Give the obvious application of mobile phone technology to all kinds of business processes you'd think it would be relatively easy to quantify the macro-economic benefits and answer the question: are countries or areas that have and use mobile technology the most, better off than those that use it least? In other words, does mobile telephony actually drive economic growth?
A report on just this issue, written by a team of researchers led by Professor Rajat Kathuria of the Indian Council for Research on International Economic Relations (ICRIER), claims it's found clear evidence to suggest that it does.
The study shows that Indian states with 10 per cent higher mobile phone penetration will enjoy an annual average growth rate 1.2 per cent higher than those with a lower teledensity.
The study was funded by Vodafone as part of a series of studies on the socio-economic impact of mobile (knowingly called SIM), also shows that mobiles aid the process by which disadvantaged groups, including the low-skilled labour force, enjoy the fruits of economic growth: so it not only drives the economy, it can share out the spoils more fairly as well.
“We believe this analysis shows that telecommunications is a critical building block for the country’s economic development," says Professor Kathuria "Our work also shows that the real benefits of telecommunications only start when a region passes a threshold penetration rate of about 25 per cent. Many areas have still not attained that level, which indicates the importance of increasing teledensity as soon as possible.
If Bihar’s mobile penetration rates were similar to those of Punjab, for example, then it would enjoy a growth rate that is 4 per cent higher than its current rate.”
In fact there's been much anecdotal evidence pointing to the sorts of business efficiencies that can be generated in both developing and emerging economies - even down at the near-subsistence level.
For instance in many countries mobile networks simply make up for inadequate wired infrastructure - so mobile brings basic telephony, never mind mobility. In other instances enhancements such as being able to transfer funds efficiently for the first time, or to gain market information (literally) seem to promise huge benefits.
For a subsistence farmer, the ability to call a contact at the market town 15 miles away to see whether there are enough buyers there to make it worth hauling his produce to market, is a real boon. These seemingly tiny bits of information can represent huge 'business process efficiencies' for the farmer, which, when multiplied thousands of times, probably make a really big difference to economic life in the region.
And the report contains specific studies of how mobile devices benefit rural farmers, small and medium sized enterprises (SMEs) and the populations of urban slums - how mobile-derived information, such as weather reports and market prices, has begun to have an impact on productivity for the agricultural sector.
But the problem faced by such studies is how to establish cause and effect - a very difficult thing to disentangle in any complex business ecosystem. Clearly the penetration and use of mobile technology is also enabled, or at least associated with, economic growth. Whether the mobile phone is a driver of that growth or simply a fellow-passenger, or at least to what extent it is, is far harder to nail.
And the report concludes that other infrastructure challenges, such as poor roads and lack of refrigerated transport, need to be addressed in parallel in order for farmers to realise the full potential of access to information via mobile.
Dr Rajiv Kumar, Director and Chief Executive of ICRIER, suggests that the research report should provide government with the analytical and empirical content to refresh the policy environment for telecommunications. He believes that this is vital in order to attract investment to the sector and to ensure this investment is used to maximum effect.
In particular, he recommends that more spectrum should be made available for civilian use and policy makers should consider changing the current caps on foreign investment and the criteria for mergers and acquisitions. These changes could stimulate greater investment in Indian telecommunications, improve access to communication in poorer areas and ultimately lead to increased economic growth.
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