6. Financing the Developing World

“Like slavery and apartheid, poverty is not natural,” declared Nelson Mandela. “It is man-made and it can be overcome and eradicated by the actions of human beings.” This challenge lies at the heart of development finance, a field that has until recently been largely passed over by financial innovation.

The goal of ending global poverty has proven elusive for so long that it is painful to contemplate the failed efforts and squandered opportunities. But the broader picture is not uniformly bleak. The World Bank reports that the percentage of people around the world living in extreme poverty dropped by half between 1981 and 2005. Half a billion people who once struggled to survive on less than $1.25 a day have ...

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