The Internet Makes International Trade Better for Everyone

by Benjy Cannon on July 22, 2013

Trade is a sensitive political issue — and an extremely uncontroversial economic one. While most economists agree that trade makes everyone better off, that “everyone” often appears limited to multinational corporations and Western powers. As a globalizing force, the Internet is beginning to upset that power dynamic.

It’s easy to see why free trade has seemed like the domain of big business. As Dan has argued, setting up shop in a foreign country is expensive, logistically demanding and impossible without vast resources and knowledge. While foreign markets have always been attractive to businesses, the complications of moving abroad entailed a hefty barrier to entry. Consequently, taking advantage of foreign markets has generally appeared to be the domain of businesses from wealthier countries. Many economists would argue these benefits permeate the global economy, and that each player ultimately benefits, but the political narrative centers on Western multinationals. The Internet, however, may change that. By eliminating costly middlemen, providing a common, transnational space and mitigating the resources needed to launch a successful business, the Internet has lowered barriers to entry for entrepreneurialism in developing nations. Businesses in these countries now have a very direct interest in lowering barriers, as they too can partake in access to new markets.

The Internet economy is still in its early days, but its empowering effects on poorer countries are already beginning to emerge. Ghana’s capital, Accra, hosts MEST, an entrepreneurial school of technology which graduates about 20 students a year. MEST trains young Ghanaians in programming and entrepreneurship, and operates as an incubator, giving teams of students seed funding to launch their own businesses. MEST is just one of a number of tech-based initiatives in Ghana which encourage entrepreneurship. Others include the Kwame Nkrumah University of Science and Technology and the Accra Startup Weekend. Students at MEST regularly attend the startup weekend, where they spend 36 hours building fully viable apps and ready-to-go businesses.

One such business, Dropifi, recently became the first African company to join 500 Startups, a “startup accelerator program.” Dropifi allows businesses to streamline their feedback forms, providing an integrated widget, spam filters, analytics and a host of features meant to simplify feedback forms. These days, Dropifi has around 6,000 clients in over 30 countries.

Dropifi’s success demonstrates the importance of the Internet to the future of international trade. On the one hand, businesses across the world benefit from the ingenuity and genius of David Osei, Kamil Nabong and Philips Effah — Dropifi’s founders. The Internet, with its accessibility, gave Osei, Nabong and Effah a platform to disseminate their idea, which filled a crucial niche in the global marketplace. Osei, Nabong and Effah benefit as well, and as they grow their business, they will bring jobs to Ghana and other parts of the continent, where they hope to “become leaders.”

African leadership in the Internet economy faces some hefty challenges. Rebecca Enonchong, the founder and CEO of Appstech and a native of Cameroon, gave an interview to CNN about some of them. Enonchong stated that certain Africans could have the best idea in the world, but lack the bus fare to get from their homes to the Internet cafe. But startups themselves are already changing that dynamic. Safari Yetu, a Tanzanian startup, allows users to buy tickets over SMS, which means they don’t have to make one trip to the bus station, which cuts travel expenses in half. SMS platforms are common in Africa, due to relatively high rates of mobile penetration. Commerce via text is far more common than in the United States and Europe, and represents innovations much of the world could utilize. MFarm, which sends regular SMS updates about crop prices, allows small, local farmers to get better prices for their crops. A study conducted among 600 Kenyan farmers showed that MFarm could double their sales. Apps such as these cut out middlemen, create jobs, and open up new opportunities across the continent.

MFarm and Safari Yetu anecdotally validate the statistics: seventy five percent of the gains from the Internet economy go towards “traditional sectors.” In other words, farmers and commuters benefit from technological advances — not just college educated entrepreneurs.

The burgeoning technology sectors in a host of African countries offer a tantalizing look at the continent’s potential. The ideas coming out of Accra, Dar es Salaam and Nairobi are ingenious. There are plenty of markets in the United States and Europe sorely in need of disruptions, which may come from the Global South. Hence the vital importance of ensuring a global, open Internet, and the free-flow of data across borders. While entrepreneurs like Enonchong rightly note that Africans can and should establish global business models, there are a host of African startups which use American technology in innovative ways to address local problems. Interplay between niche and transnational markets represents the opportunities offered by widespread access to innovation.

Benjy Cannon is an intern at the Computer & Communications Industry Association. 

  • Alex Propes

    Great story. For these reasons I’ve created a petition at http://www.SupportTrade.org to encourage passage of TPA. I agree that TPA should include provisions for trans-border data flows.

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