Tuesday, 24 April 2007

all together

One question that has rattled me in BOP theory is how on earth you want to do all at once: Protect the environment, end corruption and develop markets & standards of living. In many cases it seems outright contradictory, especially for the first two.
The answer to the first problem is usually technology. Hart in Capitalism at the Crossroads advocates building entirely innovative infrastructures, taking us for instance completely away from a reliance on oil by selling only hydrogen cars in emerging economies, and building a supply chain to match. The sad truth is that development of such infrastructures it peu a peu, and based on the cheapest available technology. Both speak against such innovative solutions. This seems to be the case with TATA's $2000 car. From PSD Blog:

Four wheels at the bottom of the pyramid

Following $3 software and a $100 laptop comes the $2000 car. With the transport market at the BOP estimated at $180 billion, no carmaker can afford to laugh anymore. BusinessWeek writes:

The key is India's low-cost engineers and their prodigious ability to trim needless spending to the bone, a skill developed by years of selling to the bottom of the pyramid. "You have to cut costs on everything—seats, materials, components—the whole package," says Tata Group Chairman Ratan N. Tata.

[…] emerging markets, which held little appeal for the major car brands even 10 years ago, now offer a volume bonanza that can make even cheap cars profit spinners. In India alone, some 1.6 million motorcycle and scooter riders are likely to buy a car over the next five years […]. India's auto market is set to double to 3.3 million cars by 2014, while China's will grow 140% over the same period, to 16.5 million cars, according to J.D. Power Automotive Forecasting. That kind of demand makes dirt-cheap cars viable.

Seems therefore that we can't look to developing countries to come up with solutions. They are probably more likely to benefit from our efforts to manage a transition. There is some truth in the comment made by one of the "Big Global Warming Lie" guys who says that the Environmental protection is in direct opposition to development. Any comments on this point would be welcome.

Its a similar story with corruption, which any attempt to do business in the poorest countries (and the rich too, in many cases) is likely to support. The usual answer to this is that corruption is everywhere. A convenient one-liner Reuben Abraham used on me at Doing Good and Doing Well. True to an extent, but that doesnt excuse the extent of it in some places.

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