The idea to use mobile phones (here and here) to help economic development in the most remote corners of the world is fascinating and definitely smart. For one thing, mobile phones have already reached the Bottom Billion. In 2007 there were 45 subscribers per 100 inhabitants in the developing countries. That means that we can now expect to have one mobile in every family. Everywhere. As well in communities where services like water, electricity, hospitals, schools or transportation are still far away.
What poor people mostly need are functioning institutions. And market is one of these. If market is not working, farmers will pay higher prices for what they buy and got less money for what they sell. Moreover they could buy or sell at the wrong time and possibly in the wrong place. In the words of the government of Rwanda,
the success of these farmers has been greatly affected by lack of access to pricing information. Many times, farmers speculate what crops to grow and what prices to charge at harvest. Some farmers depend on middlemen to dictate the prices and in most cases the latter exploit the former. For any farmer to earn a decent living from agriculture, easy access to information on market prices is of paramount importance.
Making information flows on mobile phones could
empower farmers to enable them make more informed market pricing decisions and ultimately more successful farming.
The idea of mobile banking goes in the same direction: making a service so critical for development accessible to almost everyone. That will not end poverty, but will probably make the task easier.
Thursday, 16 April 2009
Nobel-winning economist Amartya Sen argues, in an article published on The New York Review of Books, that the way out from the crisis passes through a better understanding of the ideas that contributed to build the actual economic system. Adam Smith, John Maynard Keynes, Arthur Cecil Pigou, should be read, not just quoted. And I quote
Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions—including public services such as schools—and values other than pure profit seeking, and second, they needed restraint and correction by still other institutions—e.g., well-devised financial regulations and state assistance to the poor—for preventing instability, inequity, and injustice. If we were to look for a new approach to the organization of economic activity that included a pragmatic choice of a variety of public services and well-considered regulations, we would be following rather than departing from the agenda of reform that Smith outlined as he both defended and criticized capitalism.
We must understand how institutions work and make them work better. But not just aiming at economic growth.
There is a critical need for paying special attention to the underdogs of society in planning a response to the current crisis, and in going beyond measures to produce general economic expansion.
A crisis not only presents an immediate challenge that has to be faced. It also provides an opportunity to address long-term problems when people are willing to reconsider established conventions. This is why the present crisis also makes it important to face the neglected long-term issues like conservation of the environment and national health care, as well as the need for public transport (…).
Sunday, 22 March 2009