Welcome to Africa Research Institute’s blog. Africa Research Institute is a strictly non-partisan think tank based in London. Our mission is to draw attention to ideas which have worked in Africa, and to identify new ideas where needed.

Tuesday, 5 April 2011

Redefining public goods, for Africa

In January I wrote a blog which argued that if internet usage in Africa is going to increase, more local African content is needed online. In the article, I referred to the internet as a ‘public good’. My assertion was based on the reasoning that although the internet is largely a private service, it’s utility extends far beyond any individual into the public realm. A farmer, for example, may decide to put some money aside and invest in going to a cyber cafe. At the cyber cafe the farmer learns about a new method of storing maize which significantly reduces the chance of weevils and other pests from attacking his, or her, harvest. The farmer applies this new knowledge with resounding success. Neighbours of the farmer follow suit, and crop wastage in the community is significantly reduced. Not exactly a widespread occurrence, but feasible nonetheless.

Shortly after the article was posted I received an email from my good friend Will Prochaska, director of Alive and Kicking, an innovative social enterprise which manufactures footballs in Kenya and Zambia. He made the point that a public good must be non-excludable, and therefore the term cannot be applied to the internet. I, of course, disagreed. But on reflection I felt that Will’s comment, and our subsequent email exchange, touched upon a question of considerable importance for African governments and regional institutions. How do we constructively define public goods in a contemporary African context, and what role can they play in the continent’s development?

In traditional economic theory, public goods are defined as non-excludable and non-rivalrous. Non-exclusivity dictates that no individual can be prevented from utilising the good, regardless of whether or not they have paid for it, while non-rivalry indicates that usage must not reduce availability of the good for someone else. Paul A Samuelson, cited as the first economist to develop a theory of public goods, defines them as:
‘[goods] which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good’.
The problem with Samuelson’s definition – and orthodox definitions of public goods in general – is that very few products or services qualify as a public good. And those that do, are quite a random bunch – national defence services, public parks, national television broadcasters and street lights, are often cited as examples. The definition ignores the fact that there is a plethora of goods which produce significant societal benefits, and which are either non-exclusive or non-rival, but not both. A road, for example, commonly referred to as a public good today, falls foul of Samuelson’s definition. While no one is prevented from using a road, unless it contains a toll, an increase in the number of users can be accompanied by a decline in the marginal benefit to the average user.

A strict demarcation between public and private goods is not helpful from a policy perspective. When we consider the enormity of the challenges facing most African countries – from poor infrastructure to political instability to underperforming agricultural sectors – Samuelson’s definition of public goods renders them an irrelevant category. If a proactive African government wanted to invest more in ‘public goods’, they would be presented with a fragmented and confusing set of responses. The government should invest in street lights, but not utility companies to provide more reliable power; national broadcasting houses, but not improved communications infrastructure; public parks, but not wildlife conservation areas.

My argument is that if we broaden the definition of public goods to encompass goods that conform to the spirit but not the letter of Samuelson’s definition, we are presented with a much more coherent, and relevant, framework for African policy makers. Roads, ports, dams, communications infrastructure and the like all fall short of orthodox economic definitions of what constitutes a public good – because they are either excludable or rivalrous – but are nonetheless vehicles for sustained poverty reduction in Africa.

In December 2009, Africa Research Institute published Going Public: How Africa’s integration can work for the poor, a panoramic survey of half a century of efforts to advance Africa’s integration. It argues that the process of cooperation between states needs a new direction. The overriding purpose of regional integration must be to reduce poverty, with priority being given to investment in regional public goods.

Going Public purposefully adopts a broad definition of public goods to include cross-border infrastructure, development corridors and shared regional standards, for example. In so doing, the paper sought to assess key requirements – reliable power, modern communications services, clean water and basic sanitation and improved transportation infrastructure – for poverty reduction in Africa. Adopting Samuelson’s definition of a public good would barely skim the surface of addressing the plethora of challenges facing African countries and regions today.

Jonathan Bhalla
Research Manager – Africa Research Institute

No comments:

Post a Comment

Post a Comment