Constructing homes in underdeveloped countries is a viable global economic strategy that has the ability to energize the global economy and impact all participating national economies. It is a proven economic strategy that economies based on protected private property rights have the power to eradicate poverty and create prosperity when affordable financing is available. It is the same economic development process that evolved in America in the late 1940’s and 1950’s and created unprecedented prosperity in America.
It all began when the Marshal Plan created manufacturing jobs in American as exports increased rapidly for the rebuilding of Europe. The wages for the workers were low and little could be saved for the future. Housing was in great demand and the concept of building subdivisions was born. However, it was the passing of legislation that created what was to become known as FHA and VA home mortgage insurance that unleashed a constructions industry that remains today the driving force in the American economy.
Mortgage insurance made available to millions of Americans for home ownership over the years increased the number that could qualify for a loan which became the key to prosperity for hundreds of millions of people. The interest rates were lowered because of the insurance and the terms were extended to reduce the payments and increase the number who qualified. The result was the birth of a home building industry that has created hundreds of millions of jobs over the past sixty years. Employment created demand for all types of consumer products.
The jobs created were not just in construction and the manufacturing of materials for construction. The employees in the construction industry from banking and real estate to carpenters and painters earned funds that were used for the purchase of consumer products of all types. This is the process that created a demand for a strong manufacturing industry for a wide range of products and sustained a prosperous America. It also increased imports and exports. As a result there are over 120 million families that can afford modern fully equipped homes in America today.
The adoption of this same business paradigm for financing homes in underdeveloped countries will eradicate severe poverty and homelessness by creating hundreds of millions of jobs. It begins by organizing an international system for mortgage insurance which insures international investors making loans to domestic banks in developing countries as the primary source of funds for home loans. International mortgage insurance will make it possible to launch a global home building industry in participating countries. The impact of hundreds of billion dollars invested in personal home loans will create hundreds of millions of jobs of all types globally. There is currently a need globally for over six hundred million modern and fully equipped homes based on five people per household. Starting a model program with a billion dollars in several countries would launch a home construction program that will prove the concept and demonstrate the need for the construction of at least thirty million homes per year for twenty years. To understand the magnitude of the construction this is thirty times the average number constructed in the America in one year just to meet the current needs. This process maintains an American economy for over 300 million people. Initially the home loans will be made through local banks in underdeveloped countries directly to homebuyers that are currently employed or have sufficient resources to qualify.
Thanks to the recent studies of the magnitude of the wealth that is possessed by middle and upper classes of people in underdeveloped countries there is sufficient evidence to prove that hundreds of millions of families have sufficient net worth or income to qualify now for the purchase of new homes. Many of the affluent still live in homes that are of a quality that is far below the level that they can afford because of the difficulty in purchasing land or a lack of protected property rights. There are also restrictions and limits on mortgage financing at practical rates of interest that prevents homes from being constructed. Instead many of the upper economic classes invest in foreign stock markets and buy property in foreign countries because of the lack of investment opportunities in their own countries.
Under this economic strategy modern fully equipped homes would be constructed in developing countries for the lower, middle and upper income groups while providing jobs for those that are unemployed. The unemployed are trained and educated to work. They then become eligible to become homebuyers. This process must be fully understood to comprehend the viability of the strategy which has been so successful in America. The infusion of funds from home loans into the economy through the hands of the people permits them to become investors in the economy while increasing demand for all consumer products globally.
In effect the borrower reaches forward over 30 years and brings income that will be earned over 30 years into the current year and spends it on the purchase of a home. When that is done by a millions of people year after year the economy is energized each year.
As those involved in the supplying materials, furnishings and appliances spend their earnings demands for a wide variety of consumer products is created in addition to construction products. As the new homebuyers move up to a higher priced home the vacated homes become available to lower income groups. In American the sale of existing homes each year is over three times the number of new homes that are constructed each year, which is approximately nine hundred thousand new homes during an average period. Moving up is a common practice in an expanding economy. Many senior citizens in American have owned more than five homes during their life time. Realizing their increase in equity in the homes upon sale has generated income that would not be possible working for wages.
Once the construction begins on homes for those with a net worth or sound employment the unemployed become employed not only in construction but also in producing all consumer products as demand is increased globally by the newly employed. The increase in prosperity is due to the flow of funds into the various product consumer industries. The workers in these industries also become qualified for home loans. This process is exactly the same process that launched the home building industry in America. This is the process that eradicated poverty and created an unprecedented American prosperity.
The lender making the loan funds the money directly to the homebuyer’s escrow. There is little or no opportunity for corruption. Each loan is evaluated based on appraised value of the home in each economy and the bank funds go directly to the builder/developer less reasonable fees and cost of insurance. The funds do not first go to a government or a corporation for disbursement at their discretion. Funding governments and corporations in the past has failed to energize economies because they do not offer the people the opportunity to participate as investors in the economy which is the key to creating prosperity for all.
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