Day: April 19, 2002

Routing Around Monopoly Phone Companies in the Developing World

Telephone service in most developing countries is horrible. Typically a single monopoly company provides all service, and often there is corruption involved with contracts and agreements for providing service. THe result is that phone service in the developing world is horribly expensive in countries where people’s income is relatively low.

In a country like Honduras, for example, only 44 out of every 1,000 people have a phone and telephone calls can cost up to $1.50 per minute in a country where the per capita income is only about $850.

The Washington Post reports, however, that some enterprising entrepreneurs in the developing world are routing around their country’s phone service by starting cafe’s that let people call long distance and internationally for as little as 5 to 10 cents per minute.

The Post describes one such cafe in Honduras called Multinet which is just “a tiny one-room air-conditioned space inside the city’s largest mall” where customers sit in front of one of a dozen computers. For about $1.25, customers can purchase 15 minutes of time to call anywhere in the world. There’s a phone attached to the computer that the customers talk through and the recipient gets the phone call on a traditional phone, but the call is carried entirely over the Internet, cutting the monopoly phone company out of the transaction altogether.

The cafes are so popular, that IDC Corp. analyst Elizabeth Farrand estimates that by 2006 as much of half of all international phone calls from Latin America will be carried over the Internet.

Of course, in some countries the phone companies have successfully pushed for laws outlawing such businesses, but those countries seem to be seeing the light. Both Brazil and India have laws banning Internet phone calls, but those laws expire this year and already there are entrepreneurs waiting to pounce on the new business opportunity.

In just a few years, entrepreneurs and the Internet have accomplished what state-approved phone companies could not do in several decades — bring cheap phone service to the masses. Ah what people in developing countries can accomplish when they can route around official government policies.

Source:

Internet Cafes’ Phone Service Fills a Void. Ariana Eunjung Cha, The Washington Post, April 18, 2002.

Bottled Water in the Developing World?

A conference is underway in Ghana looking at Africa’s water management problems. This follows a United Nations report that highlights the intense problems faced by those in the developing world in obtaining adequate water supplies.

The report, No Water No Future, notes that today an estimated one billion people lack sufficient access to safe drinking water. Half the world’s population lacks adequate sanitation.

One of the interesting things in that report is how private sector, for-profit initiatives have arisen where government policies have failed to provide clean water.

For example, the report notes the “astronomic growth” in bottled water sales in the developing world,

Firstly, where piped municipal water supply is unavailable or of inadequate quality, the provision of bottled drinking water is a very significant economic activity that has seen astronomic growth rates in countries ranging from Mexico to India to Thailand. In fact, the success of this domestic private sector has in recent years motivated multinational companies to develop near-global brands of drinking water that compete with local brands. For consumers in developed countries ‘bottled water’ refers to high-priced mineral water. For consumers in developing countries bottled water often refers to reliable, filtered water in 20-litre reusable containers, used for drinking, cooking or other uses that really require drinking water quality. Provision of affordable drinking-quality water in bottles or containers also relieves the piped-water system of the need to produce drinking water quality that is largely used for lower-grade purposes such as toilet flushing. Innovative public-private partnerships that devise alternative ways of providing water supply and sanitation services at various scales deserve more attention.

Similarly, in agricultural use, it has been private farmers — not governments — who have largely made investments in improving groundwater development. According to the report,

Secondly, in agriculture, private farmers have been largely responsible for the major investments in groundwater development in recent decades. This groundwater use has contributed significantly to food production and the creation of wealth in rural areas. But governments have largely failed to elaborate rules and mechanisms that ensure that groundwater is used in a way that minimises the risks of over-use and protects groundwater quality.

Perhaps one of the best things that developing countries could do to promote access to water is set basic, transparent rules and then get the heck out of the way.

Source:

No Water No Future. Report to the World Summit on Sustainable Development, Johannesburg 2002.

Deliciously Vicious Review of ‘The Scorpion King’

It is not surprising that New York Times reviewer Stephen Holden pans “The Scorpion King” in today’s paper, but what really impressed me was his rather vicious description of the onscreen performance by The Rock,

The Rock may be the first movie action hero made of flesh and blood who appears more digital than human. With his bulging eyes, skinny plucked-looking eyebrows, heavy-metal mane and monotone voice, he suggests a lobotomized Billy Crystal on stilts and steroids.

I always wanted to be that mean in movie and film reviews, but my editors would never let me. Through a series of odd incidents I ended up having to sit through and review several concert performances by Megadeth. Megadeth, of course, was started by David Mustaine after Metallica kicked him out because, among other things, Mustaine could not kick his drug habit.

I always wanted to write that Megadeth shows were so boring that although Mustaine might want to stay sober, the band should have passed out hallucinogenics to the audience to make Mustaine’s set tolerable. (Ironically, Megadeth did one of those concerts with Stone Temple Pilots who were much better . . . and, as it later turned out, received a lot of assistance in the chemical department.).

That suggestion didn’t go over too well, though, and I never got to say anything really nasty about anyone. A friend of mine created a lot of problems for herself when she worked for the student newspaper by panning the theater department’s performance of “A Street Car Named Desire” featuring the headline “A Streetcar Named Disaster.” We could hear the chair of the theater department screaming on the phone from down the hall.

Update: The flip side of this, however, is that after I finally saw it I couldn’t disagree more with Holden’s review. The Scorpion King is not the second coming of Citizen Kane, but it is an excellent popcorn action flick.

Vaccine for West Nile Virus Scheduled for Monkey Tests

The BBC reported in March that researchers at the U.S. National Institute of Allergy and INfectious Diseases and the Walter Reed Army INstitute of Research have developed a potential vaccine for West Nile virus which they will begin testing on monkeys this month.

West Nile virus occurs in many parts of the world and in 1999 found its way to New York where it was responsible for seven deaths.

West Nile virus is closely related to the virus that causes dengue fever, and researchers created a virus that is a hybrid of weakened versions of both viruses.

The vaccination was first tested on mice and produced a potent immune system response. Next up are tests in monkeys scheduled to begin sometime in April.

If the vaccine proves successful at creating an immune response in monkeys, the movement to clinical trials in human beings will likely begin very quickly since the weakened dengue virus used in the vaccine has already been clinically tested in human beings and shown to be safe. Human trials of the vaccine could begin before the end of the year.

Source:

Vaccine developed for West Nile virus. The BBC, March 5, 2002.

Rice Genome Draft Will Boost Food Research

The draft sequences of the rice genome were published this month, providing a window into one of the world’s most important food crops that will help increase the pace of advances in traditional breeding and genetic engineering of rice and other crops.

Obviously the decoding of the rice genome has a lot of implications for rice, but it will also yield important information about other grasses such as wheat, maize, barley and sorghum. According to researcher Stephen Goff,

There are about 1,000 traits that are mapped by breeders already to specific chromosomes. Now, we have the genes associated with those traits. We can speed up breeding in rice and all the other grasses.

Knowing which gene codes for resistance to bacterial pathogens in rice, for example, will also tip off researchers about which gene does the same thing for wheat, hopefully leading to advances across the board in improving food security.

Source:

Rice data to boost food security. Johnathan Amos, The BBC, April 4, 2002.

Botswana and the Mystery of Growth

The Economist recently looked at one of the odd outcomes of the last half of the 20th century. Over the last 35 years, no country has experienced faster growth in per capita income than Botswana. That’s right, Botswana.

While the rest of Africa is mired in what seems like perpetual poverty, Botswana has had a long period of relative prosperity. Why?

There, things get complicated. As The Economist notes, Botswana is no egalitarian paradise — its income inequality is just as high as in other parts of the world. And with the government consuming 40 percent of the GDP, neither is Botswana a free market paradise.

Several economists have recently published papers on precisely this question and The Economist summarizes their findings thusly,

Wealthy and secure, the [Botswana] elite pursued sensible policies, such as a customs union with South Africa, and a currency pegged to the rand. The country never tried to oust most of its expatriate labour as some other countries did. Foreign mining companies were welcomed, and the country dealt with them fairly but firmly: it even renegotiated its contract with South Africa’s diamond giant De Beers when it realised the scale of its reserves.

Botswana’s experience suggests that poor countries must try to align the incentives of the elite with those of the masses, much as companies in rich countries try to tie managers’ rewards to those of shareholders. It also backs the view of Hernando de Soto, a Peruvian economist, who has proposed a stronger approach to land titling in poor countries. Where countries receive aid, Botswana’s experience suggests that profitable goals include better courts and legal systems; and that one good use of cash is to fight disease.

…

One lesson from Botswana is that history shapes countries. ANother is that good management is at the centre of growth, and that the rule of law is as important as are the laws of economics.

In fact it may not be possible to overstate the importance of a stable judiciary that provides clear signals for poor and wealthy alike as to how they may proceed in acquiring and disposing of wealth (and thereby enriching the entire country).

Source:

The African exception. The Economist, March 30, 2002.