USAID, other donors, and national governments
put forth a major effort to scale the approach world-
wide. ORT is now used to save an estimated two
million lives every year, at a reduced treatment cost
of $6 per treated person per year.
Traditional ﬁnancial services
are inaccessible to most of the world’s poor. Dr.
Muhammad Yunus founded Grameen Bank in
1983 to provide microcredit to the rural poor
in Bangladesh. This effort provided small loans
to poor borrowers who typically lacked collat-
eral, steady employment, and a veriﬁable credit
history, excluding them from traditional loans.
Since then, the group-based microcredit model
and other services have been scaled worldwide to
at least 1,084 microﬁnance institutions in 2009
serving 74 million borrowers with $38 billion
in outstanding loans and 67 million depositors
banking $23 billion.
Conditional cash transfers:
cash transfers, initially piloted in Mexico, have
been widely adopted by national governments.
Mexico has traditionally had a patchwork of
social programs, some of which were used as a
source of political patronage. In 1994, Mexico’s
Ministry of Finance and Public Credit introduced
PROGRESA, an innovative conditional cash-
transfer program that provided payments to poor
women who ensured their children obtained basic
preventive health care and attended school regu-
larly. A randomized control trial of the program,
which compared a randomly selected treatment
group to a randomly selected control group,
much like a clinical trial in medicine, showed that
3 Ruth Levine, and What Works Working Group, Millions Saved: Proven
Successes in Global Health (Washington, D.C.: Peterson Institute, 2004).
4 Microﬁnance Information Exchange, Inc., “The MicroBanking
Bulletin,” no. 19, 2009, www.themix.org/publications/microbanking-
december-200, accessed March 29, 2012.
PROGRESA reduced childhood illness by 12%
and increased school enrollment by 10% for boys
and 20% for girls.
The combination of strong
evidence from a rigorous trial and a demonstrated
track record of operational success in running the
program at scale led subsequent governments in
Mexico to expand the program. Since then, the
governments of 30 other countries have elected to
adopt the conditional cash-transfer approach.
In each case, the beneﬁts from developing a
particular innovation extended far beyond a single
country or organization. From the standpoint
of economic analysis, this result indicates that
no single country or private investor will have
socially appropriate incentives to invest in innova-
tion. This market failure provides a rationale for
international organizations or donors to promote
and invest in innovation that might beneﬁt the
Yet, at the same time, there are many cases
of failure. Some risk is inevitable with innova-
tion. Unfortunately, there are all too many cases
in which donors have continued to throw good
money after bad, or not performed basic due
diligence. The water-fetching merry-go-round
, for instance, was designed to draw
water from deep wells when children pushed a
large revolving wheel meant for play. The program
launched with a $16.4 million campaign in 2006.
By 2009, hardly any pumps were still in operation.
5 Paul Gertler, “Do Conditional Cash Transfers Improve Child Health?
Evidence from PROGRESA’s Control Randomized Experiment,”
The American Economic Review 94, no. 2 (2004), 336–341.
6 T. Paul Schultz, “School Subsidies for the Poor: Evaluating the
Mexican PROGRESA Poverty Program,” Journal of Development
Economics 74, no. 1 (June 2004): 199–250.
7 Clarissa Brocklehurst and Peter Harvey, “An Evaluation of the
PlayPump® Water System as an Appropriate Technology for Water,
Sanitation and Hygiene Programmes,” UNICEF, October 2007.
8 Amy Costello, “Troubled Water,” Frontline/World video, Boston:
WBGH Educational Foundation, 2010, www.pbs.org/frontlineworld/
, accessed March 29, 2012.
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