Saturday, February 16, 2008

Of Cellphones and Coffeehouses

The "creative destruction of capitalism," as Joseph Schumpeter famously described the effects of this flawed but powerful economic system, has noteworthy corollaries. One of these concerns a nation's technological development: the ongoing obsolescence of old machinery and the rapid emergence of newer, cheaper replacement technologies means that poor countries often find it easier to go high-tech than to adopt older devices and techniques. In sub-Saharan Africa, this corollary is demonstrated by the widespread demand for cellular telephones in nations which never had more than rudimentary land-lines, and by the ability of telecom companies to meet that demand. Since Africans are finding it easier and cheaper to erect cellphone towers than to string telephone wires, in the field of telecommunications they are jumping directly from the nineteenth to the 21st centuries.

Sub-Saharan Africa is still poor, however, and most cellphone customers there buy prepaid minutes rather than long-term contracts. The downside of this is that phone companies are unwilling to provide African customers with cheap or free cellphones, which they reserve as incentives for contract customers. Thus, there is a large market in Africa for used cellphones, and in today's global economy, people meet that demand in ingenious ways. Consider the following excerpt from a recent article by Jon Mooallem (citing Chinese scholar Jack Qin):

"In Kowloon, Hong Kong, Pakistanis and other immigrants...import phones from Europe by the shipping container. In the past, Nigerians and other African exporters swept in to buy tens of thousands of phones at a time, particularly so-called '14-day phones,' those that have been returned under warranty and used little. But recently...the markets for these phones have become saturated in African cities. So the Nigerians, needing to take their business to poorer African villages, have been leaving Hong Kong for Chinese cities like Guangzhou, where they can purchase cheaper, more heavily used phones...Many Nigerians have learned Mandarin in order to do business in Guangzhou...and the city now has an African-style coffee-shop." (Mooallem, "The Afterlife of Cellphones," New York Times Magazine, 13 January 2008, p. 41.)

So exporters are shipping European cellphones to southern China, where Pakistani immigrants purvey them to Mandarin-speaking African entrepreneurs for eventual resale in rural Nigeria. And there's an African coffeehouse in Guangzhou. Every day, our world is becoming more and more like a Neal Stephenson novel.

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