Global Journal of Human Social Science, E: Economics, Volume 22 Issue 2

characteristics that occur in a geographic area, the author assigns the name of economic ecosystem. The economic ecosystem is made up of companies of different sizes and shapes, both legal and non-legal, as well as non-governmental organizations. The interaction between those civil and governmental organizations also makes up the economic ecosystem, which, depending on technology, institutional and legal basis, takes place in a particular way. “We use the concept of the ecosystem because each constituent in the system has a role to play. They are dependent on each other. The system adapts and evolves and can be resilient and flexible”, (Prahalad, 2005, p. 65) His proposal is to promote, or in his words, build, economic ecosystems that exploit the market potential and entrepreneurial capacity of the poor, with the help of large companies and the government, which he says as follows: “I believe that the debate must shift towards building market-based ecosystems for broad based wealth creation. Only then can we tap into the vast, dormant, and trapped resources, purchasing power, and entrepreneurial drive at the BOP. This will allow for new growth opportunities for the large corporations and a better quality of life for those at the BOP”. (Prahalad, 2005, p. 66) From this characteristic we obtain another, which is not explicit in the work of Prahalad (2005) with which the definition of the poverty penalty gains in meaning. When the poor pay higher prices than the non- poor for similar products, the poor are penalized by the economic ecosystem, and changes in that ecosystem can end poverty. “The ecosystem can provide the tools for the poor and the disadvantaged to be seamlessly connected with the rest of the world in a mutually beneficial and non-exploitative way. It provides them with skills and opportunities that are often denied by the informal sector”. (Prahalad, 2005, p. 69) In the sections that follow the previous quote, the author deals, respectively, with reducing inequities in contracts and building governance among the poor. The latter would result in the fight against corruption. Such concerns reveal what for the author characterizes a market in which the poor pay more than the rich for the same things, or the economic ecosystem in which the poverty penalty is generated. These markets, considered by him to be underdeveloped, as they use inferior technology to that available in the production of goods and apply worse conditions of access to goods (manifested in more severe contractual conditions, including greater restrictions on credit and higher credit costs), offer products of worse quality, or at more expensive prices, as in the example given by the author of the company ITC's International Business Division, in India: “[t]he real sources of inefficiency are the price and quality distortions caused by the agents' stranglehold on the market”. (Prahalad, 2005, p. 229). This bottleneck in the market, in conditions that are not of mutual benefit, or are abusive, as mentioned above, from the perspective of the poor – actual or potential consumers, which they are – characterize the economic ecosystem of the penalization of poverty, so that the market understood in it represents the composition of fundamental sociological forces, which depress the quality and increase the price relatively. This leads us to the broad concept of the poverty penalty, which comes to mean the penalization of the poor by the markets, manifested through a higher price relative to quality, or greater costs than benefits, than those assumed by the rich, in the acquisition of similar goods. Thus, although the fight against the poverty penalty involves market conditions directly, it requires fighting the sociological conditions that lead to poverty, in what the author calls development. In his words, “[W]e must recognize that the conversion of the BOP into an active market is essentially a developmental activity. It is not about serving an existing market more efficiently” (Prahalad, 2005, p. xiii) The social development resulting from the change, in the economic ecosystem, of the market inefficiency conditions that perpetuate poverty, would depend, according to the author, on the aspirations to social ascension, or, in the author's words, “[m]ore important, social transformation is about the number of people who believe they can aspire to a middle- class lifestyle. It is the growing evidence of opportunity, role models, and real signals of change that allow people to change their aspirations”. (Prahalad, 2005, p. 109) Understanding and confronting the penalization of poverty would depend, therefore, in Prahalad (2005) on the knowledge of the particularities of the economic ecosystem that make up each market, which he develops throughout his book. This confrontation for Prahalad (2005) has the potential to end poverty itself, which is said by the cited author: “Given bold and responsible leadership from the private sector and civil society organizations, I have no doubt that the elimination of poverty and deprivation is possible by 2020. We can build a humane and just Society”. (Prahalad, 2005, p. 112) From this it can be understood that the author's approach is not only market-based, but also market- oriented. The epistemological reference of the penalization of poverty, in the case of Prahalad (2005), is the discussion of market-based and market-oriented development, but it could be, for example, meeting needs, or a discussion about well-being. Another important aspect of the poverty penalty concept is its measurement. In Prahalad (2005), the penalty of poverty is measured in the form of a proportion between the price paid in two economic ecosystems. Repeating one of the examples given by © 2022 Global Journals Volume XXII Issue II Version I 21 ( ) Global Journal of Human Social Science - Year 2022 E Poverty Penalty: A Market-Based Review Prahalad (2005, p. 11), the interest rate on credit paid in