posted
Sweet. That stat reminds me of one that Thomas Friedman of the NY Times invented:the kids on mopeds health-of-the-economy stat.
He travels a lot, and realized that for 3rd world countries, the more young kids he saw running around on mopeds and scooters, the better the local economy.
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posted
I wonder about the first premise - even if the statistic is true, all it does is suggest a correleation, not causation. A country that has a good amount of secure phones per capita (indicating a developed infrastructure and/or a fairly wealthy populace) would be more likely to overthrow dictators, but it's not the phones that do it: it's the development they signify.
So, like Thomas Friedman and his mopeds, you could walk into a country, see that it has a relatively large phone-to-person ratio, and predict that it doesn't have a dictator or that it won't for long.
But does simply sending phones to a poor country reallycause that country's dictator to be overthrown? I'm not convinced.
Note: This doesn't mean that I think the send-phones-to-Africa idea is a bad one. It certainly can't hurt the people there, and phone connections tend to fuel economic growth.
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However, Thomas Friedman's observation (I've never read about it, but going on what Morbo posted...) is that there is simply a correlation between the # of kids on mopeds and the economy of the country or area (be it economic growth, GDP per head, or whatever else he was using as his definition).
That's not a particularly surprising correlation (more money means more mopeds), although it is a unique and intelligent way to get a good sense of the local economy when walking along the street. That's what correlation is all about: using an easy-to-find data set (mopeds) to estimate something else (local economy).
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posted
Workers of the world unite! You have nothing to lose but your landlines!
Yes, Friedman was just pointing out a correlation, but there is causation. The cause is low unemployment and decent wages paid to young, unexperienced workers, also indicators of a good economy.
quote:But does simply sending phones to a poor country really cause that country's dictator to be overthrown? I'm not convinced.
Dictator's have historically kept tight grips on all forms of communication. It was a crime in the USSR to own unlicensed fax machines, printing presses or copiers. And of course, propaganda is crucial tool of dictators.
So perhaps merely increasing cell phones could lead to revolutions?
A funny analogy about causation/correlation I was told in a probablity class: suppose you see lots of people waiting at the subway station for a train. You can assume that a train is probably due shortly, but bringing 30 friends with you won't change the time the train comes. The causation between variables is one-way.
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posted
Both mopeds and cell phones greatly increase market liquidity within developing nations: mopeds in the distribution of goods, and cell phones in the distribution of information.
So for these two examples, correlation is probably also an indicator of causation.
Posts: 8501 | Registered: Jul 2001
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posted
Nonsense. For one thing, cell phones without cell phone towers will be nigh useless, dispatching that notion right there; even assuming cell phone towers, there's a whole host of things implied by the presence of cell phones (regularly monthly incomes, disposable income in many cases, an existing utility in time-sensitive transactions) that are not caused by the presence of cell phones, but help cause the presence of cell phones.
And given that most developing areas have far more efficient methods of delivering goods than mopeds, I'm quite amused at your suggestion that the mere presence of mopeds would cause economic growth. Here's a short list: carts, cars, rickshaws, trucks, boats.
This is leaving aside that each area will react differently to the presence of either technology, and that different areas will adopt these technologies in different ways. Most current areas with large numbers of cell phones were already at a point where dictatorships had passed beyond, so of course there's a correlation. Furthermore, most such areas already had developed landline networks, whereas many of the areas newly adopting cell phone usage nowadays lack those landline networks, and nobody knows yet what this is going to mean for economic or political development because its never happened like that before.
Posts: 15770 | Registered: Dec 2001
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posted
I'm not sure if mopeds are a cost-efficiant way of distributing goods.
While I agree there probably is a little causation in either example, that claim isn't particularly useful when developing policy - there are a lot of ways you can overthrow a dictator, but some ideas are better than others.
Bad analogy, but I enjoy it too much to delete it:
Hot weather probably correlates with the sale of hot fudge. Why? Because people eat more ice cream on hot days, and hot fudge is a complementary good to ice cream. You could even say that hot weather "causes" the sale of hot fudge to go up, since there's a clear "because of x, y happened" relationship. However, if I were a CEO of a hot-fudge-producing company and trying to increase sales, before I invested in a doomsday satellite that would alter the Earth's weather patterns, I'd see if I could spruce up the marketing campaign a little. There are good ways to go about achieving one's goals, and bad ways. Social scientists tend to prefer the more efficiant ways.
I just don't think that sending cell phones to poor countries will automatically lead to politcal freedom. As with all correlations, there has to be something causing the correlation to happen, but... For the mopeds, I agree with Morbo that a good economy brings money to young people's pockets. That's a pretty straightforward causation. For the cell phones, I would say that a strong economy leads to both higher education levels (remembering that higher education levels also lead to a strong economy) and to people who have the time, energy, and money to get involved politically, which then leads to political freedom. (good econ -> time & education -> no dictator). A good economy ALSO leads to a better infrastructure (and vice versa), which is typically represented in econometrics as the number of phone lines per capita. Thus the correlation between phones and political freedom. But the real thing causing both of these is a good economy.
Yes, more phones will beef up the infrastructure, which will lead to a better economy, which will lead to all the other good stuff mentioned above...but isn't there a better way to do it? Free agriculture trade will help those economies a LOT more than cell phones will.
That all being said, more cell phones will also probably help the economy to some degree, and those poor countries need all the help they can get.
Edit: You got in before me, Fugu
Posts: 2409 | Registered: Sep 2003
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posted
One factor that's being left out is active supression of cell phone technology by repressive regimes. As well as satellite, cable and internet technologies.
This is true in many countries that have citizens in large numbers that could afford these techs, if they were allowed to by their governemnts.
So it doesn't just boil down to economics, you have to consider political factors also.
edit:That is to say, if repressive regimes could be bribed, tricked or coerced into opening up their communications internally and with the outside world, this could lead to their demise.
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posted
Telepathy, though. If more people had a secure telepathic connection, there wouldn't be dictators.
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posted
Which countries are you referring to? The only one I can really think of is China - it's the only country that's been able to balance a restrictive government with a market economy - and that balance has only been achived with a slow dismantling of its communist (and repressive) ideals. There are very few countries (none come to mind) that don't have a market economy, yet have a large number of citizens who can afford cell phones.
So, would you mind mentioning which ones you had in mind?
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posted
Busted! No examples other than China spring to mind. Perhaps what I should have said is potential for a strong economy, due to huge reserves of natural resources, like oil in the Middle East or minerals in Africa.
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posted
Well, ALL countries have a potentially strong economy - if Litchenstein can do it, anyone can!
But I'd say that Africa and the Middle East have more problems than simply a repressive regime keeping them from getting cell phones. Like fugu pointed out, these countries don't really NEED cell phones (although they're often cheaper now than landlines, at least in villages, since the countries don't have the telephone wires up yet). They need things like education and medicine.
In China, incidentally, cell phones are quite common. They didn't take off for a little while when compared to say India or Taiwan, but then they suddenly became a fashion accessory. India took to cell phones very quickly since there weren't landlines availible in a lot of the rural areas - cells account for about half of all phones there.
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posted
I'm not an economist, but this all seems rather silly to me. I see it from Fugu's point of view. It's hard to buy cell phones and mopeds when you're starving.
Instead of sending in a bunch of phones, we could try sending in a bunch of decent jobs.
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posted
I just googled microloan programs, and from a quick look-through they look very good (if run well). The only problem is that they seem to give too small loans for the program to be finacially-viable to a non-charity organization operating in a foreign country. Err..to clear up that messy sentence, it doesn't seem like we can get the funds from rich countries with capital to poor countries needing capital in a market-driven way. It sounds like a good thing to have a charity do, but I can't see a business giving microloans to Africans and staying in the black.
Foreign direct investment, on the other hand, is large enough to be worthwhile to businesses, and it really does help poorer countries - far more than portfolio investments or other types of capital flows. That's because the company or person investing can't just leave the country when there's a slight downturn - there's a physical presence (factory or ownership in some firm) that keeps the investor there, and encourages the flow of not only money but the technological and managerial know-how that industrilized countries have an developing countries need.
(Guess who's doing summer research on FDI to emerging markets)
Free trade is always good too. U.S., Japanese, and European farmers won't like it, but cutting gov't tarriffs and subsidies in agriculture will really help out poorer countries.
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posted
Microloans aren't typically about profit, but they don't have to be because they're so small. However, they can be part of the long term development plans for a company, as they generate considerable goodwill at low cost. It doesn't need to be the primary business for a company in order for a company to provide microloans.
Also, the repayment rate is fairly high, which makes it even more low cost in the long run.
I think you are overly concerned with market forces in this instance. Yes, market forces are a powerful hammer, but there's no need to see everything as a nail because of that.
Billions upon billions of dollars are provided to poor areas of the world every year in order to keep them afloat, in order to keep violence minimal in comparison to the past, and in order to save as many people as can be expected. Microloan programs are an effective direction for that charity, despite not being very "market driven" at the moment.
While FDI is extremely good, there are also some pretty major problems with FDI as commonly practiced. The high tax benefits given to incoming corporations often negates many of the benefits of the company's presence for years on end. Certain sorts of FDI, such as in high tech industries, can be very beneficial, but they already require a basic support network from the surrounding community. Infrastructure matters, in that case educational infrastructure. India's relatively educated population, for instance, has made it a far larger site for technology jobs than many other areas of comparable economic status (before the jobs arrived, that is).
Not to mention that, while FDI is certainly market driven to an extent, a large aspect of the market is externalized incentives (the aforementioned tax breaks and the like). There isn't an unlimited budget of FDI going around, and the countries/regions that can already afford to offer such incentives are often not those most in need of the FDI. Microloans are far more effective for targeting regions less able to help themselves, and help lay the groundwork for FDI.
Not to mention the lesson we learned for the long term future -- the types of things needing production will change, likely in the next 50 years, and the best places to produce them will likewise change. Company towns, as many particularly large and/or industrial instances of FDI create, will eventually lose their company in many cases, and without a more solid economic groundwork, such as is not necessarily provided by FDI in poorer regions, there will be recession and depression.
That is not an argument against FDI, but an argument for large scale microloan programs in addition to FDI, and other efforts which develop a richer economic community than that found in company towns.
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