Globalization for Better or for Worse: Civilization and the Environment with
CK Prahalad at the 2007 Aspen Ideas Festival.
In this, its third year, Aspen Ideas Festival once again gathers scientists, artists, politicians, historians, educators, activists, and other great thinkers around some of the most important and fascinating ideas of our time. As these thinkers present their provocative ideas, they engage a sophisticated and highly motivated audience.
Beth A. Brooke is global vice chair for public policy at Ernst & Young and a member of the firm’s Global Executive Board, with public policy responsibility
for the firm’s operations in 140 countries as well as for its diversity and inclusiveness efforts. Brooke has been named five times to the list of Forbes’ “World’s 100 Most Powerful Women,” and was named 2009 Woman of the Year by Concern Worldwide. During the Clinton administration, she served with the U.S. Department of the Treasury, where she was responsible for all tax policy matters related to insurance and managed care. She played important roles in the healthcare reform and Superfund efforts. A member of the International Women’s Forum, Brooke has been actively engaged in numerous international advocacy, civic and business organizations.
Coimbatore Krishnao Prahalad
C.K. Prahalad is Paul and Ruth McCracken Distinguished University Professor of Strategy at the University of Michigan Business School. He is a globally recognized business consultant who has worked with senior management at many of the world's top companies.
Prahalad's groundbreaking article, "The End of Corporate Imperialism", won the 1998 McKinsey Prize as the year's best Harvard Business Review article. With Professor Stu Hart, he co-authored a seminal working paper The Strategies for the Bottom of the Pyramid, helping to launch a global movement towards private-sector solutions for global poverty.
Prahalad was named the most influential management thinker alive by Thinkers 50 in 2007 and again in 2009.
C. K. Prahalad, acclaimed professor of Corporate Strategy at the University of Michigan's Ross School of Business, discusses both the positive and the negative effects of globalization on the global poor.
Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation technologies and services, mass migration and the movement of peoples, a level of economic activity that has outgrown national markets through industrial combinations and commercial groupings that cross national frontiers, and international agreements that reduce the cost of doing business in foreign countries. Globalization offers huge potential profits to companies and nations but has been complicated by widely differing expectations, standards of living, cultures and values, and legal systems as well as unexpected global cause-and-effect linkages. See alsofree trade.
Well welcome and good morning. I am Beth Brooke global vice chair at Earnst and Young and it's just myabsolute pleasure to welcome you here to what I am sure will be a very insightful discussion on theenvironment and civilization. We are extraordinarily lucky this morning to have with us C.K. Prahaladwho is the distinguished professor of corporate strategy at the University of Michigan's Ross school ofbusiness. He is been honored for his contributions with awards and he has been a member of the UNblue ribbon commission on private sector and development. Prof. Prahalad has worked with seniormanagement of many of the world's top companies. His current work addresses a complex emergingmarket. The world's poor and the innovative business models that will help to end world poverty. Hehas authored many many books. But his latest and many of you I am sure have read it is "The Fortuneat the Bottom of the Pyramid: Eradicating Poverty Through Profit". This was an instant best seller andit was selected as one of the best books of the year by the economists, Faz company and Amazon.com.In his book C. K. states that companies must revolutionize how we do business in developing countriesif both sides of the economic equation are to prosper. And I leave that and I believe it. Please join me inwelcoming Prof. Prahalad as he addresses globalization for better or worse civilization and theenvironment. And before C. K. comes to the podium, if I could just ask you to turn off your cellphones and your PDAs because they do interfere with the sound system in the room, so if you couldplease turn those off. Prof. Prahalad.Thank you so much. Some of you must be wondering why the title is different. It's the same topic, Ijust shortened the title so that I think we can talk about this without a mouthful as a title. I just want tostart with the inherent tension. When we talk about globalization which is been the topic that has beendiscussed quite a lot here or inclusive growth, call it harmonious society in China or the inclusivegrowth or 15 billion people in this country who are under banged and poor. It does not match at whereyou look at. There is a democratization of commerce that I think we need to deal with being inclusivegrowth and I include five billion people in that space and ecologically sustainable growth. Those three Ithink we can deal with it in quantitative terms, we can agree to disagree but at least we can measurethose.What I find the most insidious problem is what is on the right. The ideological battles that inform bothglobalization either for or against, or ecological development both for and against and there fore caughtin between over five billion people. So what I like to do is to talk a little bit about the context ofglobalization, what does this inclusive growth mean and then come and start looking at the impacts oftests on ecology and sustainable development. I do not believe that we can get to a point where we cantalk about sustainable development intelligently without dealing with global poverty and withoutdealing with globalization. It is fine to talk about carbon trading, green house gases, all the good thingsthat we have talked about in the United States and we have to do a lot. But if you ignore five billionpeople, the environmental degradation will be beyond belief. So my bottom-line, and I will tell you thebottom line upfront. All the development models we have used in the west are inappropriate in dealingwith global development in the long term. That is the starting point you can't fine tune thesedevelopmental models. We have to fundamentally rethink those development models. That's thebottom-line. But I am going to spend some time looking at this issue because this is what I call behindthe curtain. Well meaning people starting with totally different ideological bend can destroy the verycapacity in our society to come to a consensus, and that I think is the issue we have to deal with headon. Its lucky say to talk about people living on less than $2 a day or the impacts of globalization so I amgoing to get through it very very fast. And they I hope you will have enough time to really discusshow can we as leaders and responsible citizens bring in a consensus building process that cuts throughideology and builds pragmatism and choice for ordinary people. And that I think is the basic thesis fortoday. I want to start with the context, so there is a lot of discussions about whether globalization isgood or bad for the poor or for the rich for that matter. In fact I never thought I am going to live in aplace where at least in my life time, people in the United States would be concerned about China andIndia. Twenty years ago that was not even a distant hope that, that will happen, but it is happening allthe time. And if you listen to Lou Dobbs it looks like suddenly the world has totally changed. This isan interesting way to phrase the question, if you phrase the question this way you have to take sides onwhether it's good or bad and I think the answer is that is good and bad. I you look at what hashappened globalization has helped rapid movement of people away from $1 a day. Both in China andIndia, just in those two countries, more than 300 million people have moved away from abject poverty.That a good news, first time in human history in such a short time. The not so good news is that istremendous income in inequalities. So I can look at both sides I can say poor people have to be better oftoday, 300 million of them. I can also say there is more social unrest because income in equalities havebecome extremely dangerous in most countries. Just to give you an idea. The Gini quotient as you knowis a one measure of income inequality, if you look at the United States; it is a very unequal society andit's getting there. And we need to come to terms with the fact that we are as unequal look at whatchina has, what has happened in China. In 1985-86, the Gini quotient is 22 they were very poor thatthere were are more equal society, now they are very rich or getting to be rich they are becoming veryunequal. It is a measure, one measure of finding out what is the distribution of wealth, if every bodyhad the same, and then the Gini quotient will be very low. If you get to 50 or 60 that means that aresome very rich people and some very poor people. You look at the total population and look at what isthe differences in income, this is just a statistical measure. And this is widely used by economists, itsnot necessarily a perfect measure its widely used, okay. And if you have 47 it means it's very unequal.If you look at Brazil, it's a very unequal society, so is South Africa. So one of the interesting questionsis what happens in 20 years, when income inequalities become so pronounced in China or in India or inSouth Africa for that matter. So this is an important question because if you look at China, the bigdebate in China is ecology on building a harmonic society, that is the code word for how do we dealwith income inequalities. If you look at the debate in India it is about building an inclusive societywhich is a code word for how to deal with income inequalities. And it's the same here even though wedon't recognize it, its going to get worse. So and I think it has a huge implication on how we run oursocieties. If you look at human development index the quality if life is also varies all over the map. Soyou can ask an interesting question, wide variations in GDP wide variations in human developmentindex, but wide variations in income inequalities as well. So the real question that I think that mostcountries are debating is how should we increase income so that number of people in abject poverty getreduced, or should we deal with income inequality so there is more social cohition but not necessarilyreduction of poverty or do we have to worry about income mobility where poor people have a chanceand they have a hope that they can get out of their poverty trap.So my orientation obviously is to work on one and three, if you work on two prematurely you will getsocialism back again, because that's one way of equalizing every body at lower level; and I don't thinkthat's should be our goal is to provide mobility for people to move up and also have strategies forreducing income. In the short term, it's going to create across the world tremendous income equalitiesand social tensions. And that is why the debate about globalization is so interesting because somepeople see income inequality and say globalization is bad. I can see one and three and say globalizationis good. And both are perfectly legitimate interpretations. And I think we need to come to terms withwhat do we have to deal with and how do we moderate the influences of rapid economicdevelopment? So that's one reason why globalization must be part of the context.The second, I think is to look at how big is the market for poor people or how large is the problem thatwe are dealing with. And I think we used to talk a lot about the bottom of the pyramid; now there isa fairly detailed study of in 40 countries done by IFC and World Resources Institute. They look atthis and say, "People living less than 3,000 purchasing per dollars per capita which is about $500 or$600 depending on the country; they represent a $5 Trillion opportunity and this is what the pyramidlooks like. Most people are in-between $400 to $600 and this is huge. And this is how they spend themoney and I want to come back to it. If you look it primarily 70 percent of it is food. And I think wewant to come back and look at what the implications are. When everybody starts eating food at thelevels that are appropriate for a healthy life, what does it mean for agriculture? What does it mean forthe devastation of the environment? What do we what does it mean for fishing? And I think we wantto come back and ask that question.And then, housing and energy. You can see health which is fairly significant and transportation and ofcourse the information technology. So we'll come back to it because this market is big, it's growingrapidly, and it will have significant impacts on how we live and what business models will work. So, inmy work, I start with a very different question. I don't ask whether globalization is good or badbecause then you'll have to take sides. I ask the question, how to make globalization work for thebenefit of all? Because globalization to me is like gravity. No point in denying gravity. But we can defygravity and a plan. So the question is, how do you look at gravity and defy gravity and makeglobalization work for all? But if you want to make it work for all, we must start with a point of view.And that is the point of view that I think we should have in order to deal with the problems complexproblems that we have.Just imagine if we start with a simple question, why can't every person have the right to the benefits ofglobalization, both as a micro consumer and as a micro producer? And our job is to make every personhave the access to the benefits of globalization. If you start with that, then the problem reduces tosomething very simple. Every person as a consumer affords world-class product and services. In otherwords, we can't ask five billion people not to have a higher standard of living. Higher standard ofliving means, more energy, more water, more resources. So we need to come to terms with the questionof what happens if every consumer all 6.5 billion people even if I don't believe we'll have 9 .5 billionpeople projecting the population growth.Let us assume 6.5 to seven billion people start living the way that one billion people live today. In termsof comfort, sanitation, health and food; then what is the implication? The second is, what if everyperson becomes a micro producer? And we'll come back and ask, what does a micro producer mean?Can you have two women - women with two buffaloes in villages build a global company? The answerto that is Yes. If you go to India, you'll find Amul which works with almost 10,000 villages, 2.2million farmers. They bring two buffaloes and milk everyday the morning. It's collected in acollection center, refrigerator vans to take it here, - processing plant and they have a global business.You can buy their products in the United States. A billion dollars of a business built on the backs ofordinary people living in villages through a cooperative and a modern logistic system. And they processabout seven million kilograms of milk per day. It's the largest system in the world. It is possible to do it.That's what I mean by micro producers. Individual producers are small. Collectively there can be worldclass and world scale.So inclusion of the four billion unreserved in the market economy and consumer shape, their ownexperiences and I think both this micro producers and micro consumers. And it can be a big market, wecan do something different. Have people seen these pictures before? It's sort of interesting isn't it?Look at the people using cell phones. End of this year between 2.5 to three billion people would beconnected, hopefully in the next five years four and a half billion people would be connected. For thefirst time in human history four billion people will be connected through cell phones and very soonthrough the internet. Do you think that's going to change the way people think of themselves. Youthink they are going to see movies of what happens in the United States and in Europe and in Japan.And you think that aspirations are going to change. Or do you think that thing is going to remain the same.So in other words connectivity is going to make the world different and everybody is going to have thesame aspiration just like we have they are going to have the same aspirations. The only good news is wecan't crack the code 2.5 billion connected today and not only are people connected. It's also built oneof the world's largest markets. Just in India six and half million cell phones are sold every month, notevery year every month. And the market cap of four companies which didn't exist 10 years ago is 75 billion.Very small actually if you look at go back to the chart ICT was very small, may be under stated, maybe a little bit larger. But nothing like food, nothing like health or education or housing or transportation.This market which is one of the largest just in India, four companies are $75 billion in market cap.And that's not a bad number. Imagine what can happen to my starting point is even if you converttwo billion people into global consumers and include them in globalization. It may be the largest engineof growth - the world has ever seen. That's a good news, the bad news is we have to deal with theconsequences of rapid growth on ecology and sustainability. And I think that is the reason why I say alldiscussion about sustainability ignoring five billion poor does not matter because they are going to havea significant influence. And therefore I am going to come back and argue. That may be the place wheninnovations will come from, not from the United States or Canada or Germany. Then we will have lotmore discussion here but innovation is inevitable there. That is happening in all the other businesses.Take cell phones, the innovations are taking place in Thailand, in Philippines and in India, how many ofyou can make small transactions using an SMS message. You buy a six pack of beer and you send anSMS message and finish the transactions.That's common practice in Philippines, and in India it is increasing, so we are behind in technology andwe don't want to accept it because it just hurts our sensitivities to say we are behind. And the Filipinosare ahead, and the interesting thing is if I am a Filipino working in Dubai, I can send an SMS messageand make a small remittance to my family in the small village in Philippines. That is also possible today.And if you go and tell a Filipino that's how it can be done. It's not news. In my class, it is newsbecause we don't know how to do it here.For those of you, who just travel around the world, come back to New York try to use the cell phone.The systems don't work, but they seem to work everywhere else. So in other words the problem ofpoverty elevation is complex, it has become an ideological battleground. That is why we don't see theseopportunities. What is the problem? There is a public sector, aid agencies and multilaterals. They believethere is a universal solution. Last year it was the year of microfinance in UNDP So might be next year itis the year of small and medium enterprises, so one solution for the whole world. All poor people arethe same. Its nothing can be farther from the truth. There is so much granularity and variety in problemsand opportunities. So that doesn't work. Civil society organizations put social justice over economicdevelopment, and there fore what happens, you get very small localized brilliant experiments that arenot scalable.To give you an idea I once met with may be about 20 very important leaders in the NGO community inLatin America, we all sat together, to discuss what can be done with poverty. It was a fascinatingdiscussion because they had never met each other, even though they belong to the same organizationthey are from different countries. And I asked they them to go introduce themselves so that I knowwhat they have to do and, how they manage their lives. Out of 20, 11 or 12 of them were involved inprenatal care, and care of young children. They never talked each other, they always invented their ownways and I think prenatal care seems to be universal more or less. The social context may be differentbut the problems are not, the technical problems are not. They never discussed their technical problems.So one of the things that you find is highly segmented experimentation from NGOs, is brilliant fordeveloping of business models but there is too much redundancy built in to it. And that's an importantpart. And then of course personal philanthropy have very personal agendas and especially when thephilanthropic groups are becoming larger, their personal agendas can have a significant impact. If Billand Melinda Gates foundation decides malaria is important it can switch the priorities of manycountries in Africa rapidly. So building of capabilities over a sustained period of time becomes verydifficult when you depend on philanthropy, and then of course there is a private sector large firms. Sothe problem is the women sitting in the middle with two buffalos have become the battle ground forideology. In other words let us not make the poor a constituency rather than look at poor as a problemto be solved and a problem that we can help solve because that I think is the important issue that I wantto come back to it again because as long as we have this problem, no solution will work. I will give youa very simple example; I as a large American bank can go on giving micro finance and lend money topoor people at 18 %. I will have news paper articles in Wall Street journals saying how these companiesripping of the poor. Local money lender giving the money at 300 % gets no attention. Now I alwaysask NGOs whose side are you on?. 300% is ok, because 300 %is highly fragmented, nobody willpublish an article, but City Bank is an interesting target. So what happens most large companies shyaway from doing things that they don't know how to do? The reason is they don't want theirreputation to be destroyed, so the best thing is not to do anything which is also harmful. So why is thisso important to look at poverty, an environmental damage? I am going to primarily use data from theworld resources institute and I am some what biased because I am also member of the board and I amgoing to use mostly data from brilliant economists there called Janet Ranganathan and I am going touse some of the stuff he put together. In other words if you look at nature, there are types of equalsystem services that nature provides. The first is provisioning, goods produced are provided by theequal system that's food. Across the world you have - so there is - nature provides the bounty andthat's important for us to recognize, it is not just environmental damage, it is protecting theenvironment so that we continue to get good harvest, good levels of food and high levels ofproductivity and so on. The second is what I call regulating, benefits obtained from regulation of thenatural processes and that is really is helping us from deadly diseases, urbanization urban sprawl,tsunami and so on. And finally cultural which is having a good time enjoying nature. So the types ofecosystem services are quite interesting. So All World Resources institute did in the millenniumassessment, findings, they looked at 24 different categories and they find that out of 24 categories ofprovisioning, regulating and cultural at least 16 of them are in great danger. That's not a good scorecard. If you look at provisioning, we have enhanced crops, livestock and aquaculture and carbonsequestration in regulating so that's a good news, the bad news is fisheries, if you look at foods, fuel,genetic resources biochemicals, fresh water, climate regulation, erosion regulation, water purificationwhole bunch of things that are being degraded and destroyed in many cases. And the mix is timber andfiber regulation sump water regulation it's neither we are not there but it's okay. This is not a very goodscore card so I thought I will take something very specific and say what the score card looks like. Thisis a picture of the world if you look at what has happened 30 percent of the landscape that is cultivatedor cultivated, increase cultivation was done in the last 30 years 40 years.In other words, we are spending more energy and time in creating new areas for cultivation in the last50 years or the last 200 years. What is the implication of this and you can see where the cultivation isgetting to be very intense, it's all in poor areas. But it is very closely connected with the amount ofnitrogen that is left into the rivers, right? We use more and more fertilizer. See what is happening herethere is not a single river that is not polluted with nitrogen and if you look at the dark browns which areall in poor areas, all of China, most of India most of the middle east some Africa lot of the LatinAmerica and of course enough for fit in the United States. It's almost 80 percent of the increase ofnitrogen flows in the rivers since 1990 is not - that's because people have started to eat better and theywant to focus on agriculture, they want to get better yields they put more nitrogen I could have donethe same thing for pesticides, it could have been even worse that there is absolutely no control on theuse of pesticides in these countries they think that it is good for productivity. So if the water is gettingpolluted this way it is because improving people lives in these countries is going to create globaldamage. This is the fishing of Atlantic cod you can see what happened, 60s we over fished and thenit's gone and number of tons of landed. Now you have seen lot of these pictures before, so this is notsomething new but what is interesting is if you look at what has happened you can take mangroveforest, wonderful mangrove forest convert then into shrimp farms in Thailand and then you getdevastation. Five years you use the land for fish farming and for exactly I remember 30 years agoshrimp was once in a way. Now every part of the day you have shrimp where does the shrimp comefrom? So somebody is growing them, cultivating that shrimp and at least I want to give you a badfeeling when you eat shrimp. But it's important because if you look at what has happened we took thatit is not destroyed - I am not coming from bleeding herd liberal and saying destruction of mangroves isdangerous. No, you destroy the mangroves you cannot stop hurricanes and 50 percent of the majorcities are located within 30 to 40 miles of the coast and the last tsunami hit in Indonesia there it'sproved that if you have mangrove forest it dampens the floods dramatically. So protecting themangrove forest is lot more than just beauty. If you look at what has been done it is looking at povertyand eco system service looking at satellite maps you can see poverty rates in one part of Kenya but theinteresting thing is, if you combine poverty with development of surface water where 70 percent of thepeople need surface water and the pollution of the surface water you get a deadly picture this has justhappened to be in Kenya. But the methodologies available using satellite maps, looking at povertymaps, looking at deforestation and looking at water resources on top of it.This is a deadly picture when you see one. I took the less deadly one which is in Kenya, but 75 percentof your house water lay on surface water. They are poor, there is no surface water. The water isextremely polluted, there fore they get very sick. So we are building a huge problem. So theenvironmental issue for me is not some thing that you can dissociate from health and more importantlywith poverty. So it's the same maps for different parts of Kenya. Now let us look at mangrove becauseit sort of interesting.That's what it look - use to look like. Now let's look at what happens? So if you look at -keep Mangrove as a mangrove, you get probably about $90-$100 per hector in timber products, timberand non timber products. But you get $2000 if you convert that one hector into shrimp farming. Goodnews or bad news? Because this is only looking at, out of pocket cause. On the other hand so you cando all the timber and non timber products only converted into shrimp farm or the net present value perhector, because I cannot say any thing as a business school professor with out net present values. Okay,that's the that's a very simplistic view. Now you look at fisheries and nursery because mangroves arenatural fisheries. So that may be additional 70 bucks. But if you look at coastal protection and imputethe cost of coastal protection, suddenly the picture changes and then you take the shrimp farming andtake the subsidies out its not as interesting. If you take the pollution cost out, and then if you get therestoration cost in. Suddenly you look at a very different picture. Mangrove including coastalprotection is significantly more interesting, purely economically compared to converting it into a shrimpfarm. Does that make sense, because I have taken the total cost including environmental degradationand restoration and the protection of in fact actually in Katrina also you can say we destroy themangrove areas and I think that we are going to pay the price and all over south east Asia and all overAfrica, this is a huge problem.It's not a flow of fund when you don't destroy the mangrove forest. On the other hand if you destroyit and you get Tsunami or a flood and then you have to restore the city or part of the villages, that is atotal cost per hector. And in fact in some dense areas it could be significantly more. This is only takingto show the methodology in one area in Southern Thailand. So you can also, what I believe that oneline conclusion for me is poverty alleviation sustainable development, inclusive growth at intimatelyinterlinked You cannot - and I can give you more examples but that's not the point. I just wanted to giveyou some examples to illustrate this relation ship. That means our current development models, energywater packaging and waste per capita are inappropriate. What will happen if we use the same level ofpackaging in China, Africa, India and Brazil and Mexico, and people still need sanitation, people stillneed food, because one way of preserving food is to get processed food. That means packaging. Andthere fore we have to deal with the problems of packaging, all right. So very seldom we worry aboutpackaging and the toxic effects of packaging has on earth. For example does some one know whathappens to all the PCs that we use in laptops, any idea?, all the Xerox machines that we use or copyingcompounds, most of them are bio non-biodegradable. So packaging, whether it's not just plastic andpaper. All kinds of packaging, some are conductors and so on and certainly plasma TVs and I think atleast I have a friend who knows a lot about plasma TVs and TVs in general.So in other words new break through in innovations is not an option. So, I am going to argue that theemerging markets must become the source of innovation, because that's where the problems are, that'swhere we can find the solution. We cannot find the solution in the United States because we are hugeinstall base. There is a huge problem of changing the install base. There is absolutely no reason whyemerging countries must go through the same development model as the United States and Europe, paythe price and then correct it. The question is why can't they bypass and leapfrog? And what is that thatwe need to do in order to leapfrog? That, I think is an interesting question. And that is where I thinkthere is a huge opportunity for us not only to innovate, but may be we always assume, innovationswill come from the top of the pyramid to the rest of the World. May be we can reverse it. And at leastmost of my work has been asking the question "Can I innovate at the bottom of the pyramid and getthat back into the top of the pyramid". At least there is an open question and I want to leave you withthat question.Now, you can ask the you can ask me legitimately, "C.K. that's all fine, but do you have anexample?" So I'll give a very very quick example, because it's not easy to argue a point theoretically; soI figured that may be a short example would help. So, I believe if you want to innovate, you must haveclear criteria up-front in these markets. One, it must be affordable to the poor. That means you have tocut the cost by one-tenth one-fiftieth- something of that kind, not five or ten percent. But it must beworld-class product and services. Because people will not buy watered down versions. And newmarket based ecosystem is what we have to create. We have to get ecologically sustainable hi-techsolutions, new business models and checks and balances on the private sector. So that social institutionscivil society works very closely with the private sector. It must have social collateral it must bescalable and it must be profitable, otherwise people will not invest. So, that look like very honorous setof criteria.So, let me take energy because it's quite interesting. That's the market for energy in poor countries;Africa, Asia, Eastern Europe and Latin America. Asia is big and it's not surprising at all because of thenumber of people. And most people use bio-mass. 70 percent of India uses biomass not, in otherwords, very regressive fuels, not progressive fuels. It has pollution. The pollution inside the hut or thehome is higher than the pollution outside. So, 2 million-3 million women and children get respiratorydisease. It's a huge problem. It's not just an energy problem; it's a health problem as well. This is how -the share of household spending on energy. You can see the pervasion of the logic. The poor peoplespend more money on energy. They have bad fuel regressive fuel and they spend more money. Andof course when they get rich, they go to electricity which creates a different problem. Some body elseburns coal in a centralized place and creates energy. But at least, it's not kerosene and biomass.And cooking is a major need for energy; it's not just lighting and running factories. So this is how theycook. Anybody seen this at all? That's the most difficult thing for you to come to terms with becausepeople really get hurt inside the hut cooking everyday for hours, its it's a difficult job. So, if you gothrough the process of looking at how the customers use energy, get consumer insights and thendevelop a co-delivery system. I won't go into how to do it. It's fairly simple in fact, I say, indeveloping countries use the constraints as a given don't innovate with out constraints. Use theconstraints as of given and innovate inside the constraints, not outside. In other words, you can't wishaway the problem that safety standards ecologically sensible solutions or critical. It must be scaleableas well. So, I've been working with BP which doesn't get a good set of marks in the U.S. recently, butBP has been very concerned about alternative sources of energy. So we said, let us target the rural poor.But the rural poor have extreme variety of cooking habits. Anybody who has traveled in India fromnorth to south, east to west the food is total different, the habits of cooking are totally different youcan't give them one choice. And the choice of fuels is based on cooking habits as well as availability offunds for the family and access to bio mass so we need very flexible systems. So after about year'sworth of effort, we came out with stove which will use bio mass and LPG simultaneously. The housewife can decide which one to use. If she wants to make a cup of tea, its LPG, if she wants to cook thefood for seven people she can use biomass but biomass was palletized and we increased the energyefficiency of the typical stove that they use from 10 percent of bio mass to almost 60 percent and istotally palletized absolutely smoke free, so at least we remove the health hazard totally, and itsaffordable its less than $20 to buy and she can buy biomass pallets made in the village clusters, totallydecentralized production of biomass. So you can get 1 kilogram bags in the supply chain for newpalletizes they have to build a new manufacturing and logistics for the store and there is also LPGsupply chain highly decentralized storage. And almost all the selling is done by NGOs in local villageswith local entrepreneurs, they have a deep stack in saving forests and also in making life easy forthemselves.So at least we can say destruction of the forest now at least is one fifth of what it used to be for thesame amount of cooking. Now you can ask can you eliminate it all. The answer is yes, if there is enoughmoney. So what we find interesting is people start with bio mass and LPG they move totally to LPGwhere they become more affluent. But LPG has other problems in India in terms of safety. So there isstill work in process, but the interesting thing we can reduce deforestation and improve the quality ofhealth very dramatically and these are the people who are doing it and that's the stove and you can seethe safety posters, everybody is trained on safety before they can get this stove and its quite acomplicated product, looks simple because you have LPG next to an open flame if you understandwhat it means, the safety issues are extremely important. So this year they will sell 200,000 next yearmay be one million but the more interesting thing is because it is a global company piloted in India,scaling in India during this year and by 2010 they will have 5 million units and they are alreadyexperimenting in South Africa and this year they opened up both China and Vietnam. So by 2010,eight countries will have a very different way of looking at energy for cooking, it's not the solution toall the problems but it will dramatically reduce particulate pollutions, smoke inhalation, health issuesand dramatically reduce the cost, its a small effort. But I don't think this could have been inventedsitting in New York or Washington or London. You had to go to the villages of India to understandhow people do work and how they cook.So I want to come back to this inherent tension. Now you can look at this and say "yeah all this is finebut you are still cutting down forests, it's the same question of 18 percent interest versus a 300 percentinterest, you are destroying 5 kilograms of wood per day, now you do one, now is it better? The answeris yes but can that it be improved? The answer is yes too. So I think we need to make not one big leapbut small steps. So I look at this and say what is the only way we can change this ideological battle is Ithink we - all of us have to think differently, I think its not about money I am convinced, resources arenot the issue, technology is not the issue I am convinced mind sets are the issue, the way we think andthe way we are socialized. Globalization bad for the poor is a traditional view. I think we have to movefrom can benefit all. Multilaterals once show if it's all to multiple solutions but global standards withlocal responsiveness and focus on private sector, civil society not just local solutions but locallyresponsible scalable solutions and also work with the private sector. I say the elites, that is this grouppoor are an intractable problem to say even organize the poor to offer a new solution to poverty. Inother words the most interesting thing for me in all my research is the solution to poverty rest with thepoor. If you organize them, mobilize them, motivate them, they can solve their own problems, we justneed to mobilize them. Any amount of aid is not going to solve the problem. And I think that's why Ibelieve in Africa, we are creating more dependencies than reliance on themselves and is very unfortunate.Private sector, don't ignore the poor, it is a big market there. Government agencies don't focus onsubsidies but enable the development of market based ecosystems. Same thing with public viewprivate sector cannot be trusted. Did any body watch Ralph Nator today? Saving the world from thebig corporation. That's the most fascinating thing I have ever heard. He went on for two hours basicallysaying, how the basic large corporation is evil. Very in a articulate fashion, so may be new forms ofgovernance, multinational civil society and governments to work together. I believe the universitieshave also only focused on the top of the pyramid. Very little work gets done on what happens for afour billion people. Whether it is on health or public policy or what ever. I think that developmentmodel is where I think we need to do the most. I think current development models are totallyinappropriate so it is possible to manage inclusive growth on the ecological stewardship. I believe it ispossible to do both.So I am just going to stop by saying. We have to imagine a different world. I do not think it is going tohappen because of intellect. I think it is going to happen because we can imagine a different world andwe have the passion and the courage to create it. And I would also say lot of humility is in order. Wehave to learn to learn from the poor. In fact one thing I have learned is they have more common sensethan we think they do. And I have learned a tremendous amount. Every time I go to a village and Icome back as a much better person. I ask my self why the hell did I don't think that this way? And thereason is I am educated to reason incorrectly and they cannot afford to reason badly, they make badchoices yes, so do we, but there is a lot of reason for humility - For a professor it is difficult to putintellect lust just about luck. But I really believe it.I think imagination is what we need? That - so to sum up I do not believe we can deal with theproblems of civilization or ecological sustainability with out dealing with the issues of poverty andpoverty reduction. These are totally interlinked. Irrespective of how much discussions we have on whatthe United State should do, which we should have, we should also simultaneously put equal energy inunderstanding what's happening in developing countries, on the emerging markets, that's a critical part.Stop here and comments, disagreements, questions.