In preparation for a recent interview, I readied myself to answer the question: What would you do with $1B to make the world a better place?  I highly recommend the thought experiment. Here's where I landed.

I'd spend it grants, debt, and equity for entrepreneurs, with innovations that address the failures that are prevalent in developing countries. Failures of the market and failures in public service delivery. Simply put, many of the systems in place just don't work with the resources and income level of developing countries.  Innovative ideas that target the areas of the system that are broken and overcome them address the underlying problem.  This, I think, is sustainable development.  

What kinds of innovations?  Things like microfinance, which overcame the adverse selection and moral hazard challenges of lending in small amounts to the poor that resulted in prohibitively high interest rates.  Things like Cell Bazaar, a mobile marketplace which improves market efficiency by connecting buyers and seller and giving access to pricing information.  Things like Click Diagnostics and Frontline SMS: Medic, which use mobile technology to overcome challenges in health delivery.  Things like the ISP that will figure out the operating model that enables profitable internet access in rural areas.  And yes, I think technology enables many of these types of innovations - it's why I'm so excited about the infrastructure investments underway across Africa.  And I believe that it's not me with my Harvard degree that's going to come up with them (well, maybe one if I'm lucky) but really the entrepreneur (social or otherwise) who really understands why the system is broken.  That entrepreneur almost certainly is on the ground.

Which led me to conclude that I think a disproportionate amount of aid money and resources goes into what I call band-aids.  By band-aids I mean solutions (largely short term) that stop the bleeding, but don't address the underlying problem: the system itself. Things like Nothing But Nets (@tmsruge, you must be smiling) which mobilize resources to fight malaria, but don't address why the local systems fail to do so themselves.  One of the things I struggle with about band-aid is that they often create distortions that are not fully understood and can undermine long-term solutions.  (I recognize that the types of innovation I refer to risk similar distortions, but being largely market mechanisms, the risk is at least ameliorated).   

Which is not to say band-aids are not important.  When people are suffering and we can alleviate that over the short term, its hard not to want to help.  I still think these sorts of interventions matter.  That's just not where I'd put my money, and probably not how I'm going to approach development once I graduate in June.

And you?  What would you do with $1B to make the world a better place?