Inclusive Prosperity in Low-Income Countries (Innovations Case Narrative: The Legatum Center for Development and Entrepreneurship, MIT)

Abstract

combination of aid, charity, and volunteer work. This makes intuitive sense but ignores an important part of reality. The needs—seen as business opportunities— of those without wealth can spur spectacular innovation. Johannes Gutenberg’s printing press slashed the cost of book production by a factor of close to 100. To reach the masses, Benjamin Day sold newspapers at one-sixth the price his predecessors had charged. Henry Ford cut the price of the automobile by a factor of ten. Ray Kroc had low-income people in mind when he developed McDonald’s. These entrepreneurs did not invent books, newspapers, cars, or hamburgers. These entrepreneurs were driven to reach a much wider population; they conceptualized and executed business models that have revolutionized how we live, while at the same time generating great profits. Generally speaking, entrepreneurs do not necessarily invent things; the entrepreneurial function itself lies in providing “only the will and the action,” in order to assemble the ingredients, possibly from others, to implement a vision for reaching a market. Perhaps unwittingly, the entrepreneurs and countless innovators like them were demonstrating a universal pattern: innovations move toward those with lower incomes. Every innovation spurs a complex chain of reactions, but entrepreneurs push consistently toward lower costs and larger markets. This saves known resources or creates new ones, puts price pressures on existing products, and