The World’s Fastest-Growing Economy

Friday, November 4th, 2011

 . . . is the one that churns outside of the grasp of any government.

With only a mobile phone and a promise of money from his uncle, David Obi did something the Nigerian government has been trying to do for decades: He figured out how to bring electricity to the masses in Africa’s most populous country.

It wasn’t a matter of technology. David is not an inventor or an engineer, and his insights into his country’s electrical problems had nothing to do with fancy photovoltaics or turbines to harness the harmattan or any other alternative sources of energy. Instead, 7,000 miles from home, using a language he could hardly speak, he did what traders have always done: made a deal. He contracted with a Chinese firm near Guangzhou to produce small diesel-powered generators under his uncle’s brand name, Aakoo, and shipped them home to Nigeria, where power is often scarce. David’s deal, struck four years ago, was not massive — but it made a solid profit and put him on a strong footing for success as a transnational merchant. Like almost all the transactions between Nigerian traders and Chinese manufacturers, it was also sub rosa: under the radar, outside of the view or control of government, part of the unheralded alternative economic universe of System D….

What happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard. It is a product of intelligence, resilience, self-organization, and group solidarity, and it follows a number of well-worn though unwritten rules. It is, in that sense, a system.

It used to be that System D was small — a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too. Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world — close to 1.8 billion people — were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes…

The total value of System D as a global phenomenon is close to $10 trillion. Which makes for another astonishing revelation. If System D were an independent nation, united in a single political structure — call it the United Street Sellers Republic (USSR) or, perhaps, Bazaaristan — it would be an economic superpower, the second-largest economy in the world (the United States, with a GDP of $14 trillion, is numero uno). The gap is narrowing, though, and if the United States doesn’t snap out of its current funk, the USSR/Bazaaristan could conceivably catch it sometime this century.

Best thing I’ve read all week.

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15 Responses to “The World’s Fastest-Growing Economy”

  1. #1 |  MH | 

    Interesting. Not sure “USSR” is the best acronym. ;-)

  2. #2 |  Tolly | 

    Saddest thing I’ve read all week:
    “…if the United States doesn’t snap out of its current funk, the USSR/Bazaaristan could conceivably catch it sometime this century”

    Meanwhile, Obama wants huge “jobs” bills that will just filter down to graft, or his administration is busy losing billions of dollars backing market losers just so he can roll his shirtsleeves up and get a “Green” photo op.

    This Nigerian guy is showcasing the kind of economic motivation that drives business innovation. It’s the ‘two guys working out of their garage’ model. I wonder how insanely corrupt and slow the bureaucracy in Nigeria is.

  3. #3 |  SJE | 

    Unsurprisingly, the areas of the US economy that have shown the strongest growth in earnings and profits are those with the losest regulations: IT, software, financials. By comparison, another high-tech area, pharma and biotech, has to navigate all sorts of regulators and payment sources. Guess where biotech does best: those areas that are unregulated.

  4. #4 |  kant | 

    @ MH

    I spit coffee at that line. I think i’m going to have to get bumper stickers made up

    United Street Sellers Republic/Bazaaristan
    The USSR is Back!

  5. #5 |  BamBam | 

    Yet another important item not reported in the mainstream media by its presstitutes: On Oct 31, according to the US government’s own figures (so you know it’s far worse), the US debt officially passed the US GDP for the first time in history.

  6. #6 |  fwb | 

    Best system in the world.

  7. #7 |  NAME REDACTED | 

    Americans would have gone to jail for this. This is why the Chinese have a comparative advantage here, because their government won’t lock them up for violating foreign trade laws.

  8. #8 |  Veritas | 

    I’m not really a big fan of total market deregulation, but I admit, this does seem like a good deal for all (non-governmental) parties involved.

  9. #9 |  Boyd Durkin | 

    Meanwhile, Obama wants huge “jobs” bills that will just filter down to graft, or his administration is busy losing billions of dollars backing market losers just so he can roll his shirtsleeves up and get a “Green” photo op.

    To be fair, let’s give “graft” a chance. Let Obama (or the Republican party) give $500 billion to themselves and their friends. Then, do it again in 6 months. Then, just to be sure, do it twice more…and then do it again. Finally, do it three more times followed closely by once more and then a final round.

    What’s the difference between my proposal and the proposed government programs? The effect will be almost exactly the same.

  10. #10 |  Boyd Durkin | 

    How long before the state (Nigeria) fucks this up?

  11. #11 |  Robert | 

    “Best thing I’ve read all week.”

    Except for the part about buying them from china, yeah.

  12. #12 |  Brian Moore | 

    Hernando De Soto (the 20th century one) approves.

  13. #13 |  Maggie McNeill | 

    I’ve worked in “System D” since 1997; one can only hope governments have as little success suppressing all the rest of “System D” as they have had suppressing my sector of it, sex work.

  14. #14 |  Justthisguy | 

    Heh. I thought “System D” was just French Foreign Legion slang.

  15. #15 |  Joe | 

    I love it.

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