Subsidies hurting Africa

BarCampAfrica – The OLPC (laptop) project is another form of harmful subsidy, says one critic. It was a gentle critique – even the critic is a fan of the OLPC project in many ways (as am I – extremely cool tech and great educational ideas).

But it’s clear to anyone familiar with development issues that subsidies really are harmful, much of the time – and the speaker had examples of his own. Like the big headaches for ISPs in Africa when international aid organizations come in and dropping free connections on schools or communities. Such subsidies take out a whole chunk of the market that businesses no longer have access to – then when the aid organization leaves and goes somewhere else, the locals are left with local businesses that are weakened and less able to serve the community.

Now, I still see the OLPC as doing much more good than harm. Sure, they’re taking out a huge chunk of the market… but that market mostly didn’t exist before OLPC’s innovations made it possible to serve these people.

So, I like the suggestions: Open source the design*, let anyone build them, and keep the margin local.

On the other hand, I wonder if there is any possibility of a market-based solution that achieves OLPC’s aims, especially saturation. But if a no-subsidy model leads to more effective markets and institutions, then that may be a more important achievement. It also leaves space for more innovation – e.g. variations on the Educational Television Computer (a.k.a. the $10 computer).

* Actually, isn’t it already open source…? Help me out here...

As with all posts in this blog, the views expressed here are those of the poster, and don’t necessarily represent the Appropedia community.

5 thoughts on “Subsidies hurting Africa”

  1. Would also be interesting to see how the OLPC initiative helped the recent boom on netbooks – which will then also be perfectly suitable for local markets. ==> the OLPC as a catalysator for the netbook boom?

  2. Would also be interesting to see how the OLPC initiative helped the recent boom on netbooks – which will then also be perfectly suitable for local markets. ==> the OLPC as a catalysator for the netbook boom?

  3. jke: it certainly does seem to have been a catalyst, with so many subnotebooks coming out just as OLPC starts producing and distributing their machines. So they’ve already had a great impact.

  4. The design is as open as we can make it, and the margins as close to nothing. Part of the design of the motherboard and plastics/display is owned by our partners in manufacture, Quanta and [ChiMei/ChiLin] respectively.

    The laptops are made to be taken apart and anyone with a fab of their own and enough design sense to know how to make parts from scratch could figure out how we solved the hard parts of our design. It is interesting to see models come out that /do/ try to launch large-scale laptop hardware fab-complexes in countries outside of Asia; I agree that could be interesting. But in the short term local design would mean a 20-50% increase in cost per machine and a heavy outlay for the factories… producing a fairly small number of crap jobs. And local creation of the entire production chain, from plastics and electronic parts manufacture to fabrication, testing, and shipping, is a daunting prospect for any developing nation.

  5. The design is as open as we can make it, and the margins as close to nothing. Part of the design of the motherboard and plastics/display is owned by our partners in manufacture, Quanta and [ChiMei/ChiLin] respectively.

    The laptops are made to be taken apart and anyone with a fab of their own and enough design sense to know how to make parts from scratch could figure out how we solved the hard parts of our design. It is interesting to see models come out that /do/ try to launch large-scale laptop hardware fab-complexes in countries outside of Asia; I agree that could be interesting. But in the short term local design would mean a 20-50% increase in cost per machine and a heavy outlay for the factories… producing a fairly small number of crap jobs. And local creation of the entire production chain, from plastics and electronic parts manufacture to fabrication, testing, and shipping, is a daunting prospect for any developing nation.

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