Spark Economics

Turning Local Potential into Lasting Prosperity

___________________________________________________________________________________________________

Executive Summary

Spark Economics is an economic model designed to accelerate growth in rural communities. Led by The

Open Platform think tank in Geneva, Switzerland, the model posits that the most effective way to foster

development is by providing technology to small enterprises. By doing so, rural communities can

achieve higher income, increased productivity, and higher creation of lasting jobs than through any other

form of economic development.

___________________________________________________________________________________________________

The Challenges Addressed by Spark Economics

Traditional economic development often fails to reach the heart of rural poverty. The Spark Economics

model identifies and addresses several critical gaps in current strategies:

 1. The Lack of Steady Income: Drawing on the research of Nobel laureate Esther Duflo, it is

understood that the primary barrier for those in poverty is the absence of a steady, predictable

income. Esther Duflo identified that most people in poverty do not want to be "entrepreneurs"

by choice; they do so out of necessity. They argue that what the poor truly desire are steady,

"well-paying, middle-class jobs" because they provide the stability needed to plan for the future2

Duflo argues that the real engine of job creation is the "Missing Middle", which are medium-

sized firms that have 10 to 50 employees. The medium-sized firm, which is large enough to be

efficient but small enough to be agile, struggles to get financing. Without these firms, there are

no "good jobs" for poor people to transition into.

2. The Limitations of Microfinance: While microfinance assists individual entrepreneurs, it is

often limited to a small portion of the population. These micro-enterprises rarely create jobs

beyond the direct beneficiary or their family, often leaving the wider community without the wage-

paying jobs they actually need3

 3. Emergency vs. Sustainable Growth: Many development models focus on immediate needs

like food and medical aid. While essential, these interventions do not create lasting economic

activity or the permanent jobs required for a community to become self-sufficient.

4. Rural Stagnation and Migration: Economic activity is frequently concentrated in urban centers.

This leaves rural areas with a total lack of job availability, driving mass migration to major cities

and foreign countries in search of opportunity4

___________________________________________________________________________________________________

The Spark Economics Solution: Technology as a Catalyst

The Spark Economics model addresses these challenges by transforming existing small enterprises in

rural areas into industrialized, high-output medium sized enterprises.

1. Productivity and Quality: By introducing modern technology and machinery, small enterprises

can increase their output and improve the quality of their products, allowing them to compete in

broader markets.

2. Job Creation: Increased productivity naturally leads to the need for more workers, creating the

steady, local jobs that anchor families in their home communities and reduce the pressure to

migrate.

Analogy for Understanding: Traditional aid is like giving a community a fish, which solves hunger for

a day. Microfinance is like giving one person a fishing rod; they may eat, but they cannot feed the

village. Spark Economics is like building a local fish-processing plant and providing the modern

machinery to run it. This does not just feed the community; it creates stable jobs, produces high-value

goods for export, and turns the local economy into a self-sustaining engine of prosperity.

___________________________________________________________________________________________________

Implementation and the Path Forward

The Open Platform think tank is putting the Spark Economics model into practice through a project in

Talanga, Honduras, in partnership with Vamos Honduras NGO and Pathways To New Futures NGO.

This initiative is specifically designed to donate machines to small enterprises and track economic

results like income, job creation, and production output. Through the rigorous tracking of these

results, they will validate the model's impact and provide a blueprint for NGOs and governments

around the world to apply this economic model to their own strategies and initiatives.

For more information, visit https://theopenplatform.org/sparkeconomics