For those focused on building the markets of tomorrow, the visible poverty and squalor of the “city planet” hides a less visible reality. Whether located in São Paulo, Mexico City, or Mumbai, any emerging shantytown is a vibrant economic hub. The people who live there have the same aspirations as the urban rich and brand-conscious middle class. They are tomorrow’s market for televisions, cell phones, pharmaceuticals, and video games. They are also entrepreneurs. For example, in Dharavi, one of the largest shantytowns in India, local manufacturers make leather goods (jackets, wallets, handbags), gold jewelry, packaged food, recycled plastic (which they sell as raw material), and medical supplies. There are one- to two-person entrepreneurial shops, and well-organized workshops employing 50 to 100 people.
Unfortunately, this emerging, vibrant economic hub of consumers and producers tends to exist in what is called the extra-legal or unorganized sector. These terms are often used to dismiss this sector’s importance. But they simply indicate that the sector is not part of the formally recognized economy of the country. It is important for governments to recognize these emerging hubs of economic activity and make it easier for them to become integrated with the formal economy.
Large firms can help in this process. For example, banks can simultaneously double their customer base (if not assets under management) and learn how to provide world-class financial services at low cost. The opportunity for “doing well by doing good” for global firms is considerably enhanced by the urbanization of developing countries.
The poor are voting with their feet. They seek market-based work opportunities for themselves, through proximity to higher-paying nonseasonal and nonagricultural employment; and they seek opportunities for their children to escape the “poverty trap.” Because of the negative side of this urbanization process — congestion, pollution, shantytowns, transportation bottlenecks, and crime — some critics argue that we have to stop this trend. But with imaginative public–private–civil society partnership, this trend can lead to a new approach to eradicating poverty through social and business innovations.
Reprint No. 06109
Stewart Brand (firstname.lastname@example.org) lives in a squatter houseboat community in Sausalito, Calif. He is the founder of the Whole Earth Catalog and a cofounder of Global Business Network. His books include The Clock of the Long Now (Basic Books, 1999), How Buildings Learn (Viking, 1994), and The Media Lab: Inventing the Future at M.I.T. (Viking, 1987).