US AID for Latin America and The Caribbean
Former, Executive Director, Center for International Development
Harvard Kennedy School
We should also care because it makes us human to care.
Interview by Heidi Legg
Marcela Escobari was recently selected as A Young Global Leader, along with Chelsea Clinton and Nate Silver, by the World Economic Forum for her outstanding work for growth and prosperity in developing countries . We sat down with her amidst the leafy idealism of the Harvard Kennedy School and got real about world poverty and what we can do as a global society to work to eliminate it.
When your kids ask you what you do for a living, what do you say?
I tell them I help poor people get richer, so their kids can have the things they need.
The Center focuses on growth. Why is that?
Economic growth is the most important driver of a country’s development. It’s not the only one, but it’s a big one. And to some extent, it remains a mystery. Right now, established economic theory can explain about 30% of the world’s growth. That means we have no idea what’s driving the other 70%. The Center for International Development is focused on unraveling that mystery and learning how to reduce poverty through our research.
Are you making progress?
Our research is telling us that something we’ve named Economic Complexity plays a large role in the 70% of growth that we don’t understand. Essentially, Economic Complexity boils down to what a country knows how to make, along with a very specific type of flexibility: namely, the ability to redirect existing capabilities and know-how to make new things. If a country makes t-shirts, then can it effectively redeploy its capabilities and learn how to make dresses, jackets and perhaps shoes? It’s a theory that says each country has a unique path to development that we can now chart. The question is how to accelerate that process… of countries producing more, as well as more complex products.
This explains other things, like why many countries so rich in natural resources (say, oil or diamonds), still remain poor. While you need sophisticated skills and infrastructure to compete in the oil industry, those same skills can’t really be redeployed to make much else. So even though the country is ‘resource-rich,’ they don’t have the ability to move into more complex products based on what they currently know.
This explains the “great divergence?”
Two hundred years ago, the richest country in the world was four times richer than the poorest country in the world. Now the richest country in the world is 145 times richer.
Yes, we have seen a ‘great divergence’ in wealth, however, a few countries like India and China, have started to catch up in the last two decades. We think that in part, their success has to do with the rate at which they are diversifying and building new capabilities to make new things.
What else are you working on right now?
We’re also focused on increasing the rigor of development research. We call the initiative Evidence for Policy Design. We want to make sure that great science is informing policy that can have real impact on the ground. We are also enforcing high standards for ourselves when it comes to the effectiveness of policy interventions. We actually get most excited when we learn that programs don’t work. It means that, as a society, we can redirect those funds towards something more effective.
Give me an example?
One of the research initiatives we looked at was stovetops, because there is this huge worry that people cooking in these countries are inhaling the smoke from coal. Donors gave 250 million dollars towards these very simple stovetops that have an outlet outside of the house. The design was perfected, the price point was great, and we gave them to people in Africa and Asia. Seven years later, we tracked how it worked and we saw there was no change in health. Knowing that it isn’t working allows us to move on and spend elsewhere. Everything sounds like a great idea to help the poor but some work and some don’t.
Many people retire into working to help poor people, or do it on the side. Why did you make it the focus of your career?
I grew up in Bolivia. Both my parents were doctors and my father always worked in public hospitals with the poorest of the poor with donated equipment from the Cubans. Rich and poor had to stand in line to access the latest technology in his pediatric intensive care unit as it was part of a public hospital. Yet after two weeks in an intensive ICU, many poor families could not afford the $5 needed for medicine.
Our dinner table conversations were about how kids were dying not out of disease, but really out of poverty.
So you attribute it to your family dinner conversations?
I learned from my parents that every life matters. Living in a developing country exposes you to a lot of disparity. You can react to that by living in a bubble and creating a barrier between you and “them.” Or you can try to make a difference. Bolivia was a country with extreme class divisions. And while my parents were professionals, we weren’t the elite. But we were still on that side of the fence. Again, in that type of system, you can stay in a bubble and declare that there’s a big difference between you and the masses, or you can become even more connected to issues of injustice and poverty. Because of my upbringing, I came to believe that the world needed to be a fairer place for people who had very little.
You were educated in the U.S.?
I went to Swarthmore College. My brother, who went to Harvard, told me it was the place to go for people who cared about social issues. I had to ask him how to spell it.
But you ended up on Wall Street after school. Where was the disconnect?
I became disillusioned with trying to change things. In the summer as a freshman in college, I went back to Bolivia to the most meaningful job I could find. It was a World Bank project working with an indigenous population that used to be nomadic, but due to the expansion of private farming, they had settled in scattered communities. Due to the shift in skills they needed, they were becoming a subculture, and becoming the beggars and prostitutes of the main cities. The project was focused on how to integrate them into society—and this was a rough group of people.
Is that how you want to describe them?
It’s relevant because it partly explains why no one wanted to deal with them. They were being shot at in the jungle and represented ‘the other’ in the cities where most of them were unemployable. When we identify a group as ‘other’ it is much easier to dehumanize them than to live with the cognitive dissonance that extreme poverty creates within most of us.
What happened then?
We needed to think what we could do with this indigenous tribe to help it survive. I found myself on a 2-day train ride into the hinterlands on the border between Brazil and Bolivia. I was traveling with a French anthropologist from the World Bank. She woke me up at dawn to tell me that we were almost there, and that since the train wouldn’t be stopping we’d have to jump. “But that’s ok,” she said. ‘I’ve asked the conductor to slow it down.”
She told me how to do it. I’ve never paid more attention in my life.
Did you learn how to jump off a train correctly?
Yes. You have to jump in the direction that the train is going. If you jump against it, the momentum could pull you under the tracks.
That’s great advice for our readers who likely ride the Acela. What happened next?
When we arrived, I quickly realized the project to help these people out of poverty was fundamentally flawed. They wanted me to increase the number of kids going to school from an anemic 30%. But it didn’t take long to notice glaring problems.
To enter, school children had to wear shoes, even though half of them didn’t own shoes. Lectures were in Spanish, but these kids spoke the local dialect. Parents saw no use in sending kids to school.
All the development experiments had failed. They tried to give the group animals to raise but within two months the tribe had eaten the chickens and cows. Most of the representatives of the tribe to our project were male, even though the tribe was a matriarchy, so men didn’t really have the authority to make changes. And so it became clear to me that all the money that had gone into this program had been wasted.
It was a disaster and those usually make the best learning experiences.
No more World Bank projects?
My idealism – that as an individual I could make a difference – was crushed that summer. Development organizations were focused on providing inputs: schools, training, money, houses. But no one seemed accountable for the end results, which were supposed to improve people’s lives. I was depressed by the lack of results and common sense.
And so I swore off development. My next job was on Wall Street. It was literally at an asset management firm in one of the fiercest, most competitive intern environments in the world.
What were you looking for?
I felt that I needed to learn how incentives worked, in places where efficiency reigned. I decided that idealism wasn’t changing anything. And so I intentionally chose to go and learn in an environment where the incentives were very clear, and the rules were very clear. I went to JP Morgan when I graduated and spent a few years working 80-hour weeks doing mergers and acquisitions in New York.
Why did you come back to idealism?
After a few years I realized that my blood was not rushing in these places. It was hard to get passionate about knowing the PE ratios of all the consumer deals happening in Latin America.
There’s no passion in banking?
Not my kind of passion. The president of a nation could change and the 60th floor of the JP Morgan building wouldn’t even know because it was irrelevant to them. That was a red flag to me. And so when I was deciding whether to go to the Kennedy School or to business school, I chose the Kennedy School, and that was the crucial decision for me. It wasn’t easy, as I’m a very competitive person, and I like the private sector mentality. Since that moment, my goal has been to bring a banking mentality, and focus on results, to the field of international development.
Why should we care about the fate of poor countries?
I’ll give you two arguments. There’s the argument about how it affects you, and that’s a very powerful argument. It’s not in our best interest to be in a global community with unstable nations. But there’s the simpler argument that I know was ingrained in me at a young age – we should also care because it makes us human to care. It’s a moral imperative to help people have the basic things they need to live with dignity.
You were just selected as a Young Global Leader along with Chelsea Clinton and Nate Silver by the World Economic Forum. How will this help your cause?
I have no idea, but I’m looking forward to learning from people who come from completely different backgrounds and have managed to create possibility in their environments. I missed the first YGL conference call because I dialed in at 10am EST instead of China time. What do you mean that the world does not revolve around Boston? I won’t make that mistake again. That alone will help my cause.
What public attitude would you like to change?
A public attitude that I would like to change is that we consume and invest and do all the activities in our lives in accordance with our moral intentions not just our charity work. It’s starting to come up in the food discussions. How do people get treated from the food we consume. We want to know about how the food is prepared and brought to us. Knowing this, we might invest in companies that are creating mechanisms that are in agreement with our belief system. This would make a huge difference.
I met with this guy who is trying to certify that suppliers to big companies must have sustainable practices. I think people and the public should demand these things because then the market will arise.
Do you have any advice for students graduating this year?
Yes. I’d urge them to go and experience a different culture and do their best to immerse themselves in it and really understand it. They need to understand the ‘why’ behind stereotypes, understand not just how different people behave, but why they behave the way they do. That only happens from taking the time to understand those that seem unlike us. It doesn’t need to be across the world, or a foreign country. The Ayorean tribe was in my hometown, in my streets in Bolivia. You can go try to understand devout Muslims, speed walkers, Yankees fans. The more willing you are to leave your comfort zone, your known truths, the better equipped you’ll be to help other people.
You have two young children. How do you juggle your career and raising a young family?
I think things just have to give. I am not dogmatic about this. I feel people figure it out in different ways and I don’t judge them. It’s like marriage. It’s complicated and it’s hard and you must use what works for you. My light bulbs don’t get changed, I don’t write thank you notes; instead, we invest in the kids and in a few friends that are in our community.
Things take longer with my work. The kids are growing but they are not waiting for you to grow. Women shouldn’t give up on their goals but take a longer term perspective. You will get there. Be patient with yourself.
What do you love about Cambridge and its culture?
I knew very early on that I was not going back to Bolivia to live. I tried New York, Brazil and London and every coast on the US and I settled in Boston/Cambridge because it was a great compromise of the things I care about. It’s very international because of the schools, a little European, people have insider circles but they are not impenetrable.
Where do we fall short?
I wish there were outside pools! I grew up with the capacity to BBQ and grill and swim in a pool every weekend. There is a place in Medford where we take our kids with a BBQ and a pool and slide. It’s great.
What charity would you advise young people to take on to help?
Young people today need to go have experiences with people outside of their lives. Go help others for yourself. Learn to perceive the world from other people’s needs. In development, we get in trouble all the time when we see people’s needs from our own moral values and needs. We must learn to see it from their perspective.
To read more about Marcela’s awesome work as well as her being named A Young Global Leaders along with Chelsea Clinton and Nate Silver by the World Economic Forum click here.