The Value of Cell Phones to Kerala's Fisherman

Read "Economics focus: To do with the price of fish" From The Economist print edition, May 10th 2007.

Robert Jensen, a development economist at Harvard University, has completed a study of the economic benefits obtained by fisherman in this region of India from the adoption of mobile phones in 1997. The study is to be published as:

“The Digital Provide: Information (technology), market performance and welfare in the South Indian fisheries sector”, by Robert Jensen. To be published in the Quarterly Journal of Economics, August 2007.

Excerpts:

As phone coverage spread between 1997 and 2000, fishermen started to buy phones and use them to call coastal markets while still at sea. (The area of coverage reaches 20-25km off the coast.)....the proportion of fishermen who ventured beyond their home markets to sell their catches jumped from zero to around 35% as soon as coverage became available in each region. At that point, no fish were wasted and the variation in prices fell dramatically.

This more efficient market benefited everyone. Fishermen's profits rose by 8% on average and consumer prices fell by 4% on average. Higher profits meant the phones typically paid for themselves within two months. And the benefits are enduring, rather than one-off.....

Furthermore, says Mr Jensen, phones do this without the need for government intervention. Mobile-phone networks are built by private companies, not governments or charities, and are economically self-sustaining. Mobile operators build and run them because they make a profit doing so, and fishermen, carpenters and porters are willing to pay for the service because it increases their profits. The resulting welfare gains are indicated by the profitability of both the operators and their customers, he suggests. All governments have to do is issue licences to operators, establish a clear and transparent regulatory framework and then wait for the phones to work their economic magic.

Read "Cellphones bridge the digital divide" by Swaminathan S. Anklesaria Aiyar, The Times of India, Jan 29, 2006.

This article also describes the research of Robert Jensen on the economic benefits of introduction of cell phones to the fisherman of Kerala.

The Economist's article also mentions:

The Impact of Telecoms on Economic Growth in Developing Countries
Leonard Waverman, Meloria Meschi and Melvyn Fuss1

Waverman found

that an extra 10 mobile phones per 100 people in a typical developing country leads to an additional 0.59 percentage points of growth in GDP per person. (He recently repeated this earlier study using a more elaborate model and found that an extra 10 percentage points in mobile-phone penetration led to an extra 0.44 percentage points of growth, a difference he says is not statistically significant.)