01/04/2005 12:25:01 pm
Worth More Than Foreign Aid. In a typical developing country, an increase of 10 mobile phones per 100 people, boosts GDP growth by 0,6 %. A larger increase in phones, a larger increase in GDP growth. This could decide whether GDP doubles in 20 or 60 years time. All this according to an investigation of the impact of telecoms on growth in 92 countries between 1980 and 2003. It has been counducted by Leonard Waverman at London Business School and Melvyn Fuss of LEGG, which The Economist recently referred to. There are lots of reasons and anecdotal evidence showing why. Mobiles allow you to look for jobs, check prices in different markets, pay for goods and services and prevent wasted journeys. This reduces transaction costs, broadens trade networks and substitute for physical transport. It can be hard to afford a mobile phone in a developing country, though the increase in mobiles has been some 150 % in Sub-Saharan countries in recent years. But even when they can?t afford, they buy one and rent it out by the minute. This is free market and technology at work. It probably reduces poverty more than proud aims and government money tranfers.