Mobile Phones Increase GDP

Access to mobile phones is rocketing, along with its impact on poverty, writes Matthew Bishop.

In rich countries, mobile phones can seem something of a mixed blessing – particularly if you are stuck on a train next to a teenager with a Crazy Frog ring-tone. But in poor countries, mobile phones have no obvious downside and have already delivered remarkable bene?ts, in terms both of economic growth and personal empowerment. They may even enable poor countries to leapfrog over some of the traditional stages of the development process.

Some of the biggest bene?ts are going to the world’s very poorest people, who cannot even afford to buy their own phone handset. A lively rental market is ?ourishing across the developing world. For instance, Grameen Phone now boasts more than 100,000 “phone ladies”, who buy a handset (often with the help of a loan from a micro-?nance institution such as Grameen Bank) and then rent out airtime. These women are forming an increasingly in?uential army of micro-entrepreneurs, a new focus of business activity in their villages. And they are providing potentially global connectivity to some of the world’s least connected people, whose ?rst step on the ladder towards phone ownership is to buy their own SIM card to plug into a rented phone. As proof of how greatly this connectivity is valued, in marketplaces around the developing world there has been a boom in sales of special wallets in which SIM cards can be carried safely.

The mobile phone has spread throughout much of the developing world more quickly and deeply than any previous technology-based product – not least traditional ?xed-line phones. This has been helped by the fact that rolling out a mobile phone network is far cheaper than building a ?xed-line system. In Morocco in 1995, for example, after decades of investing in the telephone infrastructure, there were only four ?xed lines per 100 inhabitants. In 2003, there were still four ?xed line subscribers per 100 Moroccans, but there were also 24 mobile phone subscribers per 100 – up from zero in 1995, according to a recent study by the London Business School for Vodafone, the British global mobile phone giant. In the same period, mobile phone penetration has risen from 0 to 36 per cent in Albania, 0 to 30 per cent in Paraguay, 0 to 21 per cent in China and 0 to 9 per cent in India.

 

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