Measuring Mobile Subscriber Growth

I have mentioned a couple of times in this blog of my interest in understanding how firms and other institutions use figures to communicate reality. My intention is not necessarily to identify faults but to ask myself why they chose a given method of rendering their data and not another. This idea was formed from my realization that when it comes to China and India, their large size is used to present data that tells one no meaningful or new information. As a result, some of the figures thrown out end up obscuring as opposed to illuminating any matter about the economy or businesses performance in those countries.

Looking at this article from the GSM Association's business briefing, I realized that the same broad errors are being repeated. To my mind, the title of the article and good portion of its contents present only one side of the correct picture. It correctly claims that the developing world today accounts for the four in every five connections for mobile telephony.  To which my polite question would be; So?

Consider that in accordance with the data presented in Table 1 of the piece, 84.7% of the world's population reside in the countries classified by the World bank Data as developing countries. It is not news therefore to state that mobile telephony growth there is growing. Indeed, it would be odd for acquisitions to be any other way. By virtue of the fact that a majority of the population reside in the developing countries, then growth there is expected to lead to the patterns that one sees. As a consequence, the explanatory variable should be population distribution across the developing and high income country divide. 

Growth in the high income countries is incomparable to that in the rest because they have nearly reached a point of saturation with a per capita mobile phone subscription of more than 1. So the reason 80% of new subscriptions occur in low and middle income countries is because it cannot be anywhere else. Noting China and India's demographic sizes also means that there raw numbers will drive those subscription rates when measured in units. Table 2 and 3 also show that population disproportionately determines explains subscription numbers.  

As an industry information article, I think that the GSM Association newsletter is very well done and I have used it to my own great advantage. However, its editors could consider the rendition of the data in ways that actually inform its readers. 

The Currency Fights Begin

In this blog post, I stated that the controlled conflict between the US and China over the relative value of their respective currencies was worthy of looking at again. While it is now common wisdom that the Chinese currency is undervalued, I confirmed even then that competitive devaluation cannot be a long term development strategy for facilitating exports. Annie Lowrey of Slate Magazine writes here that many ministers of finance are beginning to feel that any adjustment in other currencies, the Yuan aside, will have adverse effects on their ability to make exports.

Looking at the arguments that are resented in that piece, the concern for competitive devaluation is that it is a strategy that is open to any nation. As a result, a full scale adoption of currency devaluation as a way to facilitate more exports cannot work in the long term.

This state of affairs also exposes the fact that export-driven growth is a proven development strategy but the pursuit of the strategy can create imbalances since one's country's exports must result in imports by a counterpart. The big lesson in my view is not only that currency manipulation can only work for some time before it faces competition by competing nations, but also that every economy needs a fair balance between consumption and exports. But that is easier said than done because mercantilism is instinctively attractive to many nations.

Cheap Sneakers Still Ideal

Despite my general reluctance to accept the value of marketing, I am sure that the one are where demand reflects the marketing input is in sports equipment. Whether it is jerseys or trainers, the use of sophisticated marketing techniques, channels and sports personalities certainly drives people to purchase equipment at premium prices. And yet, as I stated in a blog post here and here, trainers and running shoes have a wide range in price and some are very expensive. 

My contention is further reinforced in this piece by Lesley Alderman in the NYT that cost does not seem to correlate with the prevention of injury, overall comfort and other variables that matter to runners. In that story, the reporter specifically follows a keen runner who has learnt over time that understanding one's gait is critical to the decision about comfortable running shoes. That athlete's feeling that cost does not provide as much advantage as is claimed is confirmed by studies conducted bears her out. In short, choosing a modest pair will work perfectly provided one picks the size that allows for some space, breaks them in for at least two weeks and ensures that it fits at the heel. 

Running barefoot seems to be gaining currency and the production of a show glove tries to simulate that that perfectly but ends up producing an expensive gadget. Perhaps an algorithm that weighs sufficiently the three variables mentioned above would suffice for choosing shoes while taking care that technology- infusion hardly affects performance and comfort.  

Rinderpest Follows Small Pox

Among other things, I have an amateur's interest in the history of diseases generally and more especially in the eradication of epidemics and serious diseases. I am therefore impressed by the scientific achievement that has worked in the background to lead to the declaration that rinderpest has been eradicated. Scientists at the Food and Agriculture Organization (FAO) announced that they have virtually ensured the eradication of the rinderpest, a viral disease that affects livestock.

Reading this piece by Ian Sample of the Guardian, the achievement marks only the second time that humanity has succeeded in eradication of a viral disease. While rinderpest affected livestock and therefore had effects on livelihood for animal keepers, Small Pox directly afflicted people and had caused human deaths for three millenia before its eradication in the early 1980s.

It is interesting to note that dedicated scientific enquiry and considered design of an eradication programme may lead to fantastic results that vastly improve welfare. This short history of eradication also proves that pathogens are very resilient and their eradication is the exception rather than the norm. Still, human ingenuity gives me hope that the odds for control, if not eradication, of some pathogens are higher than they have ever been. Of course, it is possible that with prioritization, well designed prizes could hasten the conquest of the disease causing viruses.

Quoting Kong Zi

This is a very obscure blog but I celebrate my 500th blog post with a profound statement from Confucius. I find it extremely helpful for it calls for modesty and humility. And who does not need that.

The Master Said, "He with whom neither slander that gradually soaks into the mind, nor statements that startle like a wound in the flesh, are successful, may be called intelligent indeed. Yea, he with whom neither soaking slander, nor startling statements, are successful, may be called farseeing". The Analects of Confucius by Tsai Chih Chung (Location 667 on Kindle Version)

Pricing Tickets for the Olympics 2012

While I am a complete skeptic about the economic value that accrues to a country for hosting international sports events such as the Olympic Games, I am impressed that London 2012 is going all out for a commercial to find value for tickets. Mark Tran of the Guardian reports that some tickets during the opening ceremony will go for the symbolic £ 2012. This will not necessarily be the price for all the 8 million tickets that will be available across the 26 events, but this pricing mechanism has my support and respect.

I am certain that there will be takers for the more expensive tickets even if I remain uncertain about the ability to sell all the 8.8 million tickets. Still, Lord Coe and his crew are right in trying to get the best value for the tickets because the cost overruns for the venues and the works require very savvy marketing to ensure that the games get as close as possible to breaking even.

Trade Diversification for Africa

The countries of sub-Saharan Africa have shows comparatively higher growth in GDP in the last few years in spite of the effects of the financial crisis. Understandably, this has created a lot of confidence in the overall managers and governments of the countries in the continent. As it is, the view is that growth of 5% annually shows that the countries are doing something well and have managed to overcome the effects of the financial crisis which has crystallized into a general economic crisis in Europe and the US. 

Due to the state of affairs in Africa, nobody would envy the continent of this new growth momentum but still be cautious about its prospects in the medium term. African countries in the early 1960s experienced growth rates akin to what is seen today and failed to maintain that for the medium term. Writing in The Root, Njaramba Gikunju addresses the background issues while covering the later realization by sub-Saharan African governments that they would suffer secondary effects of the crisis. What is less convincing and demonstrably false in that article is that trade with China as replacement for European export markets would be Africa's main avenue for maintaining growth and escape from poverty. 

To my mind, the continent of Africa gets lots of inappropriate advise but it is inconceivable that Chinese investments and trade opportunities alone would lift the continent's people out of poverty. Africa's main problem in trade is that it has a small portfolio of products to ship out and that these are primarily commodities. Trading the same with China, Brazil or India does not in guarantee faster growth in itself. trade diversification goes both in terms of new destinations for imports and exports in addition to diversification of products. It is not one or the other.  

Are Small Businesses Special?

The small business is now an important players part of the policy narrative. Policy discussions in many parts of the world have adulated small businesses to the extent that every policy measure is often considered inadequate unless it delivers some gains for small businesses. Richard Rubin's article in the Congressional Quarterly here offers a level headed questioning of the assumptions that there is something inherently superior about small businesses and that definition is itself an arbitrary classification of very diverse firms.

To my mind, he makes two points that resonate most with me. First, in the US as in many countries, the real definition of small businesses is such a problem that it makes little sense in the scheme of things. Most definitions concentrate either on turnover or the number of employees and these are fraught with dangers as there are many businesses that could have high turnovers and yet employ few people. the reverse is also demonstrably true. However, the political appeal that comes with designing policies to benefit the "small business" is one that politicians see clearly and therefore respond to. 

The second on is that nobody wishes to be seen as criticizing the corporate welfare given to firms defined as small enterprises, with the result that there are extremely perverse incentives due to tax concessions and other exclusions that are meant to help these businesses. Creation of the facility that allows individuals to report income earned from firms together with other income just makes tax policy and administration difficult.

It is clear that I am an agnostic about the view that small businesses posses specific attributes that make them particularly worthy of special regard above other firms. Indeed, there may be reason to believe that the discrimination against large firms in some instances causes massive distortions and creates stunted firms with lower productivity. The designation, small businesses is just a political term and has little relevance for market functions.