Human Development Report 2013 - UNDP

ase by 100 million connections a year. Thisin turn stimulated investment: in 2007, mobileoperators, including South Africa’s MTNand Kuwait’s Zain, announced a five-yearplan to invest an additional $50 billion inSub-Saharan Africa to improve mobile coverageand expand it to 90% of the population.Indeed, the spectacular increase in phoneconnectivity in Africa has been driven almostentirely by companies based in India, SouthAfrica and the United Arab Emirates. 57Mobile phone manufacturers have alsore-engineered products for the needs of lowerincome consumers. For example, in 2004, TIIndia, a research and development centre ofTexas Instruments in Bengaluru, designed asingle-chip prototype for use in high-quality,low-cost mobile phones. In 2005, Nokia, in cooperationwith TI, began to market the Indianmadeone-chip handsets in India and Africa,selling more than 20 million units. Single-chipdesigns have also emerged for other devices,including affordable digital display monitorsand medical ultrasound machines. Intel hasdeveloped a handheld device for rural banking,and Wipro has marketed a low-power desktopcomputer for basic Internet connectivity. Andin 2008, Tata announced the ultra-low-costNano car, exportable in kits for assembly bylocal technicians.Technology diffusion through South–South investment is also unleashing entrepreneurialspirit, particularly in Africa. Peopleare often self-organizing, creating buyer–sellerrelationships and becoming entrepreneurs tofill unmet needs in spontaneously sproutingmarkets. This is evident in the uses to whichAfricans are putting affordable Asian-builtmobile phones: cellular banking, for example,is cheaper and easier than opening a bankaccount; farmers can obtain weather reportsand check produce prices; and entrepreneurscan provide business services through mobilephone kiosks. The use of mobile phones inNiger has improved the performance of thegrain market, and Ugandan farmers are usingmobile phones to obtain higher prices fortheir bananas.These and other transformations multiplythe possibilities of what people can do withtechnology: participating in decisions thataffect their lives; gaining quick and low-costaccess to knowledge; producing cheaper, oftengeneric medicines, better seeds and new cropvarieties; and generating new employment andexport opportunities. These possibilities cutacross income classes, reaching down to thegrassroots.To respond to the changing needs of middleclass consumers, companies doing well in theSouth tend to be long-term risk-takers andagile in adapting and innovating products forlocal buyers. Consumers in the South tend tobe younger, are often first-time shoppers formodern appliances with distinct in-store habitsand are usually more receptive to branding.Companies in emerging market economieshave the advantage of different managementapproaches from those dominant in the North:majority shareholders have greater power andredeploy resources more speedily than those incompanies in the North. 58Some of these developments are based oninteractions among research and developmentinstitutions, businesses and communitystakeholders. In such ways, innovation and itsbenefits spread, spawning faster change. Thereis greater appreciation of a broader role for thestate in stimulating research and developmentand in nurturing synergies stemming fromcooperation among private, university andpublic research institutions. For example, manyAfrican countries have emulated the early successof Mauritius in attracting East Asian FDIby creating export processing zones. Malaysia’sinvestment promotion policies have also beenwidely copied.Increasingly, the most important engine ofgrowth for countries of the South is likely tobe their domestic market. The middle class isgrowing in size and income. By 2030, 80% ofthe world’s middle class is projected to live inthe South. Countries in South Asia and EastAsia and the Pacific will alone account for 60%of the middle class population and 45% of totalconsumption expenditure. 59 Another estimateis that by 2025, a majority of the 1 billionhouseholds earning more than $20,000 a yearwill live in the South. 60Since 2008, Chinese, Indian and Turkishapparel firms have shifted production fromshrinking global markets to expanding domesticmarkets. Greater reliance on domesticmarkets will boost internal dynamism andCompanies doing well inthe South tend to be longtermrisk-takers and agilein adapting and innovatingproducts for local buyersChapter 2 A more global South | 55