Easterly, Africa and free markets
William Easterly writes in an op-ed for the Wall Street Journal (subscription required):
Economists involved in Africa then and now undervalued free markets, instead coming up with one of the worst ideas ever: state direction by the states least able to direct.
The free market is no overnight panacea; it is just the gradual engine that ends poverty. African entrepreneurs have shown what they are capable of. They have, for example, launched the world’s fastest growing cell phone industry to replace the moribund state landlines. What a tragedy, therefore, that aid agencies have foisted the poorest economics on the world on the poorest people in the world for 50 years. The hopeful sign is that many independent Africans themselves are increasingly learning the economics of how to get rich, rather than on how to stay poor.
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As a "searcher" I agree with Easterly in so many things but cell phones (or mobile phones as we English call them) are a poor example of free markets. To be really useful there needs to be standards, frequency allocations, even enforcement of rules enabling calls across networks at reasonable rates. Perhaps cell phones are an example of how when state and enterprise work together then real benefits can be seen.
Though as an engineer I prefer to see cell phones as another example of how technology changes the world leaving politics to catch up, just as cars, planes, even doors, oil lamps, and ploughs, did in their time.
Posted by: Michael Saunby | Mar 26, 2007 3:10:23 PM
The mobile phone market is in fact, a perfect example of how the public sector can enable private sector growth which can have huge impact in a way that no top-down MDG program can. African governments need to embrace a role of stewardship for the private sector; not as competitors. As they have done with the phone markets (in general) they have to establish the rules of the game, ensure that consumers are protected and encourage players to join the game and compete openly. A market based approach which does not define an effective stewardship role for government is as unlikely to produce sustainable development as a statist approach.
Posted by: Jeff Barnes | Mar 27, 2007 5:35:32 PM