In Box

The Wal-Mart Effect

When India's first Wal-Mart opened this summer in Amritsar, the response was mixed, with detractors fearing that big-box stores would eventually crowd out India's fabled "wallah" culture. What no one remarked on, however, was that Wal-Mart's debut in a country is a bellwether for future growth. Indeed, Wal-Mart has started operations in 15 countries since 1991, and 13 of them have had boom economies, with an average of 4.4 percent annual growth since Wal-Mart arrived. Over the last five years, the economies of Wal-Mart countries outside the United States have grown 40 percent faster than the world average. So what's going on? Does the ability to buy giant bags of Froot Loops at cut-rate prices inspire economic growth? More likely, Wal-Mart is simply a smart, cautious investor. "Wal-Mart chooses to go places with a sizable middle class," says Nelson Lichtenstein, a historian who just published a book on Wal-Mart's rise. And Wal-Mart's attention to middle-class growth could pay off for the company in the future.

The portion of the global middle class that lives in the developing world should rise from 56 percent in 2000 to 93 percent in 2030, according to the World Bank. Next up for the Wal-Mart effect, Lichtenstein says: Russia and Eastern Europe. Picture the new global bourgeoisie outfitted with cheap hibachi grills, extra-durable puppy toys, and energy-efficient minifridges, and you've got a glimpse of the coming Wal-Mart revolution.

In Box

Hot Potato

The little tuber that gave us modernity. 

Does the modern world owe its very existence to the humble spud? A recent study by a pair of economists suggests that the introduction of the American potato to Europe and later Asia and Africa might have been one of the most significant events in the history of human development.

The importance of potatoes first hit home for co-author Nancy Qian during a trip to rural Rwanda, where she noticed something about her hosts' diet. "All they were eating were potatoes," she says. At the time, Qian, a Yale University professor, was looking into how Rwanda's population explosion had helped cause its ethnic conflict, and she remembered reading a paper on how Ireland's 18th-century population boom had been fueled by the introduction of the potato. (Of course, the infamous 19th-century potato famine later brought thousands of Irish immigrants to the United States.)

Qian, along with Harvard University's Nathan Nunn, decided to see how universal the connection was. Looking at population trends from 1700, when the potato was introduced to the Old World, to 1900, they estimated that 12 percent of the population growth and 47 percent of the urbanization during this period was directly potato-related. Moreover, regions that are more suitable for potato cultivation -- Europe and India -- tended to urbanize and develop much faster than places that aren't, such as sub-Saharan Africa.

What gives the spud its magical power? First, as Qian says, "If you needed to choose only one crop to survive on, the potato would be it." It contains every nutrient humans need except for vitamins A and D, meaning that a person could survive indefinitely on only potatoes, milk, and a bit of sunlight. Potatoes are also very hardy, and they provide much higher yields than crops like corn and wheat, allowing countries to devote less space to farmland and more to cities and factories.

This could be why leaders from Frederick the Great to Ban Ki-moon have recognized the potato's power and encouraged farmers to grow them. Although its effect on population growth is less pronounced today, the potato is still a potent weapon in the fight against malnutrition, which led the United Nations to declare 2008 the International Year of the Potato. And that's no small fry.

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