What about India? A study found that generic companies based in India supplied 53 percent of the antiretroviral drugs to treat HIV in sub-Saharan Africa from 2004 to 2006. In fact, one-third of Indian drug exports went to sub-Saharan Africa between 1999 and 2006. That really matters when World Health Organization estimates suggest public expenditure on drugs in that region averages below $10 per person each year. It also has a knock-on effect: Recent analysis by researchers Tamara Hafner and David Popp argues that African imports of antibiotics and other drugs from India and China reduce the price of identical drugs imported from high-income countries, suggesting fiercer competition is reducing costs.
The generics effect is widespread: Basically, the things poor people want appear to be dropping in price faster than the stuff rich people want. It may even be that the bottom of the pyramid is benefiting from lower prices more than the luxury-buying elite. (That's not well reflected in global income statistics because the standard price indices used to construct these metrics are weighted toward luxury goods -- fancy cars and granite countertops, not bicycles and plastic sheeting.) In effect, the world's poor people are still very poor, but they aren't quite as poor as the stats would indicate.
That helps explain why many of the world's most destitute people own more stuff than they used to. Take Madagascar, a very poor country that has technically been getting poorer over time. Between 1992 and 2009, the country's real GDP per person fell from $843 to $753. But the percentage of households with a phone climbed from less than 1 percent to 28 percent, the proportion with a motorbike climbed from 4 percent to 22 percent, and the percentage with a television increased from 7 percent to 18 percent. People in Madagascar, as well as in much of the rest of the developing world, are living better and longer with more possessions to their name. That's true even if, officially, they are as poor as they've ever been. And Madagascar doesn't even have a Walmart -- yet.
Still, for all the "everyday low prices," whenever a new Walmart opens, local competitors really are often forced to shutter their doors. Imagine that happening on a global scale. Harvard University economist Dani Rodrik, for one, worries that Africa and Latin America are seeing their manufacturing sectors shrink, perhaps in part because East Asia has taken most of the global low-end manufacturing opportunities. And that may leave the rest of the developing world looking in vain for that first step up on the ladder to industrialization.
That's a problem, to be sure, but one that should, in theory, solve itself. As China gets richer, labor will inevitably get more expensive and factories will migrate. Some already have -- to places like Vietnam and Indonesia. And if retailers like Walmart continue to seek the cheapest, most efficient suppliers and manufacturers, those Asian production centers will eventually shift to Africa in search of cheap labor. That may take decades. But in the meantime, China's efficiency means that poor people's scarce resources can go a little bit further -- which is enough to put a grin on even the most dejected round, yellow smiley face.
SUBJECTS:
