A new report from the United Nations sharply notes that more Indians have access to cellphones than to toilets: 545 million versus 366 million.
At one level, this tells us a lot about where public policy has succeeded and where it has failed. A telephone was a luxury till around 20 years ago, but is now a common feature even among the poorest communities in the country. Toilets continue to be in short supply, which is not just an inconvenience to the poor, but also a public health issue.
One way to think through this telling dichotomy is that the telecom sector has been open to the best practices from across the world, thanks to privatization, but the public healthcare system continues to wallow in outdated practices. This is not a call to privatize public healthcare; that is a job that the government will continue to do. But public policy should find ways to let successful ideas from around the world filter in.
Economist Paul Romer has recently written a provocative working paper for the National Bureau of Economic Research where he argues that traditional trade flows are an imperfect substitute for flows of underlying ideas. The latter is what really matters for national development.
Romer then asks why some ideas spread while others do not. Rules and technology play an important role here. “All economists, including trade economists, would be better equipped to talk about international flows of technologies and rules if they adopted a consistent vocabulary based on the concepts of non-rivalry and excludability. An analysis of the interaction between rules and technologies may help explain important puzzles such as why private firms have successfully diffused some technologies (mobile telephony) but not others (safe municipal water),” writes Romer.
Romer could well be talking about mobile telephony and sanitation too. The broader point is that while there is little doubt that the government needs to step up investment in public goods such as sanitation systems, it should remember that the role of new ideas and best practices are important ingredients in the policy mix.
What place do innovative ideas have in the formulation of public policy? Tell us at firstname.lastname@example.org