NCPA - National Center for Policy Analysis


April 6, 2005

In developing nations, mobile phones can serve many purposes -- especially if infrastructure is underdeveloped. They can reduce transaction costs, broaden trade networks, and substitute for costly physical transport, says the Economist.

For example:

  • In Zambia, Coca Cola distributors, dry cleaning firms, gas stations and dozens of other shops use mobile phonesfor financial transactions.
  • Fishermen and farmers can check prices at different markets without traveling -- preventing wasted journeys.

Consequently, mobile phones can boost growth considerably. Researchers analyzed telephony and economic growth in 92 countries, both rich and poor, between 1980 and 2003. They found:

  • An increase of ten mobile phones per 100 people boost gross domestic product (GDP) growth 0.6 percentage points.
  • Long-run growth in the Philippines is a percentage point higher than in Indonesia because there are 27 mobile phones per 100 people in the Philippines, while there are only 9 mobile phones per 100 people in Indonesia.

Because of these clear economic benefits, there is booming subscriber growth. In several sub-Saharan countries, subscriber growth exceeded 150 percent last year. There are now eight mobile phones for every 100 people in Africa, up from three in 2001.

Source: "Calling across the divide," Economist, March 12, 2005.


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