of us who are agricultural engineers, we might understand that the technology she's using is still somewhat traditional, if not primitive technology.
You might see that there's no roads around her, and you might also see that this woman perhaps does not have a social safety net, those of who are sociologists or policymakers. And without social safety nets, you will see that one of the ways that she could survive in her older years is by having children to rely on. And I would submit to you she's probably given birth to six to eight children, and maybe some of them have passed on, but there's a lot of children she needs to depend on in her golden years.
And we begin to see a situation here that is almost bleak, because if we're going to get agriculture moving, some of us would say, well, let's give her technology, maybe improved seeds or fertilizers. But if you increase her productivity and there's no roads for her to market, then she may have more food in the home, but the price of food falls and her incomes fall. And so she's almost in a situation now that the world has moved toward globalization and markets, and she's still without the wherewithal to produce.
So we have a challenge. Not only we have the challenge that she is confronted, but the very theories of development, of the goals of economic development that we started off with 40 or 50 years ago, they have changed. At one point, when many of the countries in Africa became independent in the '50s and the '60s, the Marshall Plan in Europe was coming to an end after World War II, economists from Europe rushed to the newly independent states-- India first, and then into Ghana, and all the independence movements starting to take place. And the idea of gross domestic product, increasing capital growth was equated to economic development.
And then someone said, no, we must change that to real per-capita income. And then finally, said no, we need to have non-monetary indicators and basic needs. And then people said maybe freedom. And then this idea of what economic development actually means has just changed over time. And today, we talk about sustainable development. That's the goal now. And poor Mrs. Banda is sitting there watching the whole world go by, and all of these theories and models are coming to her for possible solutions.
This has come into even a more fundamental change with respect to the market, the very forces that drives income and productivity around her, because she's clearly in a market environment now. And we would enter the questions of economic development. We said, well, markets have failed. And then we said, no, governments have failed. And then said, well, what we need to do is get the institutions right, finally. Just last week, we invited Peter [? Timber ?] to Cornell to give a talk. And he wrote a very famous book on getting prices right. Well, it's not so much getting prices right these days as much as it is about getting institutions right.
And so we have seen all these transformation that has occurred in the life of Mrs. Banda, and yet we're still trying to figure out, well, what does it mean to achieve development, particularly in this era of markets. And how do we develop and devise strategies for a person who has to engage in the marketplace? Well, in 1981, Ronald Reagan, president of the United States, invited Margaret Thatcher and Helmut Kohl, the prime minister, the chancellor of Germany to Washington, DC. And they sat around one afternoon, and they decided that they were going to devise something entitled the Washington Consensus.
In other words, they were going to put in place an effort to move the entire world toward globalization and development through policies. If you were an African government, if you wanted technical assistance or aid, you had to embrace the market. They pushed in an era of what in many developing countries had been known as structural adjustments. So many countries in Africa have opened up their markets, and we've come to them with different ideas about how to improve their economy through market mechanisms.
Before I get to this idea of entrepreneurship and small business development, let's quickly look at what are some of those ideas that have come to the developing world vis-a-vis markets. Microfinance, the bottom of the pyramid, and then finally Jeff Sachs' Millennium Village. And I will quickly go through each of these, and then get back on track about the small business development.
Muhammad Yunus wrote this very powerful book, Banker for the Poor, wherein he talked about the role of credit and capital getting in the hands of small businesses and micro-enterprise individuals. This captured the imagination of the world. When it first came out, it was almost heresy. What bank would make a loan if you don't have collateral? And why would I even give a poor person a loan? But he somehow convinced the world that this, indeed, was the silver bullet. This is, indeed, the strategy that we should move forward to. And now, most central banks, commercial banks, NGOs, World Bank, they all have some type of a micro-credit or microfinance window.
The question still remains, does this affect or improve the conditions of poverty? And the jury is still out on this. What we're finding that small people taking loans-- and there's research on both sides of these questions-- they get a loan, they pay the loan off, they get another loan, they pay it off, and in effect, they stay primarily on this treadmill, not really increasing their income or increasing their wealth, just simply on some sort of a treadmill. This is primarily-- many of the people who've been engaged in the microfinance have been women.
And in fact, that Friday afternoon, when Professor Muhammad Yunus was leaving his office, this lady walked up to him, a beggar, and asked him for a gift. And he was going into his pocket and was just about to put the money in her hands, and he pulled it back and he asked her, well, what are you going to do with this? And she looked at him, she says, well, I'm going to buy some chickens. And these chickens are going to have eggs, and then I'm going to open up a business, and then I'm going to move on and improve my life. So he gave her the money, and he said, sure, thinking that he would never see this lady again.
Lo and behold, a few months passed by, and she comes to his home. And she knocks on the door with a basket of eggs. And there, in that moment, the idea of banking on the poor entered his head as a possibility. Well, in that particular example, it worked well, but as we put through the microcredit and microfinance throughout the world, as I said earlier, the jury is still out, not totally convincing as this being the antidote of poverty.
The next idea came out from the University of Michigan, Ann Arbor professor C.K. [? Pollard. ?] We have another example of this on our own campus, with Professor [? Stu ?] [? Hart ?] with the bottom of the pyramid approach at the Johnson School. And the idea here is that, now that we're in a market economy, why don't multinational corporations go to the developing countries, and then they could take their products, be it parts of soap, shampoo, or whatever the product is, break it in small packages, and sell it to the poor? In other words, the poor now becomes consumers. And the idea is that there are profits in these markets.
Well, that idea was an interesting one. You're not going to get rich if you're always buying something, and you certainly are not going to get rich if you're taking your income and buying things that the so-called West perceive to be desirable, be it shampoo or toothpaste or whatever the product is. And so now, we're holding this up with some level of suspicion about its capabilities of achieving economic development and increasing and improving the lives of people like Mrs. Banda.
Finally, our colleague at Columbia University, Jeff Sachs, he came to Cornell a few years ago with his wonderful idea of Millennium Villages. He said the governments were corrupt, and therefore we must go around the governments and develop these small villages that's aligned to the Millennium goals of development, and perhaps give each village $300,000.
And then, with that set of funds, they can design whether or not they want roads or schools or agriculture, and each village would come up with its own strategy. Well, on the surface, that sound like a good idea, but where will the next tranche of dollars come from? And aren't we building in some degrees of dependency on these people and individuals and villages?
All of these ideas are trying to get things moving, are trying to look at markets, are trying to improve people's lives, but they're somewhat limited in their perspective. There's no silver bullets here to look at. What has happened is that, over time, we've had tremendous radical change that has affected food markets and development in Africa. And these changes are both political and economic and social and technological, and they are moving at a pace of-- that they're so rapid that this change is outstripping our ability to comprehend fully the nature of the problem.
And I'll give you some examples. And this is some of the kinds of activities that we think about as we reflect back on Mrs. Banda. Certainly, there's political and legal challenges here, and the questions of government and regulations and business climate and all of these things that are around her that's a part of the state, and she's trying to [? eek out ?] a living.
Economic forces. The roads we mentioned earlier, the financial sectors, the banking, foreign direct investments, the crisis that are affecting people at the levels of poverty. Once we go to a global market, these are the kinds of things that we introduce them.
And now, there are some investments that are coming into Africa. Africa is the bottom line, not nearly as high as what we find in the top line, which is Asia. The next line would be Latin America, and Africa is coming to the bottom. By the way, 90% of the foreign direct investment that goes in the continent of Africa goes to one country, South Africa. 90% of those investments. So many of the other countries are not picking up on these types of investments. And with these foreign direct investment comes new technologies, new management, getting markets into play. And so now, we see Mrs. Banda constrained if she's not in South Africa.
Social forces, another radical change. Again, we've talked about urbanization, the informal sector, questions around gender, the HIV/AIDS issues, as well as cultural preferences for food, because as we get to urbanization and food is becoming a little bit of a constraint, people are now changing their diets. So while, in many cases, they might have been eating corn or cassava, what is rapidly entering the markets now is wheat-based products, like pasta. And you would be amazed how fast that is to cook and how inexpensive it is. And so now, we're getting a lot of changes in the food diets and preferences.
Urban population, the social phenomena, we see by 2050 Africa will be basically an urban continent. Today, we are, roughly, certainly slightly more rural. By 2025, a little bit better, but by 2050, we find basically an urban continent. So all of these factors are coming into play that Mrs. Banda is going to have to contend with.
And not to mention technology. Some of these forces are positive, others are negative, but they are changing the rapidity of change. Biotechnology, food processing technology, information tech, technology in general. And you see that she's not getting access to these kinds of things. So we're coming into a real problem, a problem where, if I can distill into two very basic questions. How can we reform the state-- I mean the government in which she-- the country she resides in-- in the context of this radical change that I've spoken about, to enact policies that will improve the competitiveness of the industry in which Mrs. Banda is a player. What can her government do?
And I would take that question a little bit deeper. I would say, what can our governments do, as well? Because until our donor governments, as well as her public policymakers, begin to get an understanding of the change that is confronting her, we're not likely to get the strategies right. So this is one big area that I want to give some possible solutions.
The title of this talk is Why Small is Still Beautiful. I wants to start talking to you about some particular ideas that will be particularly important for focusing on small business development, not only just for small producers, but small manufacturers, input suppliers, the whole supply chain on the African continent that might be a way to build capacity or strengthen capacity among the small enterprises. Let me quickly turn to what might be some possible solutions with respect to this situation Mrs. Banda find herself in.
Let's see if we can reform their state. Because in order for a small sector business to survive, to thrive, it must have an enabling environment. It must have an environment where it can have access to roads, access to grades and standards, information, a range of other things that will be important for business to develop.
The problem I am confronted with with this possible solution is that, oftentimes, the state-- that is, African governments-- if you go into ministries of agriculture or ministries of education, in many countries-- not all countries-- those agencies, they really lack capacity. They're really not up to the challenge of the 21st century for government quite to know exactly what to do in this global, radically changing environment. It's a challenge. We see it in our own country today with respect to creating jobs. Very different ideas about what must government do and what is the capacity of government to create an environment to challenge us and to improve our economic development.
There are two questions-- what is the capacity of the state, and what is the environment in which the business must operate in in which the state can do something about. This particular work-- and I'm going to go very briefly through this-- was a study that we did for the United Nations, our team here in the Dyson School with [INAUDIBLE]. And this was presented at [? FAO ?] and a lot of organizations around the world. But we were not only challenging the governments of developing countries, we were challenging the multinational organizations and the donors for them to build capacity in government so they can perhaps do the right things, as well.
When we asked this question, we came up with several scenarios. We didn't think that there was just one thing governments should do. It depends on where you are. It depends on the capacity of the state. It depends on the amount of risks that is in the marketplace. And so we came up with several stylized kinds of recommendations, if you will.
Our first, we looked at a case where the government has capacity, it can have a role to play, and we look at the examples that we saw in Uganda with respect to their seed industry. That government has a very-- NARO, the National Agriculture Research Organization, has capacity improving the seed industry. And we looked at that as a shining example where they went in, they deregulated that industry.
At one point, the government was selling all the seeds to the farmers. Now, they have privatized the sector. There are 30 or 40 small companies coming in. These small companies are now able to get improved seeds to Mrs. Banda. Left alone to the state, it was too bureaucratic.
And now, we've worked with a number of these companies, improving their marketing strategies and looking at ways that they can get access. In other words, get technology, get seeds in the hands of farmers. Sometimes the state has to step in and be more proactive. There are other situations in which the state may have low capacity, and the environment could be very risky.
So the private sector won't be involved here, nor will the state act. And here, we were looking for what are innovations in terms of public private partnerships or innovative institutions, and we looked at the case of Malawi, where the state came in with the private sector, developed something called smart subsidies, got technologies and packages in the hands of farmers and things move on with the private sector in partnership with the state. And we see that Malawi, in many regards, have simply moved their agriculture-- are beginning to move their agriculture-- forward.
Now, this with fierce resistance from the World Bank, because they thought government should not be that involved into the situation with the subsidies, but they persisted on, and we're beginning to see some positive changes in Malawi. Notwithstanding the most recent price peaks. There've been some problems there because prices of food have gone up. There is a situation where the state has capacity and so does the private sector, and what comes to mind here is supermarkets.
There are a number of high end supermarkets, Shoprite Pick and Pay. These are basically South African owned companies. They are rapidly moving into other parts of Africa into Ghana, into Uganda, into Kenya has been trying to force them out. Tanzania they have come in. These companies have come in an environment where the state did not have grades and standards.
So the private sector came in and develop these kinds of approaches to increasing the access to food and improving the modern marketing system. And so here's an example where the state really is stepping back and letting the private sector take the lead. I don't know whether that's necessarily a positive thing or a good thing, but the supermarkets-- the supermarkets are coming in in a very powerful and a very bold and a very aggressive way to meet these challenges around markets. The challenge is if you look at all the produce, if you will go to any of the major African cities and go to a Shoprite or Pick and Pay, if you look at the produce, you might get the impression that a lot of those products are not being purchased from [INAUDIBLE].
That a lot of these products oftentimes are shipped then maybe from South Africa, and getting shelf space and being able to service a large modern supermarket like this is a challenge. So then the nuanced thinking now is, let's create space in these products and on these shelves for the product that [INAUDIBLE] might have to offer. Let's create opportunities for her to have access to these markets, and then as the supermarkets come in, they should have more innovative programs with small farmers and smallholders.
That is keeping this idea of small businesses alive. The final area is when the government have relatively lower capacity and the private sector is very strong and very bold. So the role of the state here is really to maintain competitiveness to make sure that the legal systems are in check or in place to make sure that you have a pro competition. You don't have antitrust or you don't have monopolization of the markets, and so then in each of our scenario, we call for a different role for the state to play, depending on the risk, depending on the capacity of the state, but keeping in mind, making sure that the playing field is level for small businesses to contribute to the various economies.
Not only the governments of these economies should pay closer attention to these various scenarios that we've called for, but I would say our even our own governments. Sometimes USAID or the World Bank, they are not a prize to the complexities of these change, and sometimes are promoting ideas or challenges, where you insist on a market and the individuals are not prepared to do it or the state isn't prepared to play its role, and simply having people opening up their markets and subjecting them to competition is not perhaps the best thing that's happening. And what we find in this environment is that the Chinese are coming in.
You open up the African market, you think we're going to get competition, we're going to get things proved. [INAUDIBLE] is going to get better because markets matter? No. We've simply set them up for failure because the Chinese are coming in with very cheap products, oftentimes taking the very cultural products that are in Africa and replicating it and selling it back to the Africans. And so this idea of markets and competitiveness and making small business work. Things that we know that will contribute to economic development are sometimes not put forward.
So the government has to come in and enforce the ideas of laws and competition. Let me switch to the private sector now, because I don't necessarily believe that the government is in all and be all answers. I think the private sector has a role to play here. There's a role, a way in which we can strengthen the private sector, and this particular work draws from over a decade of activities that I've worked with here at Cornell, working directly with now over 1,000 small companies primarily over from 14 different countries in Africa, building capacity, strengthening their strategies, having a conversation about how they're products and how markets affect their communities.
We know that agri business is an important part of the economic development. We understand people at Cornell that agriculture is an important part of economic development. But as the economic development of a country grows, the agricultural contribution to that economy declines. It's almost predictable.
And if you look at this relationship based on the red line, we will see that as a share of the share of agriculture of an economy declines as the income of that economy increases. In other words, the share of agriculture in the United States is a very much small part of our overall economy, and we look at a number of countries here, and we can see that with the green line, that is your agri business. Note that that green line is not necessarily declining, whereas product agriculture itself-- right now, it only takes 2% less than 2% of our farmers to produce food.
But that green line, that's agri business. The input, the stores, the manufacturing, the wholesale, the entire supply system. And that has been a good 25% to 30% even in the US across countries around the world. So that means that if we're going to get economic development moving forward, we have to embrace a wider set of businesses, many of them all small businesses, many of them are ways to keep the economy moving forward because they add value to food, they create jobs, and they create incomes.
Over the last 10 years, this data goes up until 2009, we started a program here at Cornell trying to get at businesses along that supply chain-- small businesses. And now, we've worked with over 1,000 companies in our data bank. Having workshops, having training, listening to their strategies, because we thought that if we're going to build capacity in the state, we also should go directly to these entrepreneurs. And we have a number of wonderful stories to share, case studies to talk about, ways that we have involve Cornell students into this process, ways that we have taken that information, brought it back to our classrooms, engaged students from Africa in this process, engage small businesses in this process, as a way to get economic development moving with small companies.
Not necessarily Mrs. [INAUDIBLE] persay, but all the companies that are around her who's going to add value to her products, who's going to give her technical support in terms of technology and seeds and those kinds of things, and let me share with you a little bit about how that has gone. Starting in 2001, I got a call from the State Department saying, could you come to Chicago, because we have a university in South Africa that wants to work on an agri business training program. And so without knowing any of these people, I flew to Chicago, we had a conversation.
And from that point on, we started developing a program that focuses on small businesses. This was not the first year. This was several years later, and that journey has taken us through a process where we begin to really now understand that in a global market, based upon that Washington consensus that we've had talked about earlier, that these companies have subjected to a level of competition, and in order for them to meet that competition, we must think about innovative ways of building strategy of building their capacity.
In other words, what they do is beautiful, and it should be acknowledged. We have developed programs, where we brought in companies from 14 different countries. This has been a high level training program, an executive education program. They have looked at case studies.
We've been very successful in bringing in corporations, and many of his corporate contacts or Cornell graduates. For example, the Korean gentleman you see in the foreground there is with the Cisco corporation, and he discovered our program, and he said, well, look, Cisco is very interested in working with small businesses. We have new technologies, we have-- I don't know how many of you have used the tele meeting where you can sit-in a room and see people's pictures around. You don't have to travel, and so at some point, this technology is going to be important for businesses, and so what we want to do is be a part of your program.
And so they have come out-- the lady in the foreground there to the left is from Kenya. You might be familiar with the [? Lakey ?] family there, who-- the famous anthropologist, and now the family is a member of parliament, but this is one of the daughters. She owns a seed company. And so that small seed company she owns, at one point, all the seeds were distributed by the government of Kenya. Now, we have 40 or 50 companies coming in. She happens to be one of the companies who've been part of our program.
And so now we are opening up space now where technology, modern management, strategies, all this is getting in the hands of those small businesses and creating opportunities for them to grow and improve what they're doing. I can't imagine a company not understanding modern day strategy, and I discovered that many of these companies do, but they do it in subtly a different way. I cannot think of a situation, where how a business can survive, and oftentimes, we look at business survival and business development here in the US, where there's good technology and good roads and good information and human capital and education and we think that this is a magical formula to moving our economy forward, but those companies don't have that. And so now they're trying to ink out a strategy to improve their lives, improves incomes of people, and I think they're doing a very interesting job.
We're writing a new book now on strategies that these companies are coming up with, and I think they're going to challenge. Peter Drucker is the modern day father of management in the US, but that's what our business schools are teaching, but I think that these entrepreneurs here can teach something to even our best MBAs and our best students of economics and business. We then now said, how do we get our Cornell students involved with this? And so within aim, we developed a program called the Emerging Markets Program.
Two years ago, I became the director of CIIFAD, and we developed this thing called SMART, Student Multidisciplinary Applied Research Program. Our teams, and these are where we get teams of three to five students together, we attach them to a particular company or an NGO or an organization in emerging markets. Not only in Africa, now throughout the world, trying to find innovative ways to build capacity.
So students now are going to South Africa, they're going to Thailand, they're going to Indonesia, they're going to China, they're going to the Dominican Republic. We went to Ghana last year, we did South Africa, Tanzania. We've had seven or eight years now, and then we're looking at a range of places this coming year-- this coming January in a winter session, where students now, both nutrition, engineering, business, applied economics, rural sociology, public policy students. Over 100 plus students on our campus would apply for these programs to go and as multidisciplinary teams to solve problems.
And ways of building capacity in the small businesses, small organizations, or even sometimes in government, trying to create capabilities in those environments. Our students have done well. We think this is going to be an example of flagship program that we can share with other universities. We are part of the process now going directly in and building capacity in the state or capacity in the small businesses, and we've had wonderful success from this.
Our students develop phenomenal case studies, and now we can take these case studies, bring them back to our classroom. Oftentimes, in my part of the campus, we want to talk about strategy and look at case studies. They're primarily written at Harvard or at Stanford. Well, this program here will now have Cornell students writing case studies, because I think we are uniquely positioned to talk about international development, emerging markets, and challenges.
This is a phenomenal way of students learning, and they come back with so much energy, and so much excitement. So we're trying to make small beautiful by having our students engage directly with a whole range of opportunities throughout the developing world. There are challenges here. How do we evaluate these capacity building programs? What about the transaction cost?
We don't have a huge amount of dollars. Our students buy their own airline tickets. I raise the money to make sure that the teams within countries are supported in terms of their lodging and meals. Can we make this sustainable? And then finally, how do you scale this program out?
A few years ago, we started with only three locations. Three years ago, we went to five locations. Last year, we did nine. Now, we are up to 14 to 15 locations around the world, engaging our students, and I learned to use the word strengthening capacity as opposed to building capacity, because those institutions are already there on the ground. They need to be prepared to deal with those radical forces that we talked about of globalization. The political, the economic, the social, and the technological.
We are rolling up our sleeves and getting our students involved into this process. Now, I want to close with just this one thought. I gave a similar talk like this in the American heartland. I won't name the University or the State, and I was a bit taken back because someone in the audience asked the question, why should we care? What's in it for us?
These are do good ideas and why are we persisting in economic development, and I sort of thought for a moment, so I added these one or two slides in. I don't think there is why should we care question in this audience. I simply share this with us this morning as a reminder of why we should consistently be a part of the economic development process, particularly here at Cornell. First, I think there are real economic reasons why we should do so, and it's all in the economics, and I'm not an economic determinist mal, but I would submit to you that starting around 2005, the so-called emerging economies of the world became a larger share of the global economy.
You add China and India and Brazil and all the rest of the developing countries around the world, something magical happened somewhere around 2005, they became the largest share of the gross domestic product of the world. It's in our economic interest to do so now. If we just look at the cars you drive and just look at the clothes you wear and see where it's coming from, you will quickly understand that this world is integrated, and a lot of our business opportunities, but coming from those parts of the world.
There's public health reasons, too. We're living in an integrated world today. We can't simply be isolated. A person can get on the airplane and come with a disease, there are opportunities for things to move around a much faster way, and there is a global public health reason why we must be engaged and have an understanding of the world, particularly as it relates to the developing parts of the world today.
I need not think too far-- if I were a political scientist-- to quickly see that given this technology and giving the instability of political systems today that there are real reasons why our interest is at stake as Americans. The so-called Arab spring. The rapidity of that political change.
Some of us would argue, well, was it the invasion of Iraq that caused this? Or was this something that was going to happen anyway because people going to rise and ask for freedom and democracy, and then you saw putting in Facebook and Twitter and all these information technologies and we get rapid change that is a part of us. We must be engaged, and I'm very pleased to see that a place that Cornell has this has a central role in the conversations around economic development.
Finally, ladies and gentlemen, there are humanitarian reasons. Today, as I look across this planet, I see millions, millions of women in bondage. I really think that this is our moral imperative of today. This is our challenge today.
This challenge to me is as important as a question of slavery. When we stood up as a country and ended and abolished slavery in America, I think what we see is happening in the lives of women around this planet today. The economic and social and cultural bondage in which they find themselves in. I think on humanitarian grounds alone, merits our steepest consideration in solving these types of problems.
So I think small is beautiful, but I also think that we have to be smart. I think we need to use smart power. I think we need to think about economic development in very different ways, not just our military might, not just diplomacy, but I would try to elevate economic development to various levels of military decisions, diplomatic decisions, and development. Putting them all three together gives us the type of power that many people are beginning to see to be smart power, and that's, I think, it makes us more secure and indeed more effective.
Ladies and gentlemen, that is what I wanted to share with you today. I think working with small businesses and entities across the supply chain, building capacity, allowing them to be more competitive is an important way our nation should move forward, and I'm very pleased to be a part of programs at Cornell that is driving these agendas in very interesting and innovative ways. Thank you.
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Ralph Christy is director of Cornell International Institute for Food, Agriculture and Development (CIIFAD) and professor of emerging markets in Cornell's Dyson School of Applied Economics and Management, where he conducts food marketing research and educational programs on the economic performance of markets and distribution systems in developing countries.
In his September 15, 2011 lecture to the Cornell Association of Professors Emeriti (CAPE), Christy describes the work he is doing to develop markets for rural economies in Africa and how he is engaging Cornell students in that process worldwide, and presents a compelling argument that "Small Is Still Beautiful."