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Wednesday, April 07, 2004

Technology vs. Labor? Both win again.

This story indicates that a $100,000 Rolex award was recently given to Mohammed Bah Abba the Nigerian man who popularized the Pot-in-Pot non-electric refrigerator in the rural areas of Nigeria during the 1990s.

The concept is not new (it is based on the laws of thermodynamics) and indeed is marketed here in the states as a means of keeping butter fresh and water cold.

What is telling is the last portion of the Rolex Award story which includes the following:
The Pot-in-Pot is also a step forward for women in the region, as young girls are free to attend school, instead of hawking food every day. Already, village primary schools report an increase in the number of girls enrolled.

Therefore, the simple technology that allows food to be stored for up to three weeks instead of three days has fundamentally changed the economics of home production and, most likely, the future of rural Nigeria.

Unlike those in the United States who fear the onset of technology and its tendancy to make certian jobs obsolete, it seems rural Nigerians have welcomed the advancement in food storage and the loss of jobs in food marketing. Mr. Abba's efforts have allowed others (especially women and girls) to engage in alternative pursuits of greater value added (like education) while simultaneously expanding the employment opportunities of many in his home town. Once again, technology improved peoples' lives without the reduction in "jobs" over which many in the developed world would express concern.

On top of all this, Mr. Abba enjoyed an enviable thirty-three (not twenty-five - thanks Andrew David Chamberlain) percent profit on his Pot-in-Pot (he sold for "$0.40 when it cost him $0.30" to make the two pot setup), about four times the average pre-tax profit in the United States, which is about nine percent (see Table 775).

Economic advancement in the developing world has met with tremendous difficulty for a number of reasons, one of which might be thinking too large. I haven't read that much on economic growth but I don't think I have heard the hypothesis that growth might be better encouraged by starting small, although Peter Bauer (and Amartya Sen?) might have come close. Many suggest that if only the developing world had access to mobile phones and the Internet economic development would naturally proceed, but these solutions are proffered for countries without electricity, running water, and basic food supplies (This working paper investigates.)

Indeed, it is hard to imagine the United Nations suggesting the Pot-in-Pot as a solution to food storage - the idea is too simple and "low tech." It is much easier to imagine the UN lobbying for a multibilliion dollar rural electrification program with the goal of an electric refrigerator in every thatch hut in record time. In reality, any rural electrification plan would have take years, if not decades, to implement and in the end would likely end in failure; the assets depreciated to the point of being worthless or exproporiated by local goons or the government.

Hats off to Mr. Bah Abba, he succeeded where the massive bureaucracy would have failed. I am sure von Hayek is smiling.

More here and a similar Brad DeLong post from 2002

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