In Box

Epiphanies from Nandan Nilekani

"Seattle has Bill," Thomas Friedman once wrote. "Bangalore has Nandan." The co-founder of Infosys -- the Indian company that made "outsourcing" a household word -- famously gave Friedman the central conceit for The World Is Flat when he said that global commerce's "playing field is being leveled" by communications technology. Now tasked with providing digital IDs to 1.2 billion Indians, Nandan Nilekani is trying to finish the job he started in the private sector: bringing a country that never entirely left the 19th century all the way into the 21st.

My father was a middle manager in a textile mill in Bangalore and ran into hard times. He had to move on and look for other jobs. My parents were concerned that I would not get good schooling, so they put me up in my uncle's house in Dharwad, and I spent about six years there. So at a very young age, I was away from my parents. I developed an amount of independence and learned to stand on my own feet.

Infosys was going to be a different type of company. It was going to be very ethically run, meritocratic, quality-conscious, transparent. People didn't confuse the personal with the corporate. In those days in India, companies were either large multinationals, or they were large units in the public sector, or they were family companies. The notion of a first-generation set of entrepreneurs creating a very different kind of company was like a breath of fresh air in the 1980s.

All the forces that Friedman and I talked about -- globalization, technology, the leveling of the playing field -- are as valid as ever. The transmission of information and capital globally and instantaneously that is happening thanks to the cloud, tablets, and social networking are all manifestations of that concept. That hyperconnected world is both a source of opportunity and a challenge.

What we're doing [in the Indian government] is leapfrogging paper and going straight to online IDs, which is actually a big idea: People who had no idea what IDs were, which is many Indians, are now going to jump from that to an online digital ID that works on the Internet or the mobile phone. Then you can start designing services in the online world: a new way to deliver banking services, food entitlements, whatever. The intersection of what is possible with today's technology and the age-old challenges of developing countries -- that, to me, is a very exciting point.

When Western development happened in the 19th and 20th centuries, it took many decades and it went through the evolution of many technologies: the steam engine, the automobile, the airplane, electricity, the telegraph. Today, countries like India that are experiencing 7 or 8 percent growth and have this population that is impatient for change have to look at a fundamentally different model.

India is fulfilling its promise. It has the largest pool of young people anywhere in the world. And it's a country that's fully exposed because of its openness to the most modern technology. It's a society in transition, where this huge, young, aspirational population is working in a system that is still older and slower. It's a very exciting time.

Illustration by Joe Ciardiello for FP

In Box

Haiti Doesn't Need Your Old T-Shirt

The West can (and should) stop dumping its hand-me-downs on the developing world.

The Green Bay Packers this year beat the Pittsburgh Steelers to win Super Bowl XLV in Arlington, Texas. In parts of the developing world, however, an alternate reality exists: "Pittsburgh Steelers: Super Bowl XLV Champions" appears emblazoned on T-shirts from Nicaragua to Zambia. The shirt wearers, of course, are not an international cadre of Steelers die-hards, but recipients of the many thousands of excess shirts the National Football League produced to anticipate the post-game merchandising frenzy. Each year, the NFL donates the losing team's shirts to the charity World Vision, which then ships them off to developing countries to be handed out for free.

Everyone wins, right? The NFL offloads 100,000 shirts (and hats and sweatshirts) that can't be sold -- and takes the donation as a tax break. World Vision gets clothes to distribute at no cost. And some Nicaraguans and Zambians get a free shirt. What's not to like?

Quite a lot, as it happens -- so much so that there's even a Twitter hashtag, #SWEDOW, for "Stuff We Don't Want," to track such developed-world offloading, whether it's knit teddy bears for kids in refugee camps, handmade puppets for orphans, yoga mats for Haiti, or dresses made out of pillowcases for African children. The blog Tales from the Hood, run by an anonymous aid worker, even set up a SWEDOW prize, won by Knickers 4 Africa, a (thankfully now defunct) British NGO set up a couple of years ago to send panties south of the Sahara.

Here's the trouble with dumping stuff we don't want on people in need: What they need is rarely the stuff we don't want. And even when they do need that kind of stuff, there are much better ways for them to get it than for a Western NGO to gather donations at a suburban warehouse, ship everything off to Africa or South America, and then try to distribute it to remote areas. World Vision, for example, spends 58 cents per shirt on shipping, warehousing, and distributing them, according to data reported by the blog Aid Watch -- well within the range of what a secondhand shirt costs in a developing country. Bringing in shirts from outside also hurts the local economy: Garth Frazer of the University of Toronto estimates that increased used-clothing imports accounted for about half of the decline in apparel industry employment in Africa between 1981 and 2000. Want to really help a Zambian? Give him a shirt made in Zambia.

The mother of all SWEDOW is the $2 billion-plus U.S. food aid program, a boondoggle that lingers on only because of the lobbying muscle of agricultural conglomerates. (Perhaps the most embarrassing moment was when the United States airdropped 2.4 million Pop-Tarts on Afghanistan in January 2002.) Harvard University's Nathan Nunn and Yale University's Nancy Qian have shown that the scale of U.S. food aid isn't strongly tied to how much recipient countries actually require it -- but it does rise after a bumper crop in the American heartland, suggesting that food aid is far more about dumping American leftovers than about sending help where help's needed. And just like secondhand clothing, castoff food exports can hurt local economies. Between the 1980s and today, subsidized rice exports from the United States to Haiti wiped out thousands of local farmers and helped reduce the proportion of locally produced rice consumed in the country from 47 to 15 percent. Former President Bill Clinton concluded that the food aid program "may have been good for some of my farmers in Arkansas, but it has not worked.… I had to live every day with the consequences of the lost capacity to produce a rice crop in Haiti to feed those people because of what I did."

Bottom line: Donations of cash are nearly always more effective. Even if there are good reasons to give stuff rather than money, in most cases the stuff can be bought locally. Economist Amartya Sen, for example, has conclusively shown that people rarely die of starvation or malnutrition because of a lack of food in the neighborhood or the country. Rather, it is because they can't afford to buy the food that's available. Yet, as Connie Veillette of the Center for Global Development reports, shipping U.S. food abroad in response to humanitarian disasters is so cumbersome it takes four to six months to get there after the crisis begins. Buying food locally, the U.S. Government Accountability Office has found, would be 25 percent cheaper and considerably faster, too.

In some cases, if there really is a local shortage and the goods really are needed urgently, the short-term good done by clothing or food aid may well outweigh any long-term costs in terms of local development. But if people donate SWEDOW, they may be less likely to give much-needed cash. A study by Aradhna Krishna of the University of Michigan, for example, suggests that charitable giving may be lower among consumers who buy cause-related products because they feel they've already done their part. Philanthrocapitalism may be chic: The company Toms Shoes has met with considerable commercial success selling cheap footwear with the added hook that for each pair you buy, the company gives a pair to a kid in the developing world (it's sold more than a million pairs to date). But what if consumers are buying Toms instead of donating to charity, as some surely are? Much better to stop giving them the stuff we don't want -- and start giving them the money they do.