One of the interesting findings about mobile phones is that they grow the economy. In a country without a general landline network – ie, all the poor ones – 10% of the population gaining a mobile increases GDP by 0.5%. No, not the growth rate goes up from 2% to 2.01%. But an additional 0.5% of GDP each year. Which is, by the standards of these things, pretty big.
We also know why too. Being able to contact people means that markets complete, contracts and transactions are possible. It’s no longer necessary to near randomly meet someone physically in order to be able to organise a transaction. Thus more transactions happen – the value added in voluntary transactions being that GDP which is increasing.
Excellent, which is also the explanation for this:
It’s the Phone, Stupid: Mobiles and Murder
Lena Edlund, Cecilia Machado
NBER Working Paper No. 25883
Issued in May 2019
NBER Program(s):Health Economics, Labor Studies, Public Economics
US homicide rates fell sharply in the early 1990s, a decade that also saw the mainstreaming of cell phones – a concurrence that may be more than a coincidence, we propose. Cell phones may have undercut turf-based street dealing, thus undermining drug-dealing profits of street gangs, entities known to engage in violent crime. Studying county-level data for the years 1970-2009 we find that the expansion of cellular phone service (as proxied by antenna-structure density) lowered homicide rates in the 1990s. Furthermore, effects were concentrated in urban counties; among Black or Hispanic males; and more gang/drug-associated homicides.
Mobile phone enable more contracts to complete without having to rely upon territorial contact. It being the defending the territory which is the cause of those gang murders.
All of which leads to an interesting thought. We say that the great burst of growth in the poor countries is because of free market policies, privatisation maybe, possible globalisation. Actually, could just be the mobile phone. And the Freakonomics result of abortion lowering the crime rate? Could just be the mobile phone…..