Now read this text about the work of Amartya Sen and answer the questions.
Amartya Sen is a Nobel-prize winning economist, but an economist with a difference. Instead of studying the huge incomes and expenditures of entire countries, Sen deals with amounts that are often around $50. While major international banks and credit institutions invest in big projects aimed at stimulating an entire nation’s economy and employment levels, Sen looks at the importance of very poor people in a country’s economy.
In books such as Poverty and Famines and Development as Freedom, he has described the theory of microcredit”. Described by supporters as revolutionary” and by critics as over-simplistic”, microcredit means giving very poor people very small loans (often around $40 or $50) which they use to develop their own small businesses (often things like vegetable stalls, tea stands, bicycle repair shops and other such small but vital enterprises). Even though microcredit may not solve all the world’s economic problems organisations such as the World Bank and the UNDP have recognised its importance in lessening extreme poverty.
Amartya Sen does not claim to be responsible for inventing the idea of microcredit. The idea developed in several places around the world starting in the 1970s. One of the oldest and biggest microcredit banks is the Grameen Bank of Bangladesh. They begin by offering people a loan of $50 dollars. Borrowers must pay this back before they can then apply for larger amounts of money (up to $450). The Grameen Bank currently has a repayment rate of 95% - better than many ordinary banks. The Grameen Bank has paid particular attention to the role and importance of women in business. Again following an idea of Sen’s, the bank has found that lending to women helped to improve their social standing in traditional societies and improved conditions for their children. Men, on the other hand, were found to be poor credit risks and spent most of their increased income on themselves rather than their families.
While microcredit institutions are largely based in India, they can now be found in many countries including Indonesia, Malaysia, Nepal, the Philippines and Vietnam.
Sen’s work does not only deal with microcredit, however, but takes what could be described as a holistic” view of economics, examining the connections between economics, social welfare and individual freedom. Governments, he claims in his work, should look at welfare and education as being part of the same economic policies. As Sen himself has written Wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else".
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