Boosting Growth

I do have to wonder:

Gordon Brown plans to harness at least 20 of the world\’s biggest multinational companies, including Google and Vodafone, to tackle a "development emergency" in the world\’s poorest countries and put the international community back on course to achieve seven UN development goals by 2015.

As a UN report released today shows limited progress in hitting goals intended to tackle poverty, education, health and sanitation, the prime minister has been holding talks with the internet and telecoms giants as well as other international companies including Goldman Sachs and Wal-Mart in an attempt to find ways of increasing growth in poor countries

Yes, of course such companies can play a role in increasing growth in poor countries. WalMart, for example, by entering a market and revolutionising the distribution system (as it has done over the decades in the US), could greatly increase growth. It\’s actually tried to do so in India (I think I\’m remembering this correctly) but has been stopped from doing so by the Indian Government.

But trivia like that aside, what these companies can do to aid growth is to go there, invest, build things, sell their services, try to make money. Act, in fact, as they do at home: creating a product that people want to buy and thereby making a profit.

Although the prominence given to multinationals is likely to be controversial with parts of the development community,

Indeed, there\’s a very vocal part of the "development community" that insists that such companies should be prevented from doing exactly that. Why isn\’t all that certain: my own assumption is that they\’re either cretins or socialists: but I repeat myself.

Also worth noting Vodaphone there. There\’s actually a direct link between the number of mobile phones in a country and the growth rate. Looking at countries without a decent landline network it\’s (again, from memory) something like a rise of 10 per 100 of the population having handsets leads to a 0.5% increase in growth. Further, there\’s a direct relationship between how many competing providers of services there are and the penetration per head. So we can see a pretty simple idea forming here. Governments should issue multiple competing licences for mobile telecoms. Some still have single monopolies (Ethiopia, Angola, again, from memory).

The problem isn\’t with Vodaphone, it\’s with the host governments not allowing them to enter the market.

But this is the part of the press release that I love the most. It shows Brown\’s thinking so clearly:

Brown told the Guardian: "We are half way to the target date of 2015, but a long way off track to our goals and face a development emergency. 2008 should be a development year and mark a call to action from everyone – not just rich and poor governments but civil society, faith groups, trade unions and even the private sector."

We\’re talking about growth here, the creation of wealth. The moving of resources from low value uses to higher value ones (which is, after all, the very definition of growth). And we get "even the private sector"?

The truth is of course that the best method of getting that desired growth is to let the private sector rip. Remove the current barriers to capitalism red in tooth and claw. We could aid that ourselves by removing the limits placed upon imports into the UK. You know, allow people to buy goods made by poor people in poor countres, we know that boosts wealth.

It might even be something useful that the UK Government themselves could do: if we hadn\’t given the right to determine our trade policies to the European Union that is.

3 comments on “Boosting Growth

  1. “…my own assumption is that they’re either cretins or socialists”

    Is the ‘or’ in that sentence really necessary….?

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