Mobile phones are helping the third world to develop

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 phones for financial transactions.

  • Fishermen and farmers can check prices at different markets without travelling – preventing wasted journeys.

    Consequently, mobile phones can boost growth considerably. Researchers analysed 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 per cent 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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    FMF Policy Bulletin/ 12 April 2005
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