> China's mass production model then? How do you propose jump-starting that?
By loans made by the private or public sectors for the purpose of developing large scale productive capacities ? Craftsmen can't compete with industrial production, there is a minimal scale problem.
> microlending helps them create a job, or sustain it themselves rather than looking for one.
A $50 loan can't do that. You will not get an education and you will not build a business with $50, not even in the poorest village on Earth. You might help a small business owner solve a crisis situation and find some stability.
The source of poverty is lack of investment, micro-loans will drain resources out of the community (principal + interest) and leave very little actual productive capital behind.
While the idea as initially conceived by Yunus was well intentioned, the focus on lending (as opposed to developing and building) has transformed it into a form of loan sharking. Many of the newer Microlending networks that operate in India have focused so tightly on performance and profit and so little on the welfare of the clients that it has resulted in a slew of suicides and assorted tragedies:
http://www.bloomberg.com/news/2010-12-28/suicides-among-borr...
Edit: the example you provide is just that, an anecdote. It's certainly possible, but is the dominant story or the exception ? At 20% interest rate in US dollars, plus any volatility the local currency will induce, we are talking about credit card level rates, and not business loans. The introductory loan in 50 to 150$, if you need more you need to build credit, just like credit cards. How well are the borrowers and their scheme selected ? What's to prevent it from becoming a way for poor families to finance interest bearing consumption, just like a credit card ?
On a case by case basis, there are opportunities for development that can withstand 20% interest because the local need for that service is so great, thus the amortization is very rapid. There is a massive risk in this internet driven model that borrowers are selected solely for their ability to repay, and that scale and growth becomes the driving factors.
You will NOT spur development by simply lending money to the poor, quite the contrary you will lock them into a high debt, high interest form of consumption that is all too familiar to poor families in the West.