It's Economics, Stupid: Mobile Technology in Low-Income Countries

Article excerpt

In a recent article in Time, former United States president Bill Clinton lists five global phenomena as causes for optimism, beginning with the assertion that "phones mean freedom." Clinton explains that mobile phones "foster equality" and have "revolutionized the average person's access to financial opportunity," citing a 2010 UN study that found that mobile phones are "one of the most effective advancements in history to lift people out of poverty." To expand on Clinton's important observations, it is notable that the device that "fosters equality" and "lift[s] people out of poverty" is by and large provided by entrepreneurs and businesses seeking to make a profit.

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In other words, a largely commercial phenomenon has brought about remarkable "social progress" in low-income countries. Mobile phones were developed in the United States, eventually deployed to low-income countries through commercial processes and, because of certain qualities, embraced in these countries, where they have had tremendous impact. I estimate that mobile phones have been responsible for a quarter-trillion US dollars in the economies of the world's so-called poverty belt--South Asia and Sub-Saharan Africa--alone, to say nothing of the impact in the rest of the world. Mobiles also have enormous potential as a platform for other businesses in areas such as banking and healthcare and can help otherwise voiceless citizens to organize politically, but that is beyond the scope of this piece. Here, I focus instead on mobiles as one example of a productivity tool--and on their global spread as a model for promoting other such tools.

A New Approach to Development

Given the magnitude of their economic impact, the example of mobiles should spur us to revisit the nature of economic development and related US foreign policy, which generally focus on the governments of low-income countries in any approach to development. In this context, the attention to mobiles by a US president, a leading executor of foreign policies for a period of up to eight years, is particularly noteworthy.

US foreign policy over the last seven decades has regarded governments as the key actors in solving the pressing issues of low-income countries--poverty, bad governance, cultural impediments to democratic progress, and demagoguery among many others, but such a focus may actually exacerbate these problems. Instead, we must look at what actually improves the economic lives of ordinary people. Economically strong citizens, in turn, make their governments more accountable and friendly to worthy causes, including a peaceful and prosperous world. If the effort to economically strengthen the citizenry becomes our endeavor, then mobiles certainly are a striking example. Mobiles have demonstrated that the key to progress--both for low-income countries and in the context of US global interests--is the advancement of commerce as the antidote to many of the ills beleaguering low-income countries.

The commercial nature of mobiles and their potential for broad-ranging social impact are fundamentally intertwined. First, mobiles help ordinary low-income people make economic gains, enabling them to pay for the services; this is particularly apparent in the spread of mobiles in areas where people would not have otherwise been able to afford such devices. Simultaneously, businesses profit from the sale of phones and associated services. Low-income economies advance, while high-income economies enjoy increased exports of equipment to low-income ones. Mobiles have demonstrated that billions of people who fall far short of Western standards in terms of their consumption of basic goods--food, water, medicine, shelter, and education--will purchase a commercial product to make economic gains, in effect voting with their hard-earned money on what actually advances their lives. It all works because someone can spend a little to make a call that advances her economic situation a lot by saving time, money, labor, transportation, and opportunity costs. …

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