Michael Fairbanks — Aid vs. Enterprise & Growth
Co-Founder SEVEN Fund, USA
I can predict the future of a developing nation better than any IMF team of economists by asking one question. ‘Do you believe in competition?'
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Michael Fairbanks — World-Renowned Strategist and Advisor
Michael Fairbanks co-founded the SEVEN Fund in 2005. SEVEN is a philanthropic foundation based in Cambridge, Massachusetts run by entrepreneurs, whose strategy is to produce films, books and original research to markedly increase the rate of diffusion of enterprise solutions to global poverty.
Michael Fairbanks is the founder and Chairman Emeritus of the OTF Group, a strategy-consulting firm based in Boston, and the first venture-backed U.S. firm to focus on developing nations. He was a U.S. Peace Corps teacher in Kenya. A long-time angel investor in the life sciences, he is a founding shareholder in Merrimack Pharmaceuticals, based in Cambridge, Massachusetts, which has drugs currently undergoing FDA trials to fight cancer. Mr. Fairbanks is also a founding board member of Silver Creek Pharmaceuticals, based in San Francisco, which is focused on solutions to heart disease. He is helping to launch Akagera Pharmaceuticals, which will focus on solutions to infectious disease.
Mr. Fairbanks has been a Senior Advisor since 2001 to President Paul Kagame of Rwanda on private sector development and export competitiveness. Other recent projects include advising the President of the Inter-American Development Bank on creating its USD 250 million Opportunities for the Majority private sector initiative; and advising the Minister of Finance of Afghanistan on private-sector reforms. Mr. Fairbanks testified to U.S. Congress twice in the last twelve months on enterprise solutions to poverty in Haiti. He conceived and oversees the Global Pioneers of Prosperity Program, in cooperation with OTF, Legatum, the Multilateral Investment Fund, and the Templeton Foundation, which finds and recognizes role model businesses in the world’s poorest nations.
Michael Fairbanks co–authored Harvard Business School’s landmark book on business strategy in emerging markets, Plowing the Sea, Nurturing the Hidden Sources of Advantage in Developing Nations, with a foreword by Michael Porter. Business Week Magazine said, "Plowing the Sea points the way toward creating prosperity in developing nations; " the Boston Globe named it one of the ten best books of the year in Politics and Economics; and Exame magazine, Brazil’s leading business weekly, called it one of the ten best books of the decade.
Mr. Fairbanks helped to conceive, funded, and contributed to "Culture Matters: How Values Shape Human Progress," edited by Sam Huntington and Larry Harrison at Harvard. His most recent book, which he edited, is entitled In the River They Swim: Essays from Around the World on Enterprise Solutions to Poverty . His next book will be published in 2012.
Michael Fairbanks has authored numerous popular articles in the Christian Science Monitor, Huffington Post and Washington Post. He has over 500,000 subscribers to his writing.
His work has been translated into a dozen languages, including Korean, Mongolian and Serbian. He was an adjunct professor at Georgetown University and the Fletcher School of Law and Diplomacy at Tufts, and a visiting fellow at Stanford. He studied philosophy and biochemistry at the University of Scranton, a Jesuit university in Pennsylvania where he was a trustee for six years, and African politics at Columbia University, SIPA ’83, in New York City. He will spend the 2011-12 academic year as a Fellow at the Weatherhead Center for International Affairs at Harvard University.
He was named to the Commission on Globalization in the 1990s with, among others, Mikhail Gorbachev, Jane Goodall and Joe Stiglitz. In 2007, he was appointed to the President’s Advisory Council in Rwanda with among others, Pastor Rick Warren and former British Prime Minister Tony Blair. In 2006, his alma mater gave him its highest award, a doctorate in humane letters for his "accomplishments and devotion to social justice." He is a citizen of the United States, the European Union (Ireland), and Rwanda.
Aid = Resentment
I once said to the President of the World Bank, Jim Wolfensohn, “When the World Bank figures out how you can give a $100 million, $200 million to an African country and they resent you, and an African country can pay me a multiple-million dollar fee and like me, when you figure out what’s going on there, then we can all move forward to help develop Africa.
The Foreign Aid Establishment
Whenever you have an aid agreement, those consultants come into the country, and they don’t work for the country, they work for the foreign-aid establishment. And so what you find is that the aid-establishment severs the sovereign link between the leader of a country and its people— because you’ve got all these consultants running around doing their thing, purportedly to work for the people, but in reality, their masters are in Washington and Tokyo and London and Paris.
Competition and Development
I can predict the future of a developing nation better than any IMF team of economists by asking one question. ‘Do you believe in competition?’ Now, when I go to Venezuela and I say, ‘Do you believe in competition?’ they say, ‘Competition means the rich get richer and the poor get poor.’ They say, ‘Competition is the unnecessary duplication of effort to get two firms doing the same thing.’ They say, ‘Competition is a quaint North American concept. It doesn’t apply here.’ But I go to Silicon Valley and I say, “What do you think about the word ‘competition’?” and they say, “I love competition because even when I lose I learn something.”
Punctuality, Democracy and Development
Democracy is slightly, positively correlated with economic growth. So democracy is a good thing. You know what’s more positively correlated with economic growth? Rule of law. Even in dictatorships that had strong rule of law, we see firms working in a predictable environment where there’s recourse to people who have stolen from them. Therefore, they decide to innovate…. You know what is most highly correlated with economic growth? Punctuality! ‘What,’ you say? ‘If a country shows up on time for meetings, they’re more prosperous?’ Yes! … Punctuality is a proxy for a set of values around tolerance for other people, self-discipline, future orientation, and time-management; and all of those things are part of an innovation process.