02 June 2008

Livin' it Up on the Internet

I'm amazed, but only partially, by the number of internt cafes available. My friend, Maher, said before I came that he had heard that one opened up in Damascus. What an undercount. There're 4 million people in Damascus, it's a big city, so I wouldnt't try to guess how many there are, but I haven't had trouble finding them, just as I didn't in Dubai.

Consider the economics of it. Buy a half-dozen to a dozen used computers,a few chairs and desks, and that's your capital investment. It's really, really cheap. Heck, I could get this many computers for free from my college, and Goodwill won't take them, so the market for used PCs of that sort has to be a buyer's market.

Then you rent a small shop space. Fortunately, to serve the clientele you're most likely to get, you can do that in a place where the rent won't be high... a place where backpacking travelers (the luxury hotels provide internet access to guests) and either immigrant workers or families of workers who have emigrated cluster. And young people, but not rich young people or they'll have it at home.

And for that small capital investment, a person can open their own business, becoming an entrepreneur and improving their life. Maybe after a few years they sell it and move up to a more lucrative business, or maybe they save and open another internet cafe.

And this is how the developing world will develop, if their governments and well-intentioned but misguided development agencies will leave them alone.


james k said...

On a similar vein, consider the proliferation of cellphones in Africa, technology has always been the path to wealth and ICT offers a way of bypassing malfunctioning governments in a way older manufacturing technology does not.

James Hanley said...

The issue of cellphones in Africa is one that caused a huge shift in my understanding of development.

My socialist friends had always asked how developing countries could catch up, while western countries were changing ever faster. For example, the length of time and cost of developing good telephone networks.

Then I read about African fishermen using cell phones to call, from sea, about prices in the market, so they could know whether to come in or stay out longer. Also about farmers using cell phones to get information about prices in different market towns, so they could know which one to go to for maximum profitability.

And I realized what an idiot both my friends and I had been. That these countries wouldn't need to follow all the steps that the west took, but that they could leapfrog such costly infrastructure as land-line networks. It seems we must have been terribly dull, or borderline paternalistically racist, to not realize that they could adopt the latest western technology, rather than relying on our older, outdated, technology.

Heck, here in Damascus, every computer in every internet cafe I've been in has a set of headphones with a microphone, and has Skype loaded on it, so you can call cheaply from here to anywhere in the world if you have a Skype account.

And there's the argument against central planning--who the hell could have foreseen and predicted this 10 years ago? Not even the people who developed Skype probably had all these consequences in mind, and they have a financial incentive to do so.

James Hanley said...
This comment has been removed by the author.
James K said...

African cellphones taught some valuable lessons to development economists as well. The old view, influenced by the Solow Growth model, was that a country would need to go through all the stages, but faster because they weren't having to reinvent everything.

Of course development economics is a field that is constantly having to become more sophisticated as it beautiful hypotheses are slain by ugly facts.