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Who ya gonna call? Entrepreneurs!

Just a decade ago it seemed we were stuck with landlines. State-owned telephone companies were largely entrenched, sclerotic organizations that provided poor, delayed, or simply unavailable service —even in some rich European countries, and nearly universally in poor countries.

These maps (with data from 2001, 2004, and 2008) show how cell phones have quickly bypassed the dysfunctional landline companies and emerged as a triumph of bottom-up entrepreneurial success.

The measure is cell phone subscribers per 100 population, with darker shades of blue indicating movement from 0-20 to 20-30 to 30-40 to above 40 (above 40 is the dark blue shade that is most evident in all the graphs).

Note the darker blue color now encroaching on all sides of the African continent. This gives us hope that the dynamism of the bottom from entrepreneurs can overcome sclerosis at the top.

2001:

2004:

2008:

Data source: World Development Indicators

This entry was posted in Big ideas, Data and statistics, Entrepreneurship, Maps and tagged , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

11 Comments

  1. Robert Tulip wrote:

    This is good, showing how markets are superior to bureaucracies in reducing poverty. What perplexes me is that Prof Easterly has suggested before, if I recall correctly, that we have no clear evidence of what strategies work to reduce poverty and increase growth. Yet here, we see that a market-friendly business enabling environment is decisive for growth in telecoms, and all the spillover benefits for poverty reduction from mobile phones. The message of these statistics is that aid agencies can achieve much more to reduce poverty by increasing their focus on business regulation.

    Posted March 30, 2010 at 1:38 am | Permalink
  2. Hannah wrote:

    My question about these maps is what exactly is being measured? Amount of lines? Amount of Phones used?
    My question is from personal experience as the U.S. looks to be a much darker shade than East Africa although in my travels my African phone has always received better coverage than my U.S. one ever has.
    I like the theory that Entrepreneurs are behind this rapid growth I just don’t see the proof in the maps.

    Posted March 30, 2010 at 7:37 am | Permalink
  3. Ted wrote:

    I will make one objection and say that in a lot of the countries it looks more like FDI than bottom-up entrepreneurship (but I guess you could call an FDI-funded branch entrepreneurship on the part of the branch manager / partner).

    Also, I want to point out something interesting. I was looking at your map, and I was looking at the countries that are particularly under-served. Like the Democratic Republic of the Congo , Djibouti, Central African Republic and etc. It seems like in almost every country the market is either entirely captured by a state-owned enterprise or there exists a state-owned enterprise (or a significant stake in a “private” one) that competes with the private companies. And, amazingly enough, on a quick google search the private-owned enterprises tend to complain of regulatory burdens and bad spectral allocation by the regulator, which I’m sure has nothing to do with the fact the state wants to capture more profits for themselves by giving the private competitors difficulties! Interestingly, it would seem to me, as a government, that it would actually be more profitable to either sell your state-owned company to a private enterprise or give up your shares in a private enterprise, lessen the regulatory burden, and then just tax the private enterprises more. But it might be more about power than money though. I can’t help but think it’s not a coincidence that the most successful countries (in terms of cellular phone use) appear to be ones where there is no state-owned company or there is no significant ownership stake in a private company. Also, I was about to say the situation of simultaneously being an owner and national regulatory of your competitors is just absurd on so many levels and this is clearly the sign of a poor, inefficient government – but then I realized that this now describes the United States and the auto-industry … (I’m trying to figure out why we took such a large share in General Motors, pre-packaged chapter 11 would’ve worked just fine I think …).

    Anyway, I just thought it was interesting how the governments of central Africa are once again demonstrating how they can continually impede economic progress, even over something so basic as a cell phone.

    Posted March 30, 2010 at 10:54 am | Permalink
  4. Also don’t see any evidence here for “bottom-up entrepreneurial success”.

    The spread of the mobile phone may be the most significant change in Africa since the end of the colonial regimes. Observing that it is happening is a good first step. The next is really understanding in a rigorous way *what* has happened. This addresses the former but not the latter.

    Posted March 30, 2010 at 11:18 am | Permalink
  5. Wayan wrote:

    Bill,

    Stop drinking the funny Kool-aid. Your map shows nothing about “bottom up entrepreneurs” unless you consider Vodafone a small business. Mobile phone systems are deployed by big-pocketed investors, some with IFC backing. As Ted points out, this is a map of heavy FDI, not entrepreneurship.

    Posted March 30, 2010 at 11:18 am | Permalink
  6. Justin wrote:

    I have to agree with Ted that my assumption would be that these graphs represent large-scale FDI than of ‘bottom-up entrepreneurship’.

    Bill and Laura, could you provide a more direct link of how these numbers correlate with bottom-up entrepreneurship? How many bottom-up entrepreneurs are involved in cell phone activities in each of these countries? What percent of profits flow to these entrepreneurs versus the cell phone companies themselves?

    I’m not arguing that cell phones haven’t been an amazing and world-changing invention that has bought disproportionate benefits to the world’s poor, I’m just under the impression that most cell phone operators are owned by large conglomerates (e.g. MTN) or oligarchs (e.g. Carlos Slim), and thus the majority of profits flow to these groups, and not to bottom-up entrepreneurs.

    Posted March 30, 2010 at 11:23 am | Permalink
  7. Laura Freschi wrote:

    We’re going to write a follow-up post answering some of your questions on the link between the spread of cell phones and entrepreneurship. Thanks for the comments and stay tuned.

    Posted March 30, 2010 at 2:25 pm | Permalink
  8. Sergio wrote:

    How come that we have to pay for access to the World Development Indicators data?
    Please make this your new campaign “Free the World Development Indicators”

    Posted March 30, 2010 at 5:11 pm | Permalink
  9. Bill Stepp wrote:

    Entrepreneurship, even that undertaken by large companies, is bottom up, at least to the extent it doesn’t depend on subsidies and monopolies. As far as I’m aware, Carlos Slim’s monopoly doesn’t extend outside Mexico. He’s a political entrepreneur if ever there were one.
    Mobile telephony requires a large investment and similarly-sized scale to succeed.
    That’s why your mom isn’t going to start up a cell phone company, although if she’s an inventor, she could invent some whiz bang app or other add on to make existing mobile telephony better. That doesn’t detract from the somewhat politically ring-fenced achievements of the mobile telephony firms. Further deregulation would be helpful and could only result in more innovation and better service and pricing for the people of Africa.

    Posted March 30, 2010 at 8:56 pm | Permalink
  10. Robert Tulip wrote:

    The “triumph of bottom-up entrepreneurial success” from mobile phones is that small farmers and other businesses can now get market information direct from source, democratising and decentralising the economy. It still relies on a ‘top-down’ decision by central regulators to allow market competition.

    Posted March 31, 2010 at 2:10 am | Permalink
  11. Gruel Party wrote:

    The Bush Jr. Years

    Now you just look at how he upped our enemy countries! Perhaps next President will up our own country. Can you imagine how many cell phone conversation auto wrecks B. J. caused for our enemies? Republicans are gone but not forgotten. Our thoughts are with them.

    RIP, Republicans In Peace

    Posted April 3, 2010 at 10:19 am | Permalink

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  2. By uberVU - social comments on March 30, 2010 at 9:48 am

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  3. [...] April 1, 2010 in Economy, Syndication by Ideas&Minds Who Ya Gonna Call? Entrepreneurs! [...]

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