Sunday, August 14, 2005
Broadband Internet to cure poverty?
I don't know if this stuff is reliable, but I came across this pretty crazy story in the Times of London. According to the Times, Ethiopia is "is spending 10 per cent of its annual GDP on a broadband, satellite-based internet system." Before you fall out of your chair, let's also look at an example of what this money is being used for.
WTF???
Let's look at some of macro-data on Ethiopia from the World Bank. The country has a population of about 68 million. Life expectancy is 42. Literacy is at about 43%. GDP in 2003 was $6.7 billion. Per-capita income is about $90, or $0.25 a day.
In a country that is reeling from a multitude of problems, the government wants to invest about $700 million (about $10 per person) in building satellite-based broadband internet connectivity, in the belief that Ethiopia could leave all its problems behind IF ONLY it had access to the Internet. Have these guys completely taken leave of their senses? Don't they see more pressing problems to be solved (infant and maternal mortality perhaps?) before giving everyone a computer and plasma screen TV's?
This is typical of the sort of muddled thinking that considers the 'digital divide' a pressing problem that needs to be solved pronto if any country is to advance economically. Here's what I wrote in my dissertation about this.
Governments with very scarce resources (like Ethiopia) should give serious thought to how these resources are allocated. Every dollar allocated to building satellite-based connectivity is a dollar not invested in primary health, for example. Of course, the govt could argue that the investment in connectivity also leads to improvements in health and primary education, areas with demonstrable market failures. Unfortunately, the evidence for this (in the economic literature) is scant, beyond the occasional anecdote. The government should also consider the costs/benefits of investing in high-tech solutions versus the costs of investing in low-tech, brick-and-mortar solutions (better teachers, classrooms, better clinics etc). Until then, the idea of investing 10% of GDP of a desperately poor country in a pie-in-the-sky project, based on warm, cuddly, and fuzzy thinking is pretty close to criminal.
Unless of course, the Times of London is doing a Times of India and pulled the 10% number out of thin air.
Most secondary schools have now received the huge plasma-screen televisions that will soon display internet-streamed MPEG 2 digital video, including instructional films and quizzes.
WTF???
Let's look at some of macro-data on Ethiopia from the World Bank. The country has a population of about 68 million. Life expectancy is 42. Literacy is at about 43%. GDP in 2003 was $6.7 billion. Per-capita income is about $90, or $0.25 a day.
In a country that is reeling from a multitude of problems, the government wants to invest about $700 million (about $10 per person) in building satellite-based broadband internet connectivity, in the belief that Ethiopia could leave all its problems behind IF ONLY it had access to the Internet. Have these guys completely taken leave of their senses? Don't they see more pressing problems to be solved (infant and maternal mortality perhaps?) before giving everyone a computer and plasma screen TV's?
This is typical of the sort of muddled thinking that considers the 'digital divide' a pressing problem that needs to be solved pronto if any country is to advance economically. Here's what I wrote in my dissertation about this.
The digital divide in the developing world is merely a symptom of a deeper problem, namely poverty. Poor people do not take up advanced communications technologies because they do not have the money to do so. They do not take up air-conditioning (documented in economics research as productivity enhancing) for the same reason. So, there is no reason why the digital divide should receive any more attention than the ‘air-conditioning divide’. ICTs serve a purpose, namely reducing transactions costs and generating income. If people do not adopt ICTs, it is at least partly because the cost-benefit analysis does not work out for them. They make these calculations assuming ICTs to not be an end in itself, but a means to an end. Addressing the underlying problem of poverty would be a more useful endeavor than addressing one of the many, many symptoms of poverty.
Governments with very scarce resources (like Ethiopia) should give serious thought to how these resources are allocated. Every dollar allocated to building satellite-based connectivity is a dollar not invested in primary health, for example. Of course, the govt could argue that the investment in connectivity also leads to improvements in health and primary education, areas with demonstrable market failures. Unfortunately, the evidence for this (in the economic literature) is scant, beyond the occasional anecdote. The government should also consider the costs/benefits of investing in high-tech solutions versus the costs of investing in low-tech, brick-and-mortar solutions (better teachers, classrooms, better clinics etc). Until then, the idea of investing 10% of GDP of a desperately poor country in a pie-in-the-sky project, based on warm, cuddly, and fuzzy thinking is pretty close to criminal.
Unless of course, the Times of London is doing a Times of India and pulled the 10% number out of thin air.
