India produces enough buprenorphine, a medication used to treat opioid addiction, to serve about 450,000 patients each year. It is treating only 45,000. How do we fix this?

India has more people who misuse opioids than any other country in the world.1 But, of the 7.7 million people in the country who meet the criteria for opioid use disorders, fewer than 2% receive any evidence-based treatment.

Opioid addiction can sneak up on people. Many who use opioids don’t realize they’re dependent until they try to quit and then experience withdrawal. In Mizoram, one of India’s most afflicted states, the literal translation in Mizo for opioid-induced withdrawal symptoms is “suffer”. For users of opioids, “suffer” is as much a description as it is a metaphor. Coming off opioids involves severe cramps that seize the abdomen, sweating that won’t stop, tremors that look like convulsions, diarrhea and vomiting, chills, and many sleepless nights. Some of these symptoms can last for weeks.

Perhaps unsurprisingly, without sustained treatment, the rates of relapse among people who use opioids run between 80% and 90%. They then put off trying to quit again, because they simply don’t want to risk feeling that degree of pain a second time. But, after a relapse, the risk of fatal overdose is particularly high. While a user’s cravings may be just as intense, their body’s tolerance has decreased. Annual mortality among people who use opioids non-medically typically ranges from 1% to 3%.

Fortunately, for the last three-and-a-half decades, there has been access to successful treatment options. Opioid agonist therapy (OAT) recommends replacing illicit opioids with prescribed doses of methadone or buprenorphine. These opioid substitutes (agonists) bind to the same receptors in the brain, so they ease the cravings that users feel without producing the same “high”. This allows users to transition away from the dangerous parts of drug use without having to suffer withdrawal. This treatment works; these medications roughly double the likelihood of staying in treatment and cut the risk of dying from a drug overdose by about 70%.

Scaling OAT, then, seems like an obvious win. The therapy is relatively easy to administer—it can be done in an outpatient setting—and is very cheap. In India, the medication itself can cost as little as 25 to 30 US cents a day. The cost is clearly worth it; treatment pays for itself several times over because every dollar invested yields “a return of between $4 and $7 in reduced drug-related crime, criminal justice costs, and theft. When savings related to healthcare are included, total savings can exceed the costs [of OAT] by a ratio of 12 to 1.”2

And yet, OAT remains woefully underused in India. Just 2% of those who could benefit from it end up getting access, while the remaining 98% are left to fend for themselves. Other low- and middle-income countries manage to treat a considerably higher percentage of those who use opioids. If India scaled OAT to even 25% coverage—still below that of countries like Malaysia, Vietnam, and Iran—it could avert 5,000 to 7,000 deaths per year.3

Sources: Dhawan et. al (2017), EUDA European Drug Report 2025, Pirnia (2024), Luong (2024)

Why is India failing on this issue?

It is not because policymakers think OAT doesn’t work. Instead, it is because three decades of policymaking have made it extraordinarily difficult to prescribe the medication, dispense it, or stay on it. India simply doesn’t trust its doctors or patients enough to implement international best practice.

Tracing the Boundaries of Opioid Use in India

Opioid use is not rare in India. About 2.1% of the Indian population uses opioids, roughly three times the world average. In any given year, about a third of those—or 7.7 million people—will engage in harmful opioid use. As a percentage of the population, opioid misuse is more common in India than in South Africa or Germany. And each year, at least 77,000 people will die from drug-related causes. This, too, is not a small number; it is similar to the number of Indians who die from breast cancer.

Injection drug users are the minority of Indian opioid users, making up only about 11% of those who misuse opioids.4 Most injection drug use in India is heroin, trafficked across borders from Myanmar. This means the epidemic is geographically concentrated in India’s northeastern states. Mizoram, Manipur, and Nagaland sit along trafficking routes from Myanmar, leaving them particularly exposed. Heroin also crosses from Afghanistan into Pakistan, and then into the street markets of India’s Punjab state.

The states of Mizoram, Nagaland, Arunachal Pradesh, Sikkim, and Manipur all have opioid use prevalence above 10% of the adult population. Between 4% and 7% of the population meet the criteria for problematic use; this is some 10 times the national average.

Source: Ambekar A et al. on behalf of the group of investigators for the National Survey on Extent and Pattern of Substance Use in India (2019).

And in these places, the consequences of use extend well beyond addiction. HIV prevalence among people who inject drugs reaches 32% in Mizoram and 18% in Tripura. Hepatitis C prevalence exceeds 60% at multiple sites in these states. Getting the rules of treatment right here could reach a disproportionately large share of the national burden of infectious diseases. 

The majority of users, though, smoke or take pills. Recently, India has seen the same expansion of pharmaceutical abuse that has been seen elsewhere in the world. India makes more generic drugs than any other country, and this includes opioid painkillers like tramadol and tapentadol, which are cheap and easy to get. Pharmacies routinely sell such drugs without a prescription. Indeed, the concept of prescription-only drugs is often more of a suggestion than a rule in many Indian pharmacies. This makes access easy and abuse more likely. About half of India’s opioid users now abuse via prescription drugs, rather than via heroin.

Getting Harm Reduction Right

To many, opioid agonist therapy does not seem like treatment at all. It sounds like simply providing drug addicts with their fix. Perhaps it is a less harmful way to take opioids, but they are still taking opioids. Is it really the role of the state to provide addicts with a different type of drug?

But to even ask the question is to misunderstand the treatment. Users on OAT do not get high, and they avoid the harmful parts of drug use. A major meta-analysis found that OAT reduces all-cause mortality by about a third to a half. It also reduces illicit opioid use, criminal activity, and the needle-sharing that spreads HIV. This is why OAT is the gold standard of treatment worldwide.

Over months and years, OAT allows people to lead stable lives in which they hold down jobs, save money, and rebuild relationships with their families. OAT treats opioid use disorder like any other chronic condition: the goal is not to get off the meds, but to have a functional, healthy life.

In rich countries, coverage is high. France treats more than 80% of its high-risk opioid users. Across the EU as a whole, roughly 60% of high-risk opioid users received OAT in 2023.

But it is not just rich countries that use OAT; it is also widely used in middle-income countries. For example, Iran began its national OAT rollout in the mid-2000s—about the same time India began scaling its program—and now delivers OAT treatment to 31% of those who would benefit from it. Vietnam’s treatment program reaches 25% of opioid users.5 India’s coverage rate is dismal by comparison: less than 2% of people in India who need it receive OAT.

How India Built The Wrong System

To understand why so many patients remain untreated, it helps to understand the history of OAT in India. Opioid agonist therapy was first introduced in India to counter the rise in HIV infections in people who injected opioids. HIV prevalence among people who inject drugs is more than thirty times the average prevalence.

OAT can help reduce these numbers. A patient stabilized on a daily oral dose of medication no longer feels the same degree of craving to inject other opioids, and the needle-sharing that drives infection stops.

So, the national scale-up of opioid agonist therapy began in 2007-08 through the National AIDS Control Programme. The goal was explicit: to reduce needle-sharing and HIV prevalence among those who inject opioids. At the time, this made sense; people who injected drugs made up a large and growing proportion of new HIV cases. India needed to reduce new HIV infections, and that meant OAT for injection drug users.

Even this was politically challenging. Since buprenorphine and methadone are opioids themselves, critics called the government an “official drug dealer.” In some ways, the government appeared to agree; the 2012 National Policy on Narcotic Drugs and Psychotropic Substances described OAT as treatment in which “an injecting drug user is supplied buprenorphine or methadone and persuaded to abuse them orally instead of injecting heroin or other drugs.”

The government treated OAT as if it were a stop on the way to recovery—a slightly shameful stop at that. The policy went on to impose a one- to two-year cap on agonist treatment, insisting that patients be switched to “de-addiction as soon as possible preferably within one year but in no case later than two years.” 

There is no scientific basis for this time limit. Opioid dependence changes brain chemistry in ways that take many years to reverse, not just one or two. A recent cohort study of 32,000 US veterans that tracked treatment durations of up to six years found that survival kept improving with each additional year on treatment, and that the commonly recommended six-month minimum was “likely insufficient, regardless of the patient’s individual mortality risk.”

As one review put it, the question isn’t how to get patients off medication; it’s why we’d want to when they’re already doing well on it. This is why the WHO, since 2009, has recommended that “in most cases, treatment will be required in the long term or even throughout life,” and that this “should not be seen as a failure, but rather as a cost-effective way of prolonging and improving the quality of life.”

And yet, as recently as 2022, newspaper articles ran with headlines like “Punjab’s OOAT6 plan goes awry, addicts get hooked on treatment pills!” In 2023, Punjab’s health minister complained that despite improving access to medications, there weren’t enough patients who had been “cured” of opioid use disorder. But this is a fundamental misunderstanding of opioid use disorders. It is like asking for a cure for diabetes or hypertension. For opioid use disorder, cure is possible, but unlikely; consistent, managed treatment works for nearly all patients. 

Embedding OAT within the HIV program was, in part, a way to borrow the institutional legitimacy and international funding that HIV treatment provided. This was a pragmatic choice; few would argue against reducing HIV infections. But there were significant tradeoffs. Because OAT was built as an HIV prevention tool, the program of the National AIDS Control Organisation (NACO) only registers patients who inject drugs. But this leaves out almost 90% of those who could benefit from OAT. The other 7 million people smoke or “chase” heroin, drink opioid concoctions, or take pills — and they can’t access NACO-affiliated treatment centers.

Where do non-injecting opioid users go instead? Government de-addiction centers offer short-term inpatient detoxification: patients are stabilized, withdrawn from opioids over days or weeks, and then discharged. But relapse rates after opioid detoxification are as high as 90%, with most patients relapsing within weeks of discharge. This is because detoxification only clears the drug from the body. It doesn’t undo what months or years of opioid use have done to the brain. Long after withdrawal, cravings persist, the ability to feel normal pleasure doesn’t return immediately, and the body continues to be sensitive to stress.

Worse still, patients are at high risk of overdose after detox. During detox, opioid tolerance drops sharply. When patients relapse, and most do, they return to doses their bodies can no longer handle.

Recently, India has begun to include non-injection opioid users in their treatment plans. Drug treatment clinics have been set up in government hospitals to provide OAT to anyone with opioid use disorder, not only those who inject. But by 2019, there were only 27 such clinics across the whole country. Clearly, this does not suffice to serve 7 million patients.

Punjab is the one place in India where this approach has been scaled.7 Government-run outpatient clinics now accept any opioid-dependent patient regardless of injection status. 

Evidence-Based Policymaking

There is another significant problem. Indian policymakers haven’t faced the scale of the crisis. The government’s programmatic mapping exercise, conducted between 2020 and 2022, estimated there were about 289,000 injection drug users in India. But the Magnitude of Substance Use in India study, conducted by the All India Institute of Medical Sciences (AIIMS) and the Ministry of Social Justice and Empowerment in 2018 put the number at about 850,000. The latter number is likely more accurate as it is designed to capture hidden populations away from obvious hotspots.

Different parts of the Indian government use each figure; the Narcotics Control Bureau has since adopted the higher figure, but the National AIDS Control Organisation, which runs the OAT programs, uses the lower one. Planning for the lower number will leave half a million injection drug users out in the cold, and it certainly leaves no spare capacity to reach other types of opioid users.

Even if there were only 289,000 opioid users, India simply doesn’t have the clinics it needs. In the decade to 2023, the country went from essentially zero national OAT coverage to 393 centers. Punjab has added a further 529 clinics. But just short of a thousand clinics can hardly cover 7 million people across 28 states.

The situation for women is particularly bleak. Women who undergo treatment in women-only centers show less substance use and criminal activity compared to those in mixed-gender programs, but there are only four women-only drug de-addiction centers in the entire country.

There are viable solutions to this dearth of treatment facilities. If community health centers and primary care physicians could prescribe and dispense OAT, the number of access points would increase dramatically without the need to create new centers. As of 2023, India already had over 30,000 primary health centers and about 170,000 sub-centers. Even a small fraction of these offering OAT would radically increase coverage.8

Beyond Government Clinics

In a country the size of India, though, government-affiliated clinics probably won’t be enough. Private providers can help fill this gap. This is relatively common across countries that provide OAT; Iran, for instance, has more than 7,000 private outpatient clinics dispensing OAT.

In principle, Indian psychiatrists could follow Iran’s example. There are private de-addiction centers in India, and private psychiatrists are legally permitted to prescribe buprenorphine. In practice, very few facilities offer OAT because private psychiatrists simply don’t want to take the risk.

Prescribing buprenorphine is a regulatory grey zone, with conflicting directives. Buprenorphine is simultaneously regulated under four different legal instruments: the Narcotic Drugs and Psychotropic Substances Act 1985, the Drugs and Cosmetics Act 1940, the Mental Healthcare Act 2017, and separate Drug Controller General of India approval conditions, and none of these agree on who can stock, dispense, or prescribe the drug. In the past, psychiatrists have been arrested for providing buprenorphine without the right licenses.

Consider (again) the example of Punjab. While it has had success in expanding government-affiliated clinics, private clinic expansion has not gone so well. In 2019, the Drug Controller General of India issued a directive that private psychiatrists could dispense buprenorphine from their own clinics. But, before the rules could take effect, the Punjab and Haryana High Court stayed the change. In 2020, the state’s cabinet amended its rules to allow private clinics to dispense anyway, but, by 2021, that provision had been rescinded. Four years later, in June 2025, citing the shortage in the public system, the Punjab health minister announced that private psychiatrists would be allowed to dispense in their outpatient departments. But, within weeks, the 2019 stay resurfaced as a legal barrier, and the health department set up a committee to decide how to get it vacated. In October 2025, the state cabinet issued new rules that specifically allowed individual psychiatrists to provide OAT without running a full inpatient rehab, but, within weeks, a public interest petition was filed challenging the rules. The petitioner argued the outpatient-only category was inconsistent with the Mental Healthcare Act and would encourage unregulated dispensing and diversion. At the time of writing, the matter was pending before the Punjab and Haryana High Court.

Unsurprisingly, all this flip-flopping has put private practitioners off OAT entirely. No official count of private facilities has ever been published, but the number appears negligible. In India, prescribing OAT may be harder than prescribing the opioid itself.

A Dosage That Causes Suffering

Even if a patient can reach one of the few government-affiliated clinics, the current system makes it difficult for them to stay in treatment. For a start, clinics radically underdose patients.

India’s early experiments with buprenorphine in the 1990s used very low doses of 1.2 to 2 mg per day, in part because only 0.2 mg tablets were available at the time. After larger doses became available in the 2000s, a very small-scale local study in India compared the efficacy of 2 mg and 4 mg doses. It showed no difference in efficacy, likely because the study only had 23 patients. Indian policymakers stuck with the lower, cheaper dose.

Unfortunately, early studies were misleading. The WHO now recommends 8 mg to 24 mg per day for buprenorphine maintenance. At lower doses, patients are much more likely to still experience withdrawal and cravings. Since patients still suffer the negative side effects of coming off drugs, they are much more likely to discontinue treatment. A meta-analysis found that patients on 16 mg or more stayed in treatment longer and tested clean more often than those on lower doses.

India has since updated its guidelines somewhat, but they remain far below international norms. More than three-quarters of patients at government-affiliated treatment centers were receiving less than 8 mg daily and, as a consequence, about 38% had dropped out by six months. There has been no attempt to see whether higher doses could reduce this dismal retention rate.

Increasing the dosage received at clinics to the WHO standard would not require major changes. Since dosing is centralized in a relatively small number of clinics, it would be relatively simple to require these government-affiliated clinics to provide at least 16 mg of buprenorphine daily in consultation with the patient. Since buprenorphine is so cheap, it would not even be a major strain on government budgets.

Barriers to Staying in Treatment

But let us say a patient can get to a clinic and tolerate the ongoing cravings. India’s clinics still make it difficult to stay in treatment. Indeed, they give patients a seemingly never-ending series of obstacles.

When a patient starts OAT, the consent form requires a family member or witness to co-sign, and patients must agree to bring family along for follow-up visits. At many centers, this means a patient cannot begin treatment without first disclosing their addiction to a relative. Given the severe stigma of opioid addiction, that is not a small ask.

The family obligation doesn’t stop at registration. On weekends, when clinics are closed, a family member must collect the patient’s doses and supervise them at home. The patient cannot take the medication unattended. The logic behind this is that families support recovery and that involving them early builds a structure around the patient. But not everyone has a willing family member, particularly if they have struggled with opioid addiction that has strained family relationships.

The logistical difficulties do not end there. In India, OAT requires daily attendance at a clinic. Medication is given as a small tablet, often crushed and placed under the tongue. Staff watch it dissolve so it can’t be pocketed and carried out. But most clinics are only open from 9 am to 4 pm. When travel to and from a clinic is included, treatment can take hours a day, and most of those hours must be during the workday. In a country where many laborers work in informal jobs without the ability to even discuss taking time off, it can seem easier to discontinue treatment than to try to manage the logistics.

Seasonal migration makes these constraints even harder to navigate. In India, it is estimated that between 2% and 6.8% of people migrate seasonally. But when clinics require frequent in-person attendance, OAT becomes difficult to sustain. In a set of interviews with young people who inject drugs in the northeast state of Mizoram, one patient described the problem:

“We went to my wife’s village. We expected the length of our stay to be one week, one week and a bit. But they could not give us too many OATs. Maybe it was two or three days’ dose; they gave us just that. During that time, if I didn’t take it, I still had to suffer.”

So, people adapt. For travel, they borrow doses from others at the clinic, then smuggle out their own daily allotment after they return to repay the loan. In Punjab, researchers have documented this barter system among truck drivers whose trips can last a month. Most of the “diverted” buprenorphine is probably consumed by people already in treatment, not by new users chasing a high.

In many countries, take-home OAT is much more common because they have adopted an important technological improvement. Rather than using just buprenorphine, they use buprenorphine combined with naloxone. In this formulation, an opioid-like molecule, buprenorphine, and its antagonist, naloxone, are combined. When you swallow the tablet, naloxone is poorly absorbed and has little or no effect, while the buprenorphine works as expected. But if someone dissolves and injects the tablet to get high, the naloxone blocks the opioid receptors and triggers withdrawal symptoms. This means it is safe for take-home dosing since the patient can’t get high on it even if they try.

The combination works well elsewhere. In the United States, buprenorphine is prescribed like any other Schedule III medication, with patients receiving up to a month’s supply at a time. The longer patients stay on treatment, the better the outcomes. We know that the combination product—buprenorphine mixed with naloxone—is as effective as buprenorphine alone, suppressing withdrawal and cravings. 

While there have been concerns that the effects of naloxone may be too short-lived to prevent diversion in all forms, there is some concrete evidence that its design to deter abuse works. Patients prescribed buprenorphine-naloxone consistently report injecting it for misuse less often than those on plain buprenorphine. Weekly injection rates in Australia ran roughly half those of buprenorphine alone, daily injection rates among Finnish needle-exchange participants about a fifth, and US surveillance data show a similar gap.

This combination does exist in India. The buprenorphine-naloxone combination was launched in the country in 2004-2005. It is not clear why it hasn’t become the standard medication of choice for take-home dosing.9

But during the COVID-19 pandemic, India experimented with longer dosing. NACO allowed take-home buprenorphine for the first time, with centers dispensing at least seven days’ supply, and even up to four weeks’ provision in some tertiary centers. A retrospective cohort study at one North Indian tertiary center compared patients given a 1- to 2-week supply before the pandemic with a cohort given up to 4 weeks during it. The longer-prescription group stayed in treatment longer.

But even the combination therapy is just a better version of the same daily pill. The science has moved further along. In April 2026, the WHO added long-acting injectable buprenorphine to its treatment guidelines, recognizing that a monthly injection eliminates the need for daily clinic visits that drive patients out of treatment, and removes the diversion risk that drives daily dispensing recommendations. And even better options are on the horizon: subdermal implants could offer six months of steady medication from a single procedure, and early research on GLP-110 receptor agonists like semaglutide suggests they may reduce opioid cravings. Trials are in progress in the US right now, but there are no such trials in India. India must move beyond 1990s science and find the best ways to treat its large opioid-dependent population.

Fixing the Problem

It is not that India lacks the medicine or the money to treat opioid addiction. Rather, it is that the country’s opioid treatment system was built on a deep mistrust of the people within it. Patients are treated like addicts without the willpower to get clean, not as people dealing with a physiological dependence. Every choice in the system underlines that reducing the risk of misuse outweighs any suffering patients may experience along the way.

Sankey diagram of accessing OAT in India
Sources: Ambekar A et al. on behalf of the group of investigators for the National Survey on Extent and Pattern of Substance Use in India (2019); NACO program data; Ganapathi et al. (2023)

Most of these choices can be unwound, and most without much money. India can plan for all those who are dependent on opioids, not just the ones the government deems acceptable to count; raise government clinic dosing to the WHO range; make buprenorphine-naloxone the default take-home medication; and let primary health centers and private clinics prescribe and dispense without putting themselves in legal jeopardy.

None of these require inventing anything. The evidence base is decades old, the international playbook has been successfully followed in many other countries, and India is well-placed to implement a better system. Indian patients should not need to suffer any longer.

Cartoon of opioid users being rescued by helicopters - but there aren't enough ladders or helicopters to help everyone.

Akshay Narayanan is a public health researcher and consultant working on treatment for young people with opioid use disorders in India and violence prevention in schools across low- and middle-income countries. He previously led child protection programs for Guardians of Dreams, and writes about how young people shape the world and how the world shapes their lives.

If you have comments on this article, or wish to contribute to the discussion, please email them to letters@indevelopmentmag.com. Responses will be featured in a letters section.

  1. As calculated from prevalence numbers from the World Drug Report 2025. Some sources have the US as having a slightly higher number of people with opioid use disorder; given the difficulty surveying this population, there is some variation among sources. ↩︎
  2. This cost-effectiveness estimate is from the US; no similar estimate exists in the South Asian context, despite nearly two decades of OAT delivery in India. ↩︎
  3. India’s National Crime Records Bureau reported about 3,000 drug-related deaths between 2019 and 2023 but this figure is universally regarded as a severe undercount. As Singh and Rao (2012) note, opioid overdose deaths in India are routinely registered as “cause unknown” or as exposure to cold or heat, particularly among the homeless. The figure also captures only “accidental” opioid overdose. It excludes the far larger toll of drug-attributable mortality from HIV and Hepatitis C transmission through shared needles, injection-related infections, and mental health comorbidities. The true baseline against which any treatment scale-up would operate is almost certainly an order of magnitude higher than the official count.

    Scaling OAT from 2% to 25% would put an additional approximately 1.77 million Indians into treatment. Of those, baseline annual mortality would be about 18,000 to 27,000. Applying Sordo’s 55% reduction in all-cause mortality only to the fraction meaningfully retained in treatment (assume even half, given conservative retention rates) yields roughly 4,900 to 7,300 lives saved per year from mortality reduction alone. ↩︎
  4. Some heroin users inject, although in India it is more common for heroin to be smoked. ↩︎
  5. As of December 2022, Vietnam had 235,314 registered drug users, of whom 84.7% use opioids. There are 52,000 people in treatment, which is about 25%. ↩︎
  6. Outpatient Opioid Assisted Treatment. ↩︎
  7. There are now 529 such clinics in Punjab. ↩︎
  8. Indeed, this is precisely how Punjab has been expanding access to OAT to address its growing opioid crisis. ↩︎
  9. Perhaps it is because the NACO guidelines reference only plain buprenorphine. Given the legal uncertainties, it does not make sense for prescribers to push for something not explicitly covered by regulation. ↩︎
  10. Glucagon-like peptide-1 ↩︎

Can Africa regulate as a continent?

Enlli McAleese

What happens when 55 countries try to review medicines together?

The Problem of Regulatory Delay

The drug tenofovir disoproxil fumarate, a cornerstone of HIV treatment, was approved by the United States Food and Drug Administration in 2001. Its better safety profile quickly made it a standard treatment in the US and Europe. It should have been a shoo-in in Africa; at the end of 2001, sub-Saharan Africa accounted for over 70% of the world’s HIV/AIDS cases, while an estimated 2.3 million people on the continent died of the disease that year.

Instead, when African countries began rolling out their national programs to address the AIDS epidemic, with Botswana leading the way in 2002, most patients started on stavudine-based regimens.1 Stavudine was cheap but toxic, causing disfiguring and sometimes life-threatening side effects. In South Africa, one study showed that 30% of patients stopped taking it within three years.

By early 2006, the manufacturer, Gilead, had registered it in only five sub-Saharan African countries. Even in South Africa, one of the region’s larger markets, the company did not apply for registration until late 2005.

In Africa, programs only began replacing stavudine with tenofovir in around 2010.2 Had Gilead filed in African markets alongside the FDA, tenofovir could have been available from the start.3

This same pattern was repeated with bedaquiline, the first new class of tuberculosis drug in over 40 years. Following fast-track approvals by the FDA in 2012 and the European Medicines Agency in 2014, it was hailed as a breakthrough against drug-resistant tuberculosis, a disease that was killing over a million people annually. Most of those people lived in Africa and Southeast Asia. Yet, by October 2014, it had been registered in just one African country (South Africa). In South Africa, mortality among drug-resistant TB patients was roughly half on bedaquiline-based regimens compared to standard treatment. Elsewhere, patients continued to receive inferior drugs.4

The Nature of Regulatory Delay

On average, in sub-Saharan Africa, there is a gap of four to seven years between a drug or vaccine’s first submission to a regulatory agency in a high-income country and its approval. Two distinct regulatory barriers drive this.

The first is submission delay. Africa has 55 countries, and manufacturers must usually file separately in each one. This means repeated applications, different technical requirements, and higher costs. For firms weighing returns in any single market, the arithmetic often does not favor registration. They focus on larger, richer markets instead, so products are either not submitted or arrive years later. That was tenofovir’s fate.

The second is review delay. For example, if you submit a drug for review in Botswana, realistically, you can’t expect to start selling it until three years later. This is much longer than in countries like the US, where a standard review takes 10 months.

Drug reviews can be slow anywhere; the FDA, for instance, missed its own review deadlines for about 1 in 10 products in 2025. However, in developing countries, insufficient staffing at the regulatory agency can be a binding constraint. Reviewing a complex drug dossier requires trained pharmacologists, toxicologists, and clinical experts, as well as laboratory capacity to test product samples and systems to track adverse events once drugs reach patients. Most African countries lack this infrastructure.

According to the WHO, more than 90% of African countries have minimal to no regulatory capacity. For instance, in 2022, South Sudan—a country of about 11 million people—had just 16 staff at its medicines regulatory agency (~1.5 per million residents). By contrast, the US employed about 19,700 (~56 per million residents).

Regulating “Family Style”

Africa is not the only continent with many small countries, nor is it the only one that has faced limited capacity. Regulators around the world have developed three broad responses to submission and review delays. Each has involved some form of cross-border cooperation—call it regulating “family style.”

Harmonization of regulatory requirements across agencies addresses submission delays. When regulators standardize procedures, guidelines, and technical requirements, they make it easier for manufacturers to submit in multiple countries. The International Council for Harmonization has spent decades aligning technical standards across major developed country markets, but much of Asia, Africa, and Latin America remains outside its framework.

Collaborative review goes further: regulators jointly assess applications while retaining national authority. The FDA’s Project Orbis does this for cancer drugs. Since May 2019, the US, Australia, Canada, Singapore, Switzerland, the UK, and others have conducted concurrent reviews, often issuing approvals within days of each other. But this model depends on trust, which is easier when participating agencies have similar levels of capacity.5

Reliance reduces duplication by allowing regulators to defer to trusted authorities. For example, the UK can fast-track approval of drugs already authorized in other major markets.6 The WHO Prequalification Program operates on similar principles, allowing countries to rely on WHO’s assessment rather than conducting their own full review.

However, reliance is only beneficial when the leading authority’s reviews are timely. In 2022, WHO’s full review pathways averaged about 17 months, a reminder that concentrating regulatory work in a single body amplifies the cost of that body’s failures across reliant countries.7

The deepest form of collaboration is supranational regulation. In the European Union, the EMA conducts a single scientific review, and the European Commission issues one authorization valid across all 27 member states. This only works because EU countries agreed to pool sovereignty for drug approval. Without that political foundation, the model is hard to replicate.

The East African Pilot

In 2009, the African Union established a Medicines Regulatory Harmonization initiative.8 Rather than attempting continent-wide harmonization and collaboration immediately, it decided to run a five-year pilot through one of the continent’s existing regional economic communities, soliciting proposals and then funding the most promising plan. The East African Community (EAC) won the bid. Its application was compelling: it already had a customs union and a common market in force, giving its member states genuine experience in cross-border cooperation; it comprised a small number of partner states, most of which shared a common language, culture, and infrastructure; and its national regulators had already been collaborating informally for years.

And so, in 2012, the EAC’s Medicines Regulatory Harmonization (MRH) initiative was launched, covering nearly 150 million people. The initiative targeted reducing submission and review delays by adopting two of the “family style” regulatory approaches: harmonizing requirements and speeding up review by sharing the work among national regulators, while maintaining rigorous standards.

It was not designed as a supranational regulator issuing binding approvals. Applications would be jointly assessed, but final decisions on whether to approve a product would remain at the national level. There would be no central authority for medicine approvals in East Africa.

But it did split the work across countries. A product application was first submitted to Tanzania’s regulatory agency, which was responsible for the initial screening to confirm that all sections were complete. Tanzania then assigned two other national authorities to evaluate the application’s data in full, while Uganda’s regulator simultaneously led the product’s Good Manufacturing Practice assessment. Once these assessments were complete, all EAC regulators came together in a joint session to discuss the findings and reach a consensus recommendation. This was then submitted to the Secretariat, and the manufacturer could use it to apply for national marketing approval in each EAC member state individually.

Process map and milestones for East African Community (EAC) joint assessment procedure pilot. Source: Ngum (2025).

And it worked. Up to a point.

The median timeline for joint assessment fell from about two years to just over a year by 2017, and down to 240 days by 2019. Between 2015 and 2020, the initiative held 10 joint assessment sessions, reviewing 83 product applications, and recommending 36 products for approval in the region. The initiative also succeeded in advancing regulatory harmonization, by developing a Common Technical Document that manufacturers could use for submissions across all partner states. Joint Good Manufacturing Practice inspections began in 2016, pooling expertise and reducing redundant factory visits.

As well as reducing regulatory delay, the joint assessments introduced higher manufacturing standards than many national pathways required. They mandated bioequivalence studies, to demonstrate that generic drugs perform in the body in the same way as branded originals do. National procedures often waived such requirements, but the MRH had the capacity to insist on these.

Beyond speeding up review times, the initiative also sought to encourage drug classes that might not otherwise have been registered. Major global health organizations, such as the WHO, naturally prioritize advancing medical products to fight the highest burden diseases in Africa. These are usually infectious diseases. But as the African population ages, and the burden from infectious diseases has been reduced, non-communicable diseases have become increasingly important. The East African pilot decided to also focus on drug classes that treat these disease types, particularly anticancer and antihypertensive medicines. Before the pilot, such drugs were systematically under-registered: when Kenya’s government attempted to procure essential cancer drugs, nearly a quarter weren’t available in the country. Early joint assessment application data suggests the pilot began to address this gap: between 2015 and 2017, 16% of 49 applications were for oncology drugs and 24% for cardiovascular products.

Perhaps most importantly, the initiative helped build regulatory capacity across the region. When it began, only Kenya, Tanzania, and Uganda had regulatory agencies separate from their ministries of health; Burundi, Rwanda, and Zanzibar, by contrast, had small departments housed within theirs. By cooperating with more established regulators, Rwanda and Zanzibar were able to increase their independence.

But the limitations were equally apparent.

In 2015, Roche used the initiative to seek approval for two established cancer medicines, bevacizumab and trastuzumab.9 The joint assessment proceeded quickly, with a positive recommendation issued within months of submission. Tanzania registered them within four months of the drugs’ application for joint assessment, a remarkable improvement over its 15-month average.

Yet Roche registered the medicines in only only three of the six countries under the initiative at the time. It chose not to pursue the smaller markets. Even with a streamlined process, manufacturers still faced separate national submissions and fees; these markets simply weren’t worth it for Roche.

And the program didn’t fix all regulatory issues. National registration was supposed to take about three months, but sometimes took over a year. When pharmaceutical executives were surveyed about the initiative, their response was measured. They supported its ambitions and noted progress. But final national authorizations still took too long, and some countries failed to recognize joint recommendations.

This last point revealed a deeper tension. The premise of collaborative review is mutual trust. But some national regulators refused to accept the joint decisions. While their rationale isn’t publicly known, it could have been due to a lack of trust. When sharing work across countries with very different capacity levels, those with high capacity may not wish to defer to those with lower capacity.

The introduction of higher standards for generics created its own pressures. During the pilot, the industry became frustrated that the joint regional standards were higher than those previously applied in some member countries. As long as some countries maintain less demanding requirements, regulatory arbitrage—where firms capitalize on regulatory loopholes to avoid unfavorable rules and cut compliance costs—becomes possible, and companies may simply choose to submit only to countries with lower standards.

And there was one other issue. The initiative was meant to become self-sufficient after five years, transitioning from donor funding to fees and contributions from partner states. Nine years later, that transition hasn’t happened. Relying on outside funding introduced more delays to the process, and made the whole endeavor fragile.

Scaling to a Continent

Still, the East African pilot was always intended to lead to something larger. Conversations about a continental regulator date back to 2009, but it took a decade of political negotiation before the African Union formally adopted a treaty establishing the African Medicines Agency (AMA). Scaling the harmonization model to 55 countries had the potential for the same gains seen in East Africa, but it also meant confronting the same obstacles, compounded across a far larger and more diverse region.

Even after treaty adoption, creating the AMA wasn’t easy. In 2020, not long after the agency was created, the continent faced the COVID-19 pandemic. Most African countries lacked sufficient regulatory capacity to handle the approval of new medications and therapies. Instead, they had to depend on authorizations from the FDA, EMA, and WHO, leaving them with little autonomy over which vaccines and treatments they could access—or when. For proponents of the AMA, it was a concrete illustration of what a continental regulator was meant to address. Well-resourced regulators can supplement domestic capacity, but they cannot substitute for it. The AMA is intended as a coordination mechanism designed and governed by African states themselves, rather than relying indefinitely on external authorities. In that sense, the AMA fits within a broader African Union commitment to improve medical capacity on the continent and achieve health sovereignty.10

By the time the AMA officially launched in November 2025, some 39 member states had signed or ratified the treaty. But 16 countries, including South Africa and Nigeria, two of the continent’s largest pharmaceutical markets, had yet to commit, preferring to maintain independent regulatory frameworks. Without them, the AMA is likely to face considerable headwinds, operating with a meaningfully smaller share of total African pharmaceutical trade and a much weaker incentive for companies to engage with the agency at all.

The AMA also faces another significant hurdle. It is a harmonization initiative; it is not a supranational regulator—at least for now. Participation is voluntary, and countries retain the right to disregard its assessments entirely. Despite frequent comparisons, it is not “an EMA for Africa.” If engaging with the AMA and the individual countries costs more time and money than simply submitting to a country directly, companies will take the simpler path. If that isn’t the AMA, the agency risks becoming regulatory theater, significant on paper but inconsequential in practice.

The AMA can draw a clear lesson here from the East African pilot. An industry survey found that most manufacturers had expected joint assessment decisions to be automatically accepted by individual national regulatory authorities. Manufacturers who had expected automatic acceptance lost confidence in the program when they realized that this was not what it did. Setting expectations at the outset and clearly communicating the actual benefits of the AMA will position the continental agency far better with manufacturers than the pilot did.

As with the pilot, financing will also be a pressing question. Since 2022, the AMA has attracted significant external financial support—100 million euros over five years from the EU and the Gates Foundation, alongside contributions from Wellcome, the European Commission, and Belgium. But donor funding has expiration dates. The agency will ultimately require either substantial contributions from member states or it must begin to charge drug manufacturers.11

In many ways, the AMA will take all the challenges experienced in the pilot and amp them up. Building trust was difficult enough across countries in East Africa; it will be all the harder across the entire continent. Even the question of language becomes a serious operational problem: the EAC operates across three languages while the African Union officially recognizes six.12

If it goes well, the AMA could become a trusted coordinator that reduces duplication and accelerates access across the continent. Or, if these tensions aren’t resolved, it could become just another layer of bureaucracy, adding assessments, fees, and complexity without shortening national approval timelines.

Which outcome prevails will depend on whether the AMA can deliver value that justifies the additional step, and whether enough member states have the political will to let it try.

A Worthy Experiment

In many ways, the AMA is more than an experiment in drug regulation. It is an experiment in regional cooperation in the developing world—an experiment in which the stakes are high, resources are scarce, and incentives push toward yet more fragmentation.

The AMA is attempting something genuinely ambitious: regulatory coordination across 1.5 billion people, 55 member states, six languages, and enormous variation in capacity and political will. The EMA took decades to reach its current form, even with the advantage of operating within high-income Europe. Africa has neither time nor the advantages of money. The work will be technical, administrative, and often dull (to all but the most passionate regulatory wonks). But the alternative to a project like the AMA is that essential HIV treatments arrive half a decade late in places that needed them most.

Enlli McAleese is a researcher and advisor focused on strengthening medicines regulatory systems in Africa. She previously served as Regulatory Director at 1Day Sooner and worked on the COVID-19 vaccine rollout at the UK Department of Health & Social Care.

If you have comments on this article, or wish to contribute to the discussion, please email them to letters@indevelopmentmag.com. Responses will be featured in a letters section.

  1. Before the adoption of tenofovir in Africa, first-line antiretroviral therapy primarily relied on older nucleoside reverse transcriptase inhibitors combined with either a non-nucleoside reverse transcriptase inhibitor or a protease inhibitor. Common first-line regimens were stavudine, lamivudine, plus either nevirapine or efavirenz. ↩︎
  2. Studies have shown comparable antiviral efficacy between stavudine and tenofovir, including Gallant et al. (2004) and Kouamou et al. (2022). ↩︎
  3. It bears noting that registration alone may not have guaranteed access, since tenofovir’s price remained prohibitive until Gilead’s voluntary licensing program in 2006 enabled generic production and dramatically reduced costs. Earlier registration, however, would have created the legal precondition for faster licensing negotiations and generic entry. ↩︎
  4. Vaccines follow a slightly different path. Typically, a vaccine needs to obtain WHO prequalification before Gavi, the Vaccine Alliance, will fund it and the United Nations Children’s Fund (UNICEF) will procure it, meaning that delays at the WHO stage ripple forward and block access at scale. National registration adds a further layer, with countries in Sub-Saharan Africa taking an average of one to two years to register a vaccine even after WHO prequalification has been granted. Because Gavi’s funding decisions are tied to WHO prequalification, the WHO prequalification delays tend to have an outsized effect on access compared to any individual country’s regulatory timeline. For example, RotaTeq, Merck’s rotavirus vaccine, was approved by the FDA and the EMA in 2006 but didn’t receive WHO prequalification until 2010, leaving a four-year gap before Gavi could procure it for a disease that kills the vast majority of its victims in low-income settings. ↩︎
  5. Because of this dynamic, collaborative review has historically been used most often by countries with well-established regulatory agencies (such as countries that have WHO-Listed Authorities). ↩︎
  6. If Australia, Canada, the EU, Japan, Singapore, Switzerland, or the US has already licensed a drug, the UK’s Medicines & Healthcare products Regulatory Agency, through its International Recognition Procedure, can issue local authorization far quicker. ↩︎
  7. Ironically, this was largely due to limited resources — the same structural weakness that drives countries to outsource their reviews in the first place. ↩︎
  8. Similar efforts to strengthen regional medicines regulation are underway in other parts of the Global South. In Latin America and the Caribbean, the Pan American Network for Drug Regulatory Harmonization (PANDRH) is hosted by the Pan American Health Organization, and has facilitated regulatory harmonization and reliance since 1999, and, in 2023, the Latin American and Caribbean Medicines and Medical Devices Regulatory Agency (AMLAC) was established. In Southeast Asia, a continental agency has been discussed within the Association of Southeast Asian Nations (ASEAN). Notably, PANDRH, AMLAC and the existing ASEAN regulatory network operate as looser networks centered on harmonization and regulatory reliance rather than on centralized decision-making, and do not carry the same legal authority that the AMA derives from its founding treaty. ↩︎
  9. Approved by the FDA in 2004 and 1998, respectively, and listed by the WHO as essential medicines in 2015. ↩︎
  10. This was not the first time a health crisis had spurred the creation of an African institution. Before the 2014–2016 Ebola outbreak, proposals for a continental public health body in Africa had circulated for years. African leaders had formally acknowledged the need in 2013, but with little urgency. The scale of the outbreak changed that. The African Union’s dependence on outside responders made the institutional gap impossible to ignore, and the Africa Centres for Disease Control and Prevention was established in 2017. ↩︎
  11. This is what the EMA does, but it also offers binding approvals. Africa will need to develop its own approach. ↩︎
  12. Ask the EU about the difficulty of working in many languages. ↩︎

Where’s My Ministry For Emigration?

Charles Kenny

The movement of people could once again be the driving force behind global convergence.

Leaving Genoa in northwest Italy, Luigi Pastene arrived in Boston in 1848, and began selling produce from a pushcart in the city’s North End neighborhood. By the 1870s, permanently settled in the United States, he had been joined in business by his son Pietro, and the pair specialized in selling Italian imports including olive oil and tomato sauce from Naples in southern Italy.

In the same decade, Luigi Vitelli arrived in New York from Naples. First selling lace and handicrafts, he later began importing and marketing canned San Marzo tomatoes. In 1919, he returned to Italy and built his own processing plant for canned tomato exports to the US business, the origin of a firm that expanded into the multinational Vitelli Foods.

Pastene and Vitelli were just two of the millions of Italians and tens of millions of Europeans that emigrated to the New World—many permanently, some temporarily—in the second half of the 19th century and early part of the 20th century, the age of mass migration.

Migrants on a boat to the United States in 1890; image from the Library of Congress.

This migration was not just a boon for the United States. Many migrants sent money home, adding $4 million to $30 million a year to the Italian economy, a US government commission estimated in 1896. Herman Stump, US Commissioner-General of Immigration in the mid 1890s, reported that “the marked increase in the wealth of certain sections of Italy can be traced directly to the money earned in the United States.” But it was not simply about the money; emigration soaked up excess labor, returned migrants brought back new skills and contacts, and migration links drove stronger trade and investment relationships.

Indeed, the age of mass migration coincided with—and was possibly one of the drivers behind—a period of rapid income convergence between the old and new worlds. By 1910, incomes in Italy were perhaps 30% higher than they would have been without emigration.

Today, we are once again in an age of mass migration. And the movement of people could again be the driving force behind global convergence—especially if origin countries seize the opportunity.

A New Age of Mass Migration

The number of migrants worldwide has been rising again. One estimate for the first decade of the 20th century—the previous peak—is that 1.67% of the world’s population migrated across the Atlantic or Siberia. In the first decade of the 21st century, migrant flows amounted to about 1.2% of the world’s population.

But this was just the start. Global demographic trends point to a dramatically rising demand for migrants from the world’s richer countries. Europe will see its population decline by about 150 million people over the next century, not far off the one quarter drop between 1300 and 1400 as a result of Black Death.

But it isn’t only Europe in this situation or even just the richest countries. Upper-middle income China is facing a demographic cliff. The working age population in the country will fall by 160 million between 2020 and 2050. By the 2040s or 2050s, Brazil, Thailand, and Turkey will also start shrinking.

Number of children, working-age adults, and elderly people in China over time, including future projections. Data from Our World in Data.

The impact on workforces has already begun. As recently as 2008, high income countries were adding 6 million people to the working-age population each year. From the mid 2020s, they will lose 2 million a year. Add in upper-middle income countries, and that climbs to losing 10 million workers a year by the 2030s. These missing workers do not immediately disappear; rather, they retire. And retired people will continue to demand goods and in particular nontradeable services like care, even if they no longer produce them. That means they will create demand for work even if they’re not working.

Stagnating or shrinking working-age populations are one significant reason why the last few years have seen stories about worker shortages in farming, healthcare, mining, restaurants, sales, construction, transport, professional Santa Claus actors, daycare, the beer and wine industry, cheesemaking, security, interior decoration, ski lift operation, and zookeeping.

Population decline will be why even politicians elected on anti-immigrant platforms are opening the doors to more migrants. Politics cannot sweep away demographic trends. In Hungary over the last decade, a government publicly committed to not accepting a single migrant has opened up to ‘guest workers’ instead, and immigration rates have climbed dramatically since 2016. Something similar has occurred in Italy. These countries follow in the footsteps of traditionally immigrant-phobic Japan and South Korea to woo migrant labor.

Opportunities for Origin Countries

But population decline is not universal. The working-age population in low and lower-middle income countries will expand by about 1.12 billion between 2020 and 2050, or by about 37 million per year. They will also be the most educated generation in their countries’ history. The proportion of children in low-income countries that have completed lower secondary education has climbed to 38% in 2024 from 17% in 2000, for example. As they enter the workforce, they will want good jobs.

Number of children, working-age adults, and elderly people in Africa, including future projections. Data from Our World in Data.

Ensuring there are such jobs is the secret of turning the ‘demographic dividend’ of a bulging working age population into the kind of miracle growth rates that East Asian countries achieved in the second half of the 20th century. But there is a risk alongside that potential: without more jobs, the dividend could help spark turmoil: the Arab Spring was powered by a young, educated population with nowhere to go but the streets.

And there are fewer domestic opportunities to provide that employment. The traditional development model of rapid growth in jobs and income through manufacturing exports is breaking down. Relative demand for manufactured goods is falling worldwide and global value added in manufacturing exports as a percentage of global output is declining. That’s because older, richer people—like those vanishing from the labor force in rich countries—want services rather than stuff. They need healthcare, not cars. Add in continuing automation, and forecasts suggest there may be about 66 million fewer people working in manufacturing worldwide in 2050 than in 2018. Meanwhile, global services employment (much of it untradeable and difficult to automate – think home care, education, policing, construction, cleaning, and maintenance) might climb from about 1.3 billion in 2018 to 1.9 billion between 2018 and 2050.

This means that the timing of the second demographic transition toward a shrinking workforce in older countries couldn’t be better. Upper income countries need more workers, while lower income countries have workers to spare. Migration is the mutually beneficial solution to this global workforce imbalance.

Benefits of Emigration

Like immigrants in the 19th century, modern immigrants remain deeply connected to their home countries. Remittances are an increasingly large portion of incomes in developing countries, already accounting for a third of capital inflows to those countries in 2022, far more than all foreign assistance combined. Remittances help reduce levels of extreme poverty, pay for healthcare and education, increase savings, and cushion income shocks. And, for about a third of the world’s countries, remittances revenues were more than manufactured export revenues in 2023.

Personal remittances and official development assistance over time. Data from Our World in Data.

But, as it was a century ago, emigration is about far more than remittances. Migration promotes learning, trade and investment.

In the Philippines, the opportunity to migrate and earn as a nurse abroad has been a considerable incentive to stay in school and study nursing: so much so that for each nurse migrant, nine additional nurses were licensed in the country. This ‘brain gain’ effect will be why nearly three-quarters of the long-run income gains from emigration out of the Philippines came from domestic rather than migrant income. The prospect of emigration drove increased education, which in turn increased domestic income.

Similarly, the Indian information technology boom was underpinned by a domestic talent base that expanded in response to the opportunity to emigrate to the US, and then benefited from the contacts and experience of those who had migrated. Sridhar Vembu is one example: he studied at the Indian Institute of Technology – Madras, did graduate work at Princeton, and went on to a career at Qualcomm in the US. He used that experience to found Zoho, a software development company that set up offices in small towns and villages in India, providing customer relationship and project management tools for small and mid-sized companies around the world.

There are many such examples. Migrants with experience in South Korean textile factories returned alongside South Korean investment to launch Bangladesh’s own textile export revolution, while return migrants to Mexico powered a significant shift in workforce distribution toward the manufacturing sector. Refugees who fled the former Yugoslavia and spent time in Germany in the 1990s brought skills back to their countries after the war was over and fueled a knowledge-intensive export boom.

Across the world, countries that have more emigrants in communities in the US see faster trade growth with those communities. Meanwhile, those with more college-educated emigrants in the US receive more FDI from the US, and those with more patent-producing emigrants in the US have seen faster manufacturing growth.

It’s true that the cross-country correlation between emigration and economic growth suggests the relationship isn’t strong on average and may be negative for some countries. This is likely at least partially because mass emigration can be an act of desperation—fleeing violence or lack of opportunity. But a country investing in its future by harnessing the power of emigration is a distinctly different proposition than a failed state in which citizens have no choice but to leave if they can.

And the opportunity is large and growing: indeed, the average country already has an emigrant stock more than twice the size of its stock of manufacturing employees, and existing emigration may already be shrinking cross-country income inequality and global poverty, reducing the number of people living on less than $5.50 a day worldwide by between 67 to 105 million people.

Where’s My Ministry for Emigration?

When it comes to encouraging emigration, the Philippines has set the standard by creating the Philippine Overseas Employment Administration, providing pre-emigration training and certification, and an Overseas Workers Welfare Administration to assist workers and help prevent their exploitation abroad. Some eleven million Filipinos live overseas, and remittances amounted to 9% of GDP.

Other origin countries should follow its example by exploiting the increasing need for workers in rich countries to ensure greater benefits for those who stay at home. This is likely to involve a focus on more migration: not least, signing a bilateral labor agreement is associated with larger flows.

But, to reap the greatest benefits, sending countries need to do more than that. They need to ensure that emigrants have the skills they need to seize the best opportunities they can: not just in farm labor and housekeeping, but also in nursing and IT.

Increasing supply is key to making this work as part of a growth strategy. If the number of skilled workers is fixed, emigration might reduce access to those skills at home. And there is a linked point here about expansion of training to meet the demands of potential emigrants. Since most of the gains from emigration are private rather than public, the associated training costs should also be private rather than public.

Take nursing: in the Philippines, most trainees pay for their education. For-profit nursing schools have expanded to provide that training and the country now has a lot more nurses at home and abroad as a result. To ensure equitable access, countries might provide loans to cover education and training costs, which (in the case of medical staff) could be forgiven if students go on to practice in public hospitals and clinics at home.

As moving abroad is expensive, and many potential migrants have limited access to credit, origin countries could also provide potential emigrants with loans for travel and resettlement costs. And they could also help ease the process by backing domestic university and vocational training curricula that meet destination country standards: for instance, German and Indian education institutions are developing joint nursing curricula.

But as the competition for immigrants—and especially skilled immigrants—heats up, destination countries should themselves be increasingly willing to bear the costs of training. Japan, which has long included training as part of a package offered to emigrants, is improving that package to better guarantee rights, allow flexibility to switch employers, and ban demands for payment to access the training.

Origin countries could also make better use of their returning migrants. Currently, it is all too common for returnees to use their savings to invest in low-productivity, low-growth small enterprises, perhaps because of low skills or few opportunities. Origin countries can help to prevent this by facilitating migration to employment opportunities that will create skills and linkages that can be exploited to create domestic industry. Following the Bangladesh model, for example, if a government wants to encourage textile manufacturing at home, it should help potential emigrants find work in that industry in a destination country with a mature textile industry (preferably at all employment levels).

And origin countries should make it easy for that diaspora talent to return. Taiwan created the Industrial Technology Research Institute (ITRI) to turn the country into an electronics powerhouse. Its early strategies included sending students for advanced courses and employees for training to US schools and companies. Once people were trained to global standards, there were incentives to return to Taiwan. The institute provided housing, health services, and the country’s only public bilingual secondary school to lure talent back. The institute—and its returnees—later spun out both United Microelectronics Corporation (current market capitalization: US$24 billion) and Taiwan Semiconductor Manufacturing (market capitalization: US$1.6 trillion).

But instead, many countries discourage return migration. Some don’t allow dual citizenship, forcing potential emigrants to choose between their new country and their old. Few countries coordinate on social security payments for (potentially) temporary migrants. Both are fixable problems—Morocco, for example, actively encourages return migration by including social security arrangements in its bilateral labor agreements.

Countries can also focus on building out the industries that their existing stock of emigrants already work in. For instance, the Philippines has focused on building its medical tourism industry. If nurses that go abroad wish to return to the Philippines, there are internationally accredited hospitals in which they can work. In 2023, there were already some 30,000 medical tourists in the country.

That said, serendipity plays a role. Consider the example of Fahad Awadh. He left Tanzania as a young child and studied in Canada. He was not a highly skilled immigrant; there was no particular plan that he would be an asset to Tanzania. But, in Canada, he built a clothing brand and learned about sourcing and trade. When he returned to Tanzania in 2013, he used his skills and connections to found and build YYTZ Agro-Processing, which processes nuts and markets them globally under the More than Cashews brand. It sources from 4,700 smallholders, increasing their incomes and customer base. Certainly, agroprocessing is some distance from Awadh’s original experience in clothing. But a larger flow of emigrants increases the chance that these random acts of cross-country entrepreneurship occur.

The first age of mass migration closed with the imposition of migration restrictions in the US and beyond. The second age is beginning as similar restrictions are loosened under the increasingly urgent pressure to find workers. And, like the first age of mass migration, the second has the potential to make the world considerably richer. Luigi Pastene and Luigi Vitelli made migration a tool for Italian development a century ago, and it worked as well today to help Fahad Awadh create jobs and growth in Tanzania, ITRI launch semiconductor factories in Taiwan, and Bangladesh build its textile industry. More developing country governments should seize the opportunity.

Charles Kenny is a Senior Fellow at the Center for Global Development, and the author of Getting Better: Why Global Development is Succeeding and Life, Liberty, and the Pursuit of Utility: Happiness in Philosophical and Economic Thought.

If you have comments on this article, or wish to contribute to the discussion, please email them to letters@indevelopmentmag.com. Responses will be featured in a letters section.

For many years, the first word most foreign visitors learned upon moving to Jakarta was macet, traffic jam.

Traffic was so bad that transport experts warned in 2013 that if nothing was done, the city could achieve total gridlock, with every part of the city experiencing a traffic jam. In 2014, Jakarta was crowned the world’s most congested city by the Stop-Start Index and a year later was ranked far below other Asian cities on livability by the Economist Intelligence Unit.

Ten years later, Jakarta has the world’s largest and one of the most used bus rapid transit (BRT) systems. The old, crowded diesel commuter trains, famous for allowing passengers to ride on the roofs, are now electrified, air conditioned, and run on regular schedules linking the suburbs to the city center. There are multiple subway and light rail lines crisscrossing the city. The transformation has been remarkable: in 2015, less than 20% of residents were within walking distance of transit. Now, nearly 90% of the city has access to BRT or trains.

(A photo of a morning commute in Jakarta, with a dedicated Bus Rapid Transit lane. Image: UN Women, CC-BY-NC-ND)

How did Jakarta go from the world’s most congested city to one that other rapidly growing cities seek to emulate? International investment, political will, and a bit of luck.

Fixing the World’s Most Congested City

It’s hard to overstate how challenging getting around Jakarta used to be. Back in the early 2000s, expats in Jakarta used to joke about taking trips to “more peaceful” cities — like New Delhi, Cairo, or Bangkok.

After all, those cities had urban transit systems. In Jakarta, the only certainty was traffic. During peak hours, it would often take more than an hour to travel just five kilometers. At that speed, walking would be faster, but with no sidewalks in most of the city, even that wasn’t really an option.

There were few buses and no urban rail. According to the Institute for Transportation and Development Policy, the city-run bus system covered only about 10% of the city, and seemed to mainly serve to get you stuck in traffic. Other minibuses were run by private companies or individuals. They took seemingly random routes, stopping on demand, and charged inconsistent fares based on distance and which company ran the bus.

Other options were bajaj (auto-rickshaws) and ojek (motorcycle taxis). There were dozens of companies offering such services and few were reliable. It was possible to be taken on a joyride, or worse. And, according to a 2016 Asian Development Bank report, it was only going to get worse over time — private vehicle ownership was rapidly increasing at some 10% per year. Every year, Jakarta was also adding some 400,000 new residents, and they too had to use the roads.

As a consequence, Jakarta had also become one of the world’s most polluted cities. By 2011, 58 percent of all illnesses among people living in the city were related to air pollution.

And there were few signs of change. A 2013 working paper by the International Monetary Fund (IMF) placed Indonesia as having the worst infrastructure in the region. In 2014, the World Bank blamed the traffic on a “rapidly growing population and poor planning processes,” alongside “one of the lowest percentages of GDP spent on infrastructure” in the world. Residents were resigned to spending an average of 16 days stuck in traffic each year.

What changed?

The then-president of Indonesia, Susilo Bambang Yudhoyono, saw traffic as a concern for city and local governments. In his mind, this was not a national problem; Jakarta would have to fix itself.

The next president, Joko Widodo, known as Jokowi, saw things quite differently. Elected in 2014 after serving two years as Jakarta governor, he began taking steps to improve existing commuter train lines and expand the BRT system. Upon taking office, he branded himself the “infrastructure” president. To him, addressing Jakarta’s congestion was central to making it a world class capital city, and foreign investment, via development loans and technology transfer, would be key.

Just over a year after Jokowi took office, Japan and Indonesia signed an agreement to provide a 77 billion Japanese yen (US$623 million) loan to build a mass rapid transit (MRT) line. While the groundwork had been laid over the previous decade, many credited Jokowi with brokering the agreement. The loan had an interest rate of just 0.1%. Japan would also provide technical expertise for the building process; Japanese train systems are built quickly and efficiently at low cost, and Indonesia hoped to learn from them. Having Japanese and central government oversight would also hopefully reduce corruption.

It was a big risk. Indonesia only had a decades-old colonial era domestic railway network and little rail or railway manufacturing capability. There was no evidence that the country had the capability to implement such a large-scale project, and many expected it to either go over budget, or be heavily delayed. After all, strange pillars still dotted the Jakarta skyline from the last time the city had attempted a similar project. In 2003, construction started on a monorail project in Kuningan business district. That project never got beyond basic pre-construction, the funding either wasted or, as many Indonesians believe, stolen.

(Pillars from the abandoned monorail project. Image: Davidelit; public domain.)

This time, it would be different. Japan would play a role in basic design, construction, and introduction of transportation systems, including trains, signals, and gate systems, as well as their operation and maintenance.

But Japanese contractors were insistent that, while they might build the railway, it was up to Indonesia to run it. Much of the technology would come from Japanese companies like Sumitomo and Nippon Sharyo, but construction, operations, and maintenance would all have to be done by Indonesian companies or the government. “In the future, it will be the local staff of Jakarta MRT who will have to manage this railroad. The Japanese way of doing things will not always be applicable here. For these reasons, we placed an importance on their autonomy when transferring the technology and operation know-how to the local staff,” says Mariko Utsunomiya from Japan International Consultants for Transportation.

For the most part, the MRT was built underground or alongside existing large thoroughfares, minimizing the need for expensive land acquisition. When land was needed, the project used international standards to determine fair compensation and ensure fair process. Still, issues around some stations, particularly in South Jakarta, did result in the deadline being pushed back from 2018 to 2019.

Other than land acquisition issues, the MRT construction went smoothly, and the project stayed within budget. The first line opened in 2019, just in time for Jokowi’s re-election. According to a report in the Indonesia Journal of Social Sciences, the MRT project met most of the requirements of the Paris Declaration, which sets standards for mutually beneficial aid spending, and had a “positive impact on infrastructure development in Indonesia.”

(Ratangga 1000 series LBB12 train on the Jakarta North-South MRT line. Image: Alvin Imanuel; CC BY-SA)

While the MRT was still being built, the central government also approved a plan to have the state railway operator build two Light Rapid Transit (LRT) lines using domestic trains and technology. With knowledge gained from working with Japan, the Indonesian government would try to build its own infrastructure. The first line opened in 2023, slightly delayed by the COVID-19 pandemic but on budget.

The success of the LRT and Phase 1 of the MRT has opened the door to more international investment. MRT Phase 2, also funded by Japan, is under construction and should open in late 2026.

JICA and ADB are funding the MRT Phase 3 East-West Line, and a South Korea consortium, led by the Korea Overseas Infrastructure & Urban Development Corporation, Korea National Railway and Samsung, will build Phase 4 for 21 trillion Indonesian rupiah (US$1.9 billion). By 2045, if all goes to plan, there will be 10 LRT and 4 MRT lines with over 100 miles (160 km) of track added to the network.

“The improvement is quite significant in terms of quantity and network,” says I Made Vikannanda, Senior Manager for Resilient Cities & Transport at the non-profit World Resources Institute (WRI) Indonesia.

The user experience has also been streamlined. All of the new lines are part of an integrated digital fare system. A journey from one end of Jakarta to another is capped at 10,000 rupiah (about 70 US cents). According to WRI Indonesia, as of 2024, 10 percent of trips in Greater Jakarta are now made by public transit, compared to just 2 percent in 2015.

While the JICA loans covered the cost of building the system and training local staff, the full cost of operation has now fallen to the city government. So far, this has worked reasonably well, with Jokowi arguing that the cost of running the system — at about 800m billion rupiah (US$50 million) a year — is justified by the estimated 65 trillion rupiah (US$3.5 billion) in annual economic losses due to traffic.

There are also plans to take what has worked in Jakarta and expand it to other large cities in Indonesia. In 2022, the World Bank approved US$224 million to expand mass transit in other Indonesian cities. It hopes to replicate the success of Jakarta’s system in the metropolitan areas of Medan and Bandung, Indonesia’s third and fourth largest cities. This comes alongside a loan from the French development agency, Agence Française de Développement, to support the development of a Jakarta-style BRT in Medan and Bandung.

Future Challenges and Lessons

Despite making remarkable improvements in the last decade, Jakarta’s public transit still isn’t enough. The city has recently overtaken Tokyo as the world’s largest city, with a metro population of over 41 million people, and it is still growing rapidly. It is projected to add another 10 million people in the next 25 years.

To serve this population, Greater Jakarta has only six train lines and under 250 miles (400 km) of track. Tokyo, by contrast, has an astounding 158 train lines and 2,930 miles (4,715 kilometers) of track connecting 2,210 stations throughout its massive metro area. If Jakarta wishes to serve its population as well as Japan serves its, it would need an order of magnitude more transit.

This has meant that despite the growth in transit ridership, there are still more cars in Greater Jakarta now than in 2019, when the MRT opened. Ride-hailing apps have also exploded in popularity; GoJek and Grab now provide on-demand motorcycle and rideshare to millions of Jakartans everyday. The sheer number of them means that fares are cheap — often just a little more than the train for a ride that requires no walking or transfers.

This means one of the core drivers of the transit development push — air pollution — has actually worsened. Danny Djarum, an Air Quality Senior Research Lead at WRI Indonesia says that PM 2.5, the measurement of inhalable airborne particulate matter, is now eight to ten times higher than World Health Organization guidelines. “We’re still one of the top 5 most polluted cities in the world,” he said.

(Smog in Jakarta. Image: Joe Mud, CC BY-NC-SA)

Other infrastructure has also lagged behind investment in trains. “Sometimes the crucial things like the connectivity or accessibility around the stations, or the first mile/last mile problem, are often forgotten,” said Gonggomtua Eskanto Sitanggang, the Southeast Asia Director at the Institute for Transportation and Development Policy (ITDP), a think-tank . “Aid is good, but it needs more streamlined planning and coordination with the government, so it can take a broader perspective on how we can envision public transport in the future.”

While the city government has made progress on expanding sidewalks, it is limited by a lack of funding and capacity. Large projects, such as train lines, attract multiple foreign bids, but an overpass or better crossing signals do not. Convincing donors that these, too, are important might be the next frontier in improving Jakarta’s built environment.

There is also work to be done on getting people to drive less and use transit more. This could be accomplished through congestion pricing, making drivers pay a fee to enter certain areas. Mandatory car-pooling could also be a strategy. The strategy that WRI is calling for is the designation of Low Emissions Zones, LEZ, where access by private vehicles is restricted, green space is expanded and walkability improved. The city has, in fact, run a small-scale trial in the touristy “old town” (Kota Tua) neighborhood. While too small to have a measurable impact on air quality, residents and businesses observed improvements in safety and social inclusion, and reduced noise and air pollution.

“The best way that we can reduce the emissions emitted from the transportation sector is to have LEZs at a much larger scale,” says WRI’s Djarum.

Most cities that have embarked on demand reduction programs are in richer countries. Singapore has an electronic road pricing system, New York City has congestion pricing, and Paris has a highly regarded expansion of walk- and bike-only streets. It’s another chance for Jakarta to show a path forward for the tens of millions of people living in crowded, congested cities in Asia, Africa, and Latin America.

After all, Jakarta has already done the hardest part. Government and external donors have shown they can coordinate to improve the urban landscape. Jakartans are proud of the improvements and believe that their city can make even greater progress. In the latest TomTom traffic index, measuring average congestion—the percentage increase in travel time compared to free-flow conditions— the city ranked 24th, just ahead of the United States’ most famous traffic clogged city, Los Angeles.

Nithin Coca is an award-winning, Asia-focused freelance journalist who covers politics, technology, human rights, and environment, across the region, with a focus on cross-border, collaborative reporting. He is currently based in Japan, but was previously based in Jakarta, Indonesia.

If you have comments on this article, or wish to contribute to the discussion, please email them to letters@indevelopmentmag.com. Responses will be featured in a letters section.

A successful commercial firm does something no NGO can.

June Jambiha was a quintessential hustler. Like many in Kenya’s capital of Nairobi, she sold clothing as an informal entrepreneur, her income in 2018 swinging wildly, from $400 one month to $60 the next. This uncertainty made it nearly impossible to plan: hard to save, borrow, or commit to anything beyond the next week. But in Kenya, where over 80% of jobs are informal, hustling was less a choice than the only option available.

June joined my company, Wasoko, a B2B e-commerce platform linking small shops to large manufacturers, as a telesales agent. Her starting pay was lower than her best month selling clothing, but, for the first time, it was predictable. She knew what would land in her account the following month and the month after that. More than the money, though, there was an upward trajectory: her career could grow. Joining Wasoko didn’t just give June a paycheck; it gave her a career.

Entrepreneurship by Default

In developing countries, many people become entrepreneurs by default. Most have informal, cash-in-hand jobs. There is no certainty in entrepreneurship. At any given time, there could be a glut of opportunities, or income could completely dry up, and individuals have little control over this. When your income can differ markedly from month to month, it is hard to plot a path forward. Should you take out a loan to grow your hustle when your income could disappear the following month?

People in wealthier countries rarely stop to think about what a regular paycheck actually provides. A few prefer the adrenaline rush of building something of their own, but most, given the choice, prefer a steady job, since housing payments, credit cards, and expected bills are all far easier to manage. A paycheck is a reliable inflow that lets you build a future, not just get through the month.

People in poor countries share those preferences. As highlighted by Abhijit Banerjee and Esther Duflo in Poor Economics, these individuals do not necessarily want to be hustling; they simply have no choice. There are not enough steady jobs to be had.

To lift the floor for the 800 million people living on less than $3 a day, we don’t need more projects; we need more payrolls.

Effective Entrepreneurship

Non-governmental organizations often try to limit the damage from this massive deficit of employment opportunities. Cash transfers can allow people to invest productively, and asset transfers mean that people do not have to save for those purchases. But NGOs are inherently limited by the generosity of donors. What if there is a better option?

A successful commercial firm does something no NGO can: it issues “cash transfers” to a large group of people every month, indefinitely, funded by the market rather than donor whims. Indeed, private sector growth is the key to the structural transformation required to create hundreds of millions of jobs. No rich country today has become wealthy through the intervention of NGOs.

Rather, it is businesses that make a country rich. Take Singapore as an example. It became an export hub, first in goods and later in services. As the private sector grew, the state had more money to invest in public goods and advanced infrastructure, enabling further private-sector growth. Growth laid the foundation for everything else.

All of this can feel like a task for governments and economists—structural transformation is an initiative too large for any one person to shape, right? That assumption is wrong. Firms don’t emerge from policy; they are built by founders. You could be one of them.

I started Wasoko in Kenya in 2015. The seed of the idea had come from a month spent living in a rural village in Egypt a few years earlier, where I was doing remote coding work while learning Arabic. What I kept noticing was a simple, persistent problem: the neighborhood shops kept running out of basic items, such as soap, cooking oil, flour, and sugar. The shopkeeper then faced a half-day trip to the nearest city’s wholesale market to restock, at a significant cost in time and transport.

A small shop in Egypt with smiling shopkeeper
A typical small shop in Egypt. Photo by Joseph Bautista; image under Creative Commons BY 2.0 license.

Wasoko replaced that trip with a mobile phone order and same-day delivery. By consolidating dozens of individual restocking runs into a single route—one driver, one truck, serving many shops—the marginal cost fell significantly for each shopkeeper. What had once taken half a day and eaten into thin margins could now be done on the phone in two minutes.

Wasoko eventually grew to serve more than 100,000 small businesses across six countries in Sub-Saharan Africa, with a team of 2,000 people. Most held entry-level logistics and customer support roles—the vital first rungs of the formal economy. Each drew a monthly paycheck; that payroll helped support the lives of more than 10,000 family members. Those paychecks paid school fees, covered medication, and funded improved housing.

My experience at Wasoko is just one data point in a larger argument. Scale-up entrepreneurship—moving from the startup phase to manage increasing complexity and growth—is not merely a business strategy; it is the most powerful engine of mass job creation and poverty reduction ever built. All countries start with informal economies; the transition to an advanced economy happens one firm at a time.

Creating Firms in Poor Countries

Starting a business in a developing country means confronting a hard ceiling almost immediately. Most potential customers are poor. While you can build something genuinely useful and serve real demand, you can still find your growth fundamentally capped by local purchasing power—the very condition you set out to change.

But there is a way around this, by focusing on exports. By selling to global markets, firms bypass the constraints of domestic purchasing power entirely to access demand that is effectively bottomless.

This is what economist Dani Rodrik calls an “unconditional escalator.” Unlike domestic-facing firms, whose growth depends on rising local incomes, an export firm can scale as far as global demand will take it—in principle, until every willing worker in the country has a paycheck. This is roughly what China did when it became the manufacturer to the world. In the 1990s, Chinese consumers were too poor to support demand for their own sprawling manufacturing industries, but American consumers were eager to buy cheaper Chinese goods. In time, the employment gains made the average Chinese citizen much richer.

But the gains go beyond employment. To compete in global markets, a firm must meet international quality standards and benchmark itself against the world’s best—driving productivity levels that domestic industry rarely needs to reach. This is how a country climbs the complexity ladder: not by protecting local champions, but by forcing them to compete.

This was the scale logic of the “East Asian Miracle,” the rapid economic growth and industrialization, along with significant poverty reduction, in eight economies in the 40 years to 1990. Countries like Singapore, South Korea, and Thailand did not achieve historic poverty reduction through domestic services or aid. They did it by investing in manufacturing. By starting with low-complexity exports like textiles, they built the organizational muscle and fiscal surplus to move into higher-value industries. Each export factory served as a school of management and engineering, creating a self-reinforcing cycle of wealth and skill.

The organizational capital created within these pioneering firms eventually “spills over” into the broader economy. As people move on from the first scale-up firms, they take their knowledge with them. Economists Ricardo Hausmann and César Hidalgo argue this vital “productive knowledge”—the collective ability to perform complex tasks—is rarely found in textbooks; it must be acquired through learning-by-doing within functional organizations.

There are legions of historical examples. Consider Floramérica, the first cut-flower exporter in Colombia. Floramérica was founded by a few Americans in their early thirties who brought US-style business management to their pioneering venture. Within six months, they were exporting to the US and, within three years, employed 400 people.

But Floramérica didn’t just grow flowers; it engineered a multinational cold chain from scratch. It negotiated with airlines to create cargo space, designed specialized refrigerated trucks to navigate Andean mountain roads, and mastered the stringent plant import standards of US Customs. This required a level of organizational knowledge that Colombian domestic business did not have at the time. By solving these complexity problems, it created a high-productivity blueprint for an entire nation.

The knowledge didn’t stay inside Floramérica. Local employees mastered the trade and left to launch their own ventures, seeding an entire industry. Today, Colombia is the world’s second-largest flower exporter, with an ecosystem generating US$2.4 billion in annual value with 200,000 formal jobs as of 2025.

cartoon of a lemonade stand setting up franchises

It is difficult for an NGO to compete with that level of impact. This outcome was achieved through entirely different mechanisms outside of standard aid practices: The founders of Floramérica didn’t write policy papers, disburse cash transfers, or run a randomized control trial. They built a scale-up business in a poor country selling to global markets. In so doing, they catalyzed the structural transformation that gave hundreds of thousands of people exactly what June Jambiha spent years looking for: a reliable paycheck and a path forward.

And it’s repeatable. One of the Floramérica founders, Thomas Kehler, went on to launch SalmoAmerica in Chile—one of the first salmon exporters in what is a $6.5 billion industry employing 86,000 people in the country as of 2023.

Does This Still Work?

A common objection to export-led growth is that commodity prices are volatile: a nation that builds its economy around coffee or copper can be devastated by a price crash. This concern is real, but it misidentifies the target. Raw commodity exports are often capital-intensive rather than labor-intensive. They concentrate wealth in a few hands and can generate perverse incentives such as “Dutch disease,” where resource windfalls crowd out other productive sectors, or corrupt the elites who hoard outsized resource profits. The answer is not to avoid exports altogether, but to focus on value-added, labor-intensive manufacturing. A garment factory or food-processing plant prices its output primarily against the cost of entry-level labor, which is far more stable than iron ore or arabica futures. It is also precisely this kind of production that generates the broad-based employment that lifts living standards across a society.

A related worry is that the era of export-led industrialization is closing. With tariffs rising, there are significant efforts to relocate manufacturing closer to home, and manufacturing’s share of global value-added output is lower today than it was two decades ago. Is the window for the remaining poor countries to industrialize closing too? The window may be narrowing—but the alternatives are worse. For any developing country, the question is not whether manufacturing is growing as a share of global GDP, but whether there is room on the escalator for new entrants. There is: China’s share of global apparel exports peaked at nearly 37% in 2010 and has since fallen as wages have risen. Bangladesh’s share of global apparel exports has increased from 4.2% in 2010 to nearly 7%, while Vietnam’s more than doubled from 2.9% in 2010 to just over 6% as of 2024 World Trade Organization reporting. Both countries followed the same path: their lower wages attracted the labor-intensive industry while building general organizational capacity, while China’s rising wages pushed the lowest-complexity production onward to the next location.

Garment workers in a factory in Sri Lanka. Photo by ILO; image under Creative Commons BY-NC-ND 3.0 license.

Vietnam and Bangladesh are themselves now traveling up the escalator: Vietnam’s electronics exports now surpass its garments while Bangladesh is pushing into higher-value textiles and luxury apparel. The entry-level production that built their export sectors is moving again. Sub-Saharan Africa, with the world’s youngest workforce and wages below those that drew investment to Southeast Asia a generation ago, is the most logical next address. The alternative—betting on domestic demand—remains a structural trap: you need rising incomes to grow demand, but you need demand to raise incomes. Exports break the cycle.

Still others worry that manufacturing automation will make mass employment in the sector a thing of the past. As robotics gets cheaper and more capable, developed countries could reshore manufacturing entirely, closing the window for developing nations before they have climbed through it. This is a serious eventuality and should not be waved away.

But the economic forces driving advancements in robotics should be examined against the conditions for entry-level manufacturing. The robotics deployments that have transformed manufacturing over the past two decades have been concentrated almost entirely in high-precision, high-cost production—automotive assembly, semiconductor fabrication, aerospace components—where replacing expensive skilled labor makes compelling economic sense. The entry-level manufacturing that developing economies rely on sits at the opposite end of the spectrum: handling soft, irregular materials with low-cost labor in fast-changing production runs has attracted comparatively little capital investment. The dexterous manipulation of malleable, unpredictable fabric remains one of the genuinely unsolved challenges in robotics. Even where automation is technically feasible, the economics of deploying it against a workforce earning $65 a month remains deeply unfavorable—robots have high fixed costs, must be retooled for different product lines, and, as orders fluctuate, cannot flex up or down the way a human workforce can. Human labor in physical manufacturing may eventually be made redundant, but even apparel manufacturers in China today still rely on human tailors to drive their production. 

Furthermore, other growth paths besides manufacturing face even stronger headwinds. Tradeable services exports look like an increasingly bad bet. Public companies in service-driven export industries such as business process outsourcing have seen their share prices fall by as much as 70% following advancements in leading artificial intelligence companies. So far, manufacturing has been immune to this; collective market intelligence suggests that widespread reshoring across industries through extremely low-cost automated production remains beyond the forecastable window of cash flow impacts. 

But there is another category of objection altogether. Is this neo-colonialism, and who is an outsider to reshape an African economy? But this critique misunderstands the mechanism. Export entrepreneurship in developing markets is not about arriving with answers to problems you don’t understand. You—the prospective founder—may not have particular expertise in a specific low-income market. But you don’t have to. Your comparative advantage can come from deep knowledge of high-income buyer markets to build a bridge between local production potential and global demand. 

A founder who understands what a European retailer or American distributor needs from a supplier, and who can help a Ghanaian or Kenyan manufacturer meet those standards, is not imposing. The goal is not to serve as an extractor of basic materials from poor countries, but to start businesses in poor countries selling to new global customers who had never bought anything from there before. Eventually, firms started by local people you trained or inspired will probably outcompete you—and that’s the real win. The rising tide of growth brings gains to many people: the workers who will earn formal wages for the first time, the local entrepreneurs who will start the next generation of firms for global customers, and all the new local businesses that will form as they spend their wages.

Founder’s Journey

This is not an easy path. It is for the ambitious; those who want the highest impact and are unafraid of getting their hands dirty. Export-driven growth firms are gritty, capital-intensive businesses defined by physical logistics and hands-on operations. There is no startup accelerator like Y Combinator for garment factories, but success has the potential for far more societal uplift. A B2B software-as-a-service company may be the best job creation mechanism in Silicon Valley, but in Tanzania it is definitely not. These unglamorous industries are precisely those that pull people out of poverty at scale. They provide formal employment to workers who have never had steady paychecks and help countries gain access to the unconditional escalator of global demand. Your potential impact is limited only by the global market.

Success begins with initiative and immersion. As a software developer who grew up in California, I had no prior awareness of the supply chain challenges of small shopkeepers before my time in the rural Egyptian village after a university exchange program to study Arabic. I returned to my second year of undergraduate studies at the University of Chicago with an idea: what if small shops could instead reorder inventory by text message? I entered the concept into a university business plan competition and won a $10,000 prize. That recognition and modest starting capital gave me what I needed most: the means to justify a leave of absence to my parents and the runway to build out an initial prototype of the envisioned system.

I cold-emailed consumer goods brands across emerging markets, pitching the concept to anyone who responded. After months of dead ends, there was interest from an unexpected quarter: the Kenya office of Wrigley, the global purveyors of Juicy Fruit and Doublemint chewing gum. Following the suggestion of a potential pilot, I bought a ticket to Nairobi two weeks later and spent several months riding along on delivery routes with their local distributors, coding in the evenings to update our fledgling platform for presentation at the next Wrigley management meeting.

Daniel Yu speaking to Nairobi shopkeepers
Daniel Yu presenting early versions of Wasoko systems to Nairobi shopkeepers and Wrigley staff in 2015. (Image: Daniel Yu.)

That on-the-ground education shaped everything that followed. We launched what became Wasoko as a simple SMS-ordering service: lean, low-tech, and grounded in what we had actually seen. But the market quickly imposed a harder lesson: a platform that merely connects buyers and sellers is worthless if delivery is unreliable. To provide real value, we had to own the full supply chain. We built our own logistics, managed our own inventory, and became a fully integrated B2B platform. This is the opposite of what the typical asset-light Silicon Valley playbook would have prescribed, but it was the only approach that actually worked. In markets where the infrastructure doesn’t exist, you can’t outsource it. You have to build it.

That meant starting from nothing and scaling through the unglamorous middle. Our first warehouse was a two-bedroom apartment, emptied out and stacked floor-to-ceiling with chewing gum and soap. As volumes grew, we moved to a house with a yard large enough for shipping containers, which we packed with inventory as we expanded capacity. Eventually we operated a network of industrial facilities across six countries, shifting hundreds of millions of dollars worth of goods. The progression sounds logical in retrospect; at the time, it was improvised, one problem at a time.

There were other challenges. We were hiring for roles with no established talent pipeline, in markets where professional norms were still forming. How does one hire a head of product when that job doesn’t yet exist in the market? The first person we did hire did not show up on his first day. He was unreachable for three days, then resurfaced with a relaxed explanation: he had gone away for a family event, and in any case had decided not to leave his existing job. We eventually put together an exceptional team, made of people like former-hustler June Jambiha, but it was by a process of trial and error. 

Country expansion was no smoother. When we entered Rwanda, new suppliers demanded upfront cash before releasing goods. I went to our local bank branch to withdraw the equivalent of $10,000 in Rwandan francs—and discovered they held only $1,500 in local notes. I ended up on a motorcycle to the national branch in the capital city of Kigali, returning with two large bags of cash to close the deal.

But it was worth it. By the time I left the firm, it was serving 100,000 small businesses. After my nine years of living in and scaling the business across six African countries, Wasoko completed Africa’s largest-ever tech merger with MaxAB, an Egyptian e-commerce firm, poetically bringing me full circle back to Egypt.

And as for June Jambiha, within a year of joining Wasoko she was promoted to local team leader, and by five years later she left to co-found a consultancy with former colleagues to help the next generation of East African businesses improve their sales and operations.

Beyond Wasoko

Through that decade of venture building in Africa, I came to understand a harder truth: the path to widespread prosperity would not come from simply helping local businesses operate more efficiently. Wasoko was a start, but local purchasing power was deeply constrained. Creating genuine engines of income growth requires businesses built to serve markets beyond developing countries—using global purchasing power to drive convergence.

That conviction is what brings me back to you. If you want to improve livelihoods across the world, I would push you not towards Silicon Valley or the UN, but to the factory floor.

Start with radical immersion. If you lack a network in your target market, offer to work for free; local entrepreneurs are rightly skeptical of unproven outsiders. Spend at least six months working for a local export business, learning to navigate regulatory thickets, building supplier trust, and absorbing the nuances of the business culture. This is the most valuable capital you can acquire, and it cannot be found in a policy brief or a business school classroom.

Then build small, test rigorously, and commit to the long haul. Export-led ventures require a multi-year horizon; dabbling in actual development does not work. Study what succeeded in Asia and apply those lessons to the untapped comparative advantages of your chosen market. Most enterprises in low-income countries today serve protected local markets; the frontier is in helping them compete globally.

This path will likely never put you on a stage at the World Economic Forum in Davos. You won’t have a diplomatic passport and your work will probably be invisible to the global aid industry. But consider what the world actually needs: not more development consultants, but more exporters without borders—people willing to trade the conference circuit for the factory floor, who go to places where formal employment barely exists and build the supply chains that bring it into being. In the long arc of human history, development has never been a product of charity. It is built by those who go forth and export.

Daniel Yu is the founder of Wasoko, one of Africa’s largest e-commerce companies, and now the founding partner of the Africa Jobs Fund, a new program under Renaissance Philanthropy to finance and build African export manufacturing and labor mobility pathways.

If you have comments on this article, or wish to contribute to the discussion, please email them to letters@indevelopmentmag.com. Responses will be featured in a letters section.

Is it nuts to give cash to the poor without strings attached?

That’s not a rhetorical question; it’s the headline the New York Times ran the first time they covered GiveDirectly. My co-founders and I had a mild panic. We had been hoping, I suppose, for something benign and puffy along the lines of “New Charity Founded by Thoughtful Econ PhDs Is a Great Idea.”

The truth is of course that that piece did what it needed to do, which was to speak to its audience where they were at. At the time (i.e., in 2011) most New York Times readers probably did think it was nuts—or, at best, naive—to give out money for nothing. And one can hardly blame them. They had been fed a steady diet of data-free, mantra-heavy messaging implying, if not stating outright, that people living in extreme poverty were not capable of sound financial choices. One must teach a man to fish, the inane aphorism goes.1

Photo from GiveDirectly; photo of Liberia (Maryland Country) field office

Since then, opinions—professional opinions, at least—have swung. Giving away money without strings attached is seen as a good option, often the best. A 2024 position paper by the United States Agency for International Development (USAID)—prior to its untimely demise in 2025, the largest of the bilateral donors—said that the agency “should include direct monetary transfers as a core element of its development toolkit.”2 The stated policy of the UNHCR, the UN Refugee Agency, is a “‘why-not cash approach,’ whereby operations must give [cash-based assistance] priority consideration over in-kind assistance.”

Priority consideration has not yet translated into majority market share. But numbers are up: cash transfers (and vouchers) were 20.6% of international humanitarian assistance in 2022, up 50% from five years before. And during the pandemic, when governments needed to deliver urgent help at massive scales, they turned to cash transfers en masse, reaching up to 1.4 billion people.

Private donors need more convincing. In 2023, U.S. individuals and foundations gave over $30B to international development work.3 Of that, just 0.5% went to GiveDirectly—the only sizeable nonprofit doing what we do, enabling donors to send money directly to households living in extreme poverty.4 Cash transfers’ relative share of this market, in other words, is very small. Yet it has grown enough that we have been able to raise and deliver over $1 billion to over 2 million people.

One way to tell GiveDirectly’s story is thus as a bellwether for evidence-based decision-making. To win over skeptics we invested heavily, as I will describe, in causal evidence. And we benefited from the growth around us of an ecosystem that took that evidence seriously. If even a nutty idea like giving away money for nothing could survive and thrive in this environment, this bodes well for other efforts to elevate evidence over anecdote.

But there is more to it than that. Part of the point was to provoke questions not just about how to spend development dollars, but also about who should spend them. Questions, that is, about the allocation of power and not just its optimal exercise. From this point of view it was not so obvious what role program evaluation should play. If the money really is for nothing—free not just of strings, but of any particular sought-after result—then what exactly should one evaluate?

Experimental research can, in fact, still be useful even in this regard. It can because of a key difference between experiments in the social as opposed to the physical sciences. When Sir Ronald Fisher pioneered experimental methods at the Rothamsted Experimental Station, one of the world’s oldest centers for agricultural research, in order to figure out which fertilizers or seeds worked best, his “subjects” had no ethically significant agency: they were plants. But the subjects in a cash transfer experiment do. When a researcher documents the choices they make, we learn something about their preferences, their priorities, their vision of a good life. These insights have no analogue in a purely technical matter like agriculture productivity. And they have been an essential part of the story.

Cash transfers and causal evidence

As a point of departure I will lay out an argument an economist might make for giving money to people living in extreme poverty.

It starts with the observation that a dollar is worth much more to them than to us. To illustrate magnitudes, suppose we take a utilitarian view of things, and that we believe the relationship between utility and earnings is roughly logarithmic. This means, for instance, that doubling someone’s income—be it from $1 to $2, or from $100,000 to $200,000—always yields the same utility gain. This is a conservative stance relative to the available measurements of wellbeing, as I read them.5

We can then compare the marginal utilities of people at different initial income levels. Specifically, at the $2.15-per-day international poverty line and at, say, the $170 per day taken home by an average American full-time worker. The implied ratio of marginal utilities is 80, meaning that an incremental $1 increases wellbeing by 80 times as much at the poverty line as for the average American.6

Admittedly, such ratios feel abstract. Stumping for GiveDirectly made them feel a bit less so. My co-founder and I met one afternoon with a potential donor in his opulent corporate citadel in Dubai, dining afterwards at the Burj Khalifa, where the choreography of the water fountains outside synchronizes with the muzak within. Then, on the following morning, we met with potential recipients in a dusty fishing community on the outskirts of Karachi, including one woman nearing her death to tuberculosis. One can think of extreme ratios of marginal utilities as saying that the world would be better if we exchanged some synchronized water fountains for fewer TB deaths.

The second factor is that people living in extreme poverty typically face lower prices than we do. Among the 26 countries the World Bank currently classifies as low income, which collectively contain 44% of the world’s extremely poor people, the median ratio of the nominal exchange rate between local currency units and US dollars to the corresponding purchasing power conversion factor is roughly 3.1. If you don’t care to whom utils accrue, this creates an opportunity for arbitrage. You can triple the bang you get for your buck.

Multiplying these factors together we get, as an overall estimate, that transferring a dollar from a typical American to a typical person living at the extreme poverty line increases its value in terms of aggregate human well-being by a factor of 248. That’s a lot! Most of us would feel good if we could merely double our money by investing it prudently over the course of a decade. Here we have an opportunity to increase its value by a factor of 248 in a matter of weeks.7

And yet for most people this argument is insufficient. Most worry about what people will do with the money once they get it. We expected this, in those early days at GiveDirectly. So we saw no way forward without good, hard evidence.

The question was whether we needed to produce that evidence ourselves. Governments in South and Central America were already running large conditional cash transfer programs and, in many cases, measuring their effects using randomized controlled trials (RCTs). The results as we read them were broadly “positive” in that recipients spent money on reasonable-seeming things—investment as well as consumption, for instance—and that various indicators of well-being improved. Indeed, this evidence was one of a few things that had convinced us to begin in the first place. Would yet another RCT really be any more convincing?8

We ultimately decided to run one as a matter of principle. Any non-governmental organization (NGO) asking for donations ought, we felt, to run an RCT if it could, as a sort of due diligence. Running one would be a statement of intent. It would show that we planned to do things the right way, and not market the idea on the basis of cherry-picked success stories.

It almost didn’t happen, even so. It almost died in—of all places—ethics review: Harvard’s Institutional Review Board worried that giving people money might harm them. This put us in a Catch-22: we had to argue that transfers would not have bad effects in order to justify a study to find out what effects they would have. Eventually, after months of delay, we prevailed.9

It was worth the struggle. Transfers turned out to have a variety of positive effects, from reducing malnutrition to stimulating business investment to enabling people to build more durable homes. They did not increase spending on “temptation goods” like alcohol or tobacco. The study documenting these impacts has been influential among economists (cited nearly 1,900 times). And it has been influential for GiveDirectly—helping to earn a series of top charity recommendations from GiveWell, for instance.

So we carried on. At this time, we’ve completed or initiated 24 RCTs. We’ve come to see conducting—and not just citing—experimental research as a core strategy. It differentiated us. And it let us fuse research with direct impact to create an attractive risk-return profile. Worst case, your money substantially improves the lives of some very poor people. Best case, the evidence this yields also changes other people’s minds.

Conducting research while also doing good in the world is not always an obvious combination. There is a perceived tension between what is “of interest to academics” and “of practical value.” That perception has roots going all the way back to the 1940s, and to American engineer and administrator Vannevar Bush. Bush, the great advocate for public research funding, suggested that we envision research problems on a spectrum, from “basic” to “applied.” He then argued that many important basic questions were too far from commercialization to be taken up by the private sector. His latter, essential point was entirely right. But the uni-dimensional map of the problem space he invoked in making it was too simplistic: some questions, as Donald Stokes has argued, are important both practically and conceptually.

Take the indirect, or “general equilibrium,” effects of transfers. What happens when many people in a village receive transfers? Do prices go up? Are the transfers less valuable? Potential donors often asked us about this, and reasonably so. The question mattered practically.

But academics were also interested in this question. It connects with a classic idea in development economics that one could have a demand-led “big push,” where a big enough increase in purchasing power makes it worthwhile for businesses to make investments they otherwise would not. And answering it let us produce the first experimental estimate of a “transfer multiplier,” a quantity macroeconomists often estimate to try to calculate the effect that government transfers (such as welfare payments) will have on total economic activity, or GDP.10 This is why the general equilibrium study we ended up running succeeded academically, as well as being useful for GiveDirectly. Indeed, it won one of the more prestigious awards an economics paper can.

Or take basic income. In the late 2010s, Universal Basic Income (UBI) was having a moment. Google searches for the term increased nearly eight-fold between January of 2016 and January of 2017. A swathe of GiveDirectly’s target audience were probably going to form their initial views about cash transfers writ large based on what they heard about UBI. But the pilots getting media attention at the time were small-scale and questionably designed, far from what we would consider a reasonable test.11 Running a better one ourselves seemed requisite almost as self-defense.

But it also addressed an economic question. When you give away money you can structure it as either a stream of small payments, or as a few big ones. GiveDirectly had usually done the latter, but UBI involves the former.

We’d chosen to focus on making a few big payments for three reasons. One was the descriptive evidence that accumulating lumps of capital is otherwise hard for people near the poverty line. This makes it hard to start a business or make other productive investments, because these often require a large lump-sum purchase. A large transfer also enabled these larger purchases. Another was that they earn higher rates of return on their investments—in small businesses, agricultural inputs, housing, and so on—that we do when we keep the money in a bank or brokerage account. This means that keeping money on our books while we wait to transfer it to them is inefficient. And a third, perhaps reflecting the first two, was that when we asked people what they preferred, they almost all wanted lump sums. Yet for all that, we had never convincingly compared the impacts of the two. When we did, the results surfaced a lot of interesting economics—including the fact that UBI recipients often formed savings clubs to “reverse-engineer” their streams of small payments back into lumpier ones.

In short, setting out to solve what Bush might have called applied problems has often led to more basic scientific insights. As a result GiveDirectly studies have published in many of the top economics journals—including (if the names mean anything to you) the American Economic Review, Econometrica, Review of Economic Studies, and Quarterly Journal of Economics—even though in no case was publication in a top journal the goal.

And our research-led strategy seems to have worked. In 2025 GiveDirectly delivered its billionth dollar. Raising that money has consistently cost $0.05 or less per dollar raised—a low figure by industry standards. Some donations have come from people whose first reaction was “at last!” But many have come from people whose first reaction was “this sounds nuts”.

Of course, we had help. GiveWell, the first outfit to publicly and systematically assess charities on the basis of causal evidence of their programs’ impacts, launched in 2007. In 2012, they endorsed GiveDirectly as a top charity. In 2010, USAID launched Development Innovation Ventures, a program to find high-impact development interventions. It would eventually support GiveDirectly’s benchmarking collaboration with USAID. There have been new evidence-based funders: Good Ventures, which would account for a large share of GiveDirectly’s early funding, launched in 2011, and The Life You Can Save, which would consistently promote GiveDirectly, launched in 2013. Google.org took an increasingly data-centric approach, backing some of GiveDirectly’s boldest bets. All of this occurred during an ambient rise in the appetite for experimental evidence and the randomista12 turn in development economics, for their roles in which Abhijit Banerjee, Esther Duflo, and Michael Kremer were recognized with the 2019 Nobel Prize. Today, the ecosystem looks far friendlier to evidence-based strategies than it did when we started.

We also benefited from the sheer volume of cash transfer randomized control trials (RCTs). We could point to a much larger and more robust evidence base than we could have produced on our own. I think this helped us escape a “winner’s curse.” When there have been only a few studies of a new idea, it will often look either better or worse than it really is. Momentum—and hype—build behind the good-looking ones. But this means that as more studies come out there is likely to be some mean reversion — where subsequent studies estimate effect sizes smaller than previously expected — and some disappointment. Microcredit arguably suffered from this boom-bust dynamic.13 Cash transfers were comparatively fortunate; the evidence base grew fast enough that the hype never got as far out in front.

From evidence to empowerment tool

Causal research can certainly help those who already have power, such as the power to choose what to fund, exercise it more effectively. But can it also influence the allocation of power? Can it meaningfully empower the people it studies?

Historically, development work has seen fairly little “empowerment” in the sense I mean here, i.e. real transfers of decision-making rights.14 There has been a bit of budget support to national governments, true, and some funding to local bodies a la Community-Driven Development.15 But individual people living in extreme poverty have certainly had little direct say. Money was spent on their behalf, but not at their behest.16

Photo from GiveDirectly; Benta, Kenya 2018

You see this power dynamic reflected in the research. It is so ordinary that it goes unseen: research that hopes to inform important decisions is addressed to the people with the power to make them, i.e. funders and policy-makers. A program evaluation paper might open, for instance, by taking as motivation the fact that policy-makers want to make some outcome go up.

Gunnar Myrdal once observed something analogous about why economists began studying development—as opposed to the wealth of wealthy nations—in the first place:

“The direction of our scientific exertions, particularly in economics, is conditioned by the society in which we live, and most directly by the political climate… Rarely, if ever, has the development of economics by its own force blazed the way to new perspectives. The cue to the continual reorientation of our work has normally come from the sphere of politics; responding to that cue, students turn to research on issues that have attained political importance.”

The same goes for valuation. One cannot evaluate without valuation; there is no way to determine how good an intervention is without taking a stand on how to measure the good. These days the usual way is by asking whether an intervention can inexpensively increase an outcome that policy-makers want—i.e., cost-effectiveness analysis. Economic welfare analysis, in contrast, requires that you ask how the intervention affects various people’s wellbeing as they themselves see it. This is harder to do, and perhaps consequently, you see less of it.

A concrete example may sharpen this distinction. Consider sending SMS messages to families encouraging them to feed their children nutritious meals, and take them for regular check-ups. If this “works,” it will induce both benefits and costs. If families spend more money on food for children, they must spend less on something else. If they visit a health clinic more often, some of that clinic’s capacity cannot be used for something else. Welfare analysis pushes us to consider how to value such things, whereas a typical cost-effectiveness analysis might simply observe that child health improved a lot relative to the negligible cost of sending SMS messages.17 This is not the whole story—but it is what matters from the narrow point of view of a technocrat tasked with improving child health.

Our ecosystem is prone to such narrowness by its very design. Agencies and foundations have their distinct divisions tasked with promoting health, education, livelihoods, and so on. These are good goals per se, of course, and creating specialized organizations to pursue them makes some sense. But it also tends to result in a lot of powerful people asking relatively narrow questions about cost-effectiveness. They focus on the impacts on health or education or livelihoods—not all of them at once.

Whereas cash transfers focus on nothing in particular; they can be used for anything. This is why studies of cash transfers are particularly good at surfacing the tensions. For example, my co-authors and I recently studied a transfer scheme in the Indian state of Jharkhand, for example, whose stated aim was to reduce child malnutrition. We found that it did, to an extent. But (unsurprisingly) households also spend much of the money on things other than food for children—including food for adults. The program doesn’t look particularly cost-effective if you divide the effects on child anthropometrics by total costs. But this amounts to treating the other things as having absolutely no social value, which cannot be right.

How then can a cash research program engage with power, as it is currently structured? In (at least) two distinct ways: it can be pragmatic, or prophetic.

The pragmatic approach is simply to answer funders’ questions, such as they are. At GiveDirectly, for instance, we worked with one foundation whose funding came from a large coffee conglomerate and whose remit was therefore to help coffee farmers. For them the key question was what impacts transfers would have in coffee-growing regions, and on coffee production. We also worked with a foundation whose mandate was to serve women and girls; for them the key question was how transfers to young women making critical decisions about education, employment, fertility and marriage would affect those choices. In another instance, we worked with USAID to “benchmark” the impacts of their conventional programming, asking how giving away the same amount of money to the same kinds of people but with no strings attached would affect the same outcomes Congress had tasked it with shifting—outcomes like youth employment, for example.18

By taking these narrow objectives as given, these studies stacked the deck against cash transfers. We knew that recipients would almost surely spend some of the money on things that did not advance those objectives, and hence count for nothing in a cost-effectiveness analysis—things like food for adults in Jharkhand. Even so, transfers often ended up looking cost-effective.19 In such cases you could end up with de facto empowerment—funders choosing to transfer money without strings attached—without changing their underlying premise.

In the prophetic approach, research must be a bit provocative. Instead of asking how to achieve a given kind of success, it can offer to shed light on recipients’ notions of success.

Consider housing. Housing is a key asset for low-income households—shelter, after all, generally follows food on lists of existential needs. Development economists often omit housing from measures of well-being, as it is vexingly hard to value.20 But it surely matters. In relatively high-quality data from Indonesia, Mexico, and South Africa, for instance, my co-authors and I estimated that housing services represented between 22% and 43% of poor households’ consumption.

So it is no surprise that many GiveDirectly recipients have invested heavily in housing. They build new homes, or expand and upgrade existing ones. One popular choice is to replace a roof of thatch with one of sheet metal.21 This was so common, in fact, that it caught eyes at Habitat for Humanity, the leading house-building NGO. Upon meeting Habitat’s head, I was surprised that he thanked me for drawing so much attention to housing!

Photo from GiveDirectly; Jael, Kenya, 2018

I have no idea how this affected Habitat’s bottom line quantitatively. But the role research played here is striking. The usual technocratic logic would be

Donors want more housing (and believe it is more important than other things)

& Causal evidence shows that recipients use cash transfers to buy it

⇒ Donors fund more cash transfers.

while here it is

Recipients want more housing (and believe it is more important than other things)

& Causal evidence reveals this fact to donors

⇒ Donors fund more housing.

Evidence plays a role, but not to reveal how best to achieve donors’ priorities. Instead, it reveals what the recipients see as a priority.

This is why, in GiveDirectly studies, we typically pushed to measure a large set of outcomes. Larger, in particular, than the set of outcomes on the funder’s initial wish list. Measuring something—like investment in housing, say—makes visible the extent to which recipients are prioritizing it. The most important outcomes to measure, paradoxically, can be those that are not our priorities, but that could be theirs.

We can also extend this logic to choices not just about how to spend money, but also about how to receive it. I mentioned earlier one such study in which my co-authors and I learned that most people wanted lump sums, and not streams of small transfers. We also learned that timing mattered. A sizable minority preferred to defer their transfers for at least a month or two. They had various reasons, some of which we had not anticipated—to have more time to plan, to get money in the appropriate season for home-building, or at a time they would be free to start a new project, or at a time their neighbors would have money to spend at a new business, and so on. We learned a lot, in short, about the issues they were dealing with—much more so than had we tested which timing had a bigger effect on some ad hoc outcome index.

Normative choices in positive economics

Economists speak of maintaining a “positive / normative distinction” in research. Our vocation, in this view, is to describe “what is” —the positive—while others can then decide “what should be,” the normative. This idea has a stellar pedigree running back through Keynes (“the function of political economy is to investigate facts and discover truths about them, not to prescribe rules of life… It is described as standing neutral between competing social schemes”), Robbins (“economics is entirely neutral between ends”), and Friedman (“positive economics is in principle independent of any particular ethical position or normative judgments”), among other luminaries.

And to me, when I encountered it in graduate school, it seemed simplifying. It absolved me of any ethical responsibilities beyond honesty. Just the facts, ma’am.

The wrinkle is of course that one must decide which facts. This is obvious in the extremes. If I were to study how to breed infectious agents that could be used as biological weapons, I could hardly disclaim responsibility for the potential consequences on the grounds that the research is merely positive.22 Nor can one evade responsibility by appealing to what policy-makers want. Some of them have wanted biological weapons.

The truth is that economists make ethically meaningful choices all the time. In one recent study, for instance, my co-authors and I estimated effects of introducing biometric authentication into India’s largest social protection scheme. We found that corruption fell. We also found that between 1.5 million and 2 million legitimate beneficiaries lost access to their benefits at some point. Documenting either one of these results on its own would have been perfectly valid “positive” research. But it would have been ethically problematic, serving either the interests of the government or of its critics. And our own critics on the left might say that we made a misstep in studying this particular reform in the first place when we could instead have studied reductions in fraud achieved through other, less fraught means.

Or take the work on general equilibrium effects of transfers I mentioned earlier. In that paper we first estimate the economic multiplier on transfers, and then separately consider how it changed the welfare of recipients. This matters since, as Greg Mankiw and Matthew Weinzierl have pointed out, GDP and welfare are not the same thing. If people are induced to work more, for instance, this unambiguously raises GDP, but does so at the cost of leisure. Welfare thus rises less or perhaps not at all. From this point of view, it was normatively important to document that (in this case) GDP rose not primarily because people worked longer hours, but because they earned more per hour. All the more so because so much of the broader dialogue about cash transfers and labor supply has taken exactly the opposite ethical stance: that it would be bad if “lazy” recipients were to work less.23

This has been my broader point about the role of evidence: it matters what questions we ask. It mattered at GiveDirectly. It was pragmatically important that we address the understandable concerns holding many potential donors back—concerns that people living in poverty didn’t share their priorities, or didn’t know how to fish (or, at least, where to get fishing lessons). But it was also important to show that people living in poverty don’t always share their priorities, and that sometimes we were the ones being naïve about where and how to catch fish.

Paul Niehaus is Chancellor’s Associates Endowed Chair in Economics at the University of California, San Diego, and co-founder of GiveDirectly, Segovia, and Taptap Send.

If you have comments on this article, or wish to contribute to the discussion, please email them to letters@indevelopmentmag.com. Responses will be featured in a letters section.

  1. The provenance of this phrase is murky, but Victorian novelist Anne Thackeray Ritchie is often credited. The irony is that when the inveterate skeptic Max Du Parc introduces it, in her novel Mrs. Dymond, he does so to critique the upper classes:

    “I don’t suppose even Caron could tell you the difference between material and spiritual,” said Max, shrugging his shoulders. “He certainly doesn’t practise his precepts, but I suppose the Patron meant that if you give a man a fish he is hungry again in an hour. If you teach him to catch a fish you do him a good turn. But these very elementary principles are apt to clash with the leisure of the cultivated classes. Will Mr. Bagginal now produce his ticket — the result of favour and the unjust subdivision of spiritual enjoyments?” said Du Parc, with a smile. (Source)
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  2. Predictably, as of February 2025, this page no longer exists. A Wayback Machine copy exists here. ↩︎
  3. Specifically, they gave $30B to charities classified as primarily working on international affairs. This is thought to be a lower bound on total giving to international development because a meaningful but unreported share of donations to religious organizations—which attracted $146B in 2023—eventually go to overseas work. ↩︎
  4. Many other NGOs run excellent unconditional cash transfer programs, but none promise that this is the sole thing they will do with your money. ↩︎
  5. These estimates may themselves be unfairly conservative to the extent that the subjective happiness of the rich and the poor reflects adaptation to their circumstances, as for example Sen (1988) has pointed out. ↩︎
  6. The marginal utility is 1/c; thus, the ratio of marginal utilities in income levels c1 over c2 is c2/c1. ↩︎
  7. There is arguably also a third, macroeconomic factor to account for. My co-authors and I have estimated, using a large-scale field experiment, that economies in rural Kenya grew by $2.50 for every $1 transferred into them. Multiplier estimates for the US tend to be lower, around $1.60. One might therefore reasonably factor in a “relative multiplier” adjustment of 2.5 / 1.6 ~= 1.6 or more. ↩︎
  8. The other two factors were (a) the advent of reliable, low-cost digital payments solutions like mobile money in low-income countries, and (b) our conversations with existing NGOs, which persuaded us they were unlikely to offer a direct transfer service as this would cannibalize existing business models. ↩︎
  9. We also had to find a location. Our initial idea had been to conduct the study near Busia, which had become a hotbed for RCTs after the pioneering early collaboration there between Michael Kremer (among others) and the NGO Investing in Children and their Societies (ICS). But Busia turned out to be too hot of a bed: so many other RCTs were running nearby that we could not find a place to work without stepping on someone’s toes, inadvertently cross-cutting their randomization or contaminating their control group. So we packed our bags and went elsewhere. ↩︎
  10. Answering it also required an unusually big experiment and novel analytical methods. See Muralidharan & Niehaus (2017) on the case for large-scale experimentation and Faridani & Niehaus (2024) on their use for estimating causal effects. ↩︎
  11. Subsequently several better-run trials in high-income countries have released results, including an exceptionally detailed one coordinated by Open Research (Bartik et al., 2024; Miller et al., 2024; Vivalt et al., 2024). ↩︎
  12. Economists and researchers who advocate randomized controlled trials as the gold standard for evaluating poverty reduction. ↩︎
  13.  In 2005 my co-founders and I finagled invitations to a kickoff event for the International Year of Microcredit at the United Nations. The mixed drinks were, as I recall, stronger than the evidence.
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  14. The word “empowerment” has been cheapened somewhat by over-use (see for example Jayakarani et al., 2012); here I will use it to refer narrowly to transfers of decision-making rights. One person is empowered only when another is disempowered—or, more to the point, chooses to disempower themselves. ↩︎
  15.  Casey (2018) is an excellent review of such programs. ↩︎
  16. A review of “participatory grantmaking” commissioned by the Ford Foundation found something similar: many examples in which beneficiaries were consulted, but few in which these consultations really bound the consultants in any way. ↩︎
  17. The more thoughtful cost-effectiveness analyses would, in fairness, try to account for the cost of health system capacity. But this is different from their value in alternative uses, which is what economics was built to study. ↩︎
  18. While straight-forward enough in concept, this took some vigorous machete-wielding by very brave and dedicated civil servants to pull off in practice. To give you some idea, they needed a memo from the General Counsel’s office providing legal cover; this ended up specifying that GiveDirectly would call each recipient to confirm that no one had spent taxpayer dollars on bad things—including birth control. ↩︎
  19. See, for example, the results from benchmarking studies in Rwanda (McIntosh & Zeitlin, 2022; 2024) and the Democratic Republic of the Congo (Javier et al., 2022). ↩︎
  20. See Amendola & Vecchi (2022). ↩︎
  21. See Haushofer & Shapiro (2016), Table VI. ↩︎
  22. This is more mechanical than the critique made by Blaug (1992) and Putnam (2002), among others, that a sharp dichotomy between “fact” and “value” may not exist in the first place. Even if you believe that purely factual statements are possible, it matters which ones you make. ↩︎
  23. See, for instance, Banerjee et al. (2017). ↩︎