Of Fish & Phones
Until 1997, on average, 5-8% of Kerala’s total fish catch was wasted, says Robert Jensen [”The Digital Provide”; .pdf file here], who has surveyed the price of sardines at 15 beach markets. On January 14th 1997, for example, 11 fishermen at Badagara beach ended up throwing away their catches, yet on that day there were 27 buyers at markets within about nine miles who would have bought their fish. There were also wide variations in the price of sardines along the coast.
But starting in 1997 mobile phones were introduced. Coverage spread gradually, providing an ideal way to gauge the effect.
As phone coverage spread between 1997 and 2000, instead of selling their fish at beach auctions, the fishermen would call around to find the best price, while still at sea. Dividing the coast into three regions, Mr Jensen found that 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. By the end of the study coverage was available in all three regions. Waste had been eliminated and the “law of one price” had come into effect, in the form of a single rate for sardines along the coast.
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.
Leonard Waverman [”The Impact of Telecoms on Economic Growth in Developing Countries”; .pdf file here] found that an extra 10 mobile phones per 100 people in a typical developing country leads to an additional 0.44 percentage points of growth in GDP per person.