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Parable of the Vuvuzela

Parable of the Vuvuzela
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First Published: Tue, Jun 22 2010. 08 10 PM IST
Updated: Wed, Jun 23 2010. 09 03 AM IST
The vuvuzela is the latest global idea that threatens to go viral.
The manic speed at which the plastic horn—what one South African columnist described as an instrument from hell—has become a global talking point tells us a lot about how quickly a powerful idea or habit can spread in a globalized world. The question is how easily it will take root in other countries and at other sporting events.
It is now clear that the noisy horn will not be disturbing the genteel peace at Wimbledon this year. The organizers of the tennis tournament have banned the vuvuzela. Other sporting bodies are moving fast to keep their tournaments and venues free of the auditory nuisance. It will be worth waiting to see what happens when the next season of the Indian Premier League begins and crowds line up outside the stadiums armed with the South African horn.
Both the popularity of the vuvuzela and the moves to ban it are a simple illustration of a bigger issue: the role that local rules play in promoting or hindering the spread of new ideas.
Some of the biggest gains from globalization come from the spread of ideas through television, the Internet, international travel, trade and investment. These carry with them information about new ways of doing things, though the rapidity with which a new idea spreads depends on local rules. Some of them are easy to understand, as in the case of the vuvuzela bans while others are more complicated because of the variety of special interests involved.
Simple ideas such as the latest sartorial fashions can move across the world in a jiffy. They are unveiled in a global fashion capital and are slavishly copied by fashionistas around the world within weeks. Ideas and practices that originate in organizations— business or otherwise—find it more difficult to migrate across national borders, partly because of cultural rules that govern behaviour and partly because of legal rules such as patents. But they do eventually move from one country to another. The toughest ideas to move across borders are those that involve deep institutional constraints and deal with big issues such as how to manage an economy or run public services. That explains why economic reforms are such an uphill task in most situations.
The relative importance of binding rules in each of these three cases helps explain why global consumer fashions float effortlessly across borders while it is almost impossibly difficult to reform governance.
Economist Paul Romer has been writing and speaking with missionary zeal about the need to reform rules so that global best practices take root in poor countries. At the beginning of a TED conference speech he gave recently, Romer used a photograph of African students doing their homework under streetlights to ask why governments in that continent cannot get electricity at home even though most consumers can afford to light at least a 100W bulb.
Romer thinks the answer is in the rules governing electricity markets. “US customers have cheap electricity mostly because rules channel self-interest in the right way. Some protect investments made by utilities, others stop these companies abusing their monopoly power. With such rules, companies win; efficient providers make a profit. But customers win too; they get access to a vital resource at a low cost. It’s the absence of these rules that explains why many Africans don’t have electricity at home. It might seem a simple insight, but it took economists a long time to understand it,” he writes in an article in a recent issue of Prospect, a British intellectual journal.
Romer has been campaigning for the creation of special zones—he calls them charter cities—in developing countries that will have different rules than those prevalent in the rest of a country. This is also the idea that originally lay behind the idea to set up special economic zones.
The implicit assumption here is that Western rules need to be transplanted to developing countries, leading to very valid criticism that Romer is giving rebirth to the imperialist notion of the white man’s burden, or the seemingly humane attempt to civilize the natives, while the economic mess in the West and the fast growth of the rest should help correct the record.
Ideas flow both ways. Three decades ago, Japanese automobile makers taught the powerful American car industry a thing or two about quality control and just in time inventory management. In the current times, companies from emerging markets have innovated with new products and processes. The Indian telecom industry is a classic case in point.
Indian society has been the quickest to pick and choose the best from around the world. Indian companies were off the block a little late, but have learnt a lot over the past decade. The slowest learner has been the Indian government, but perhaps inevitably so since its job is more complicated than blowing a vuvuzela.
Niranjan Rajadhyaksha is managing editor of Mint. Your comments are welcome at cafeeconomics@livemint.com
To read Niranjan Rajadhyaksha’s previous articles, go to www.livemint.com/cafeeconomics.htm
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First Published: Tue, Jun 22 2010. 08 10 PM IST