August 08, 2007 Fishermen, traders, and consumers have all benefited from the fishing industry’s adoption of mobile phones in Kerala, India, according to research published by Watson Visiting Professor Robert Jensen in this month’s Quarterly Journal of Economics. In one of the first rigorous, empirical studies of the benefits of information and communication technologies (ICTs) in poor countries, Jensen goes beyond the largely anecdotal body of evidence currently dominating the discussion of the so-called “digital divide” between the rich and poor.
"Economists have long emphasized that information is critical for the efficient functioning of markets,” Jensen writes in “The Digital Provide: Information (Technology), Market Performance and Welfare in the South Indian Fisheries Sector.” And yet “questions such as how much market performance can be enhanced by improving access to information, how much society gains from such improvements, and how those gains are shared between producers and consumers remain largely unanswered.”
In Kerala, fish is a dietary staple. Prior to the availability of mobile phones, fishermen and traders typically knew only the price of fish in a handful of nearby villages or the nearest town. Fuel costs limited the markets at which a fisherman could dock; little storage capacity was available, and ground transportation costs were high. “The inefficiency is clear,” Jensen writes. “While at Badagara there are 11 fishermen dumping their catch unsold, there are 27 buyers within 15 kilometers who are about to leave without purchasing any fish.”
With the introduction of mobile service between 1997 and 2001, fishing boats and wholesale and retail traders began using cell phones to coordinate sales. A dramatic improvement occurred in the allocation of goods from one market to the next, along with a decrease in related price variations. Fish dumping, which averaged about 5 to 8 percent of daily catch before mobile phones, was eliminated. Fishermen’s profits increased on average by 8 percent, while consumer price declined by 4 percent. And while it was primarily the largest fishermen who adopted mobile phones in Kerala, smaller fishermen without phones still gained due to the improved functioning of markets.
In India, “the benefits of ICTs can be found among fishermen or farmers, not just software engineers or call-center workers,” Jensen writes. This is not an isolated case. “In fact, it has become increasingly common to find farmers, fishermen, and other producers throughout the developing world using mobile phones, text messaging, pagers, and the internet for marketing output.”
In the ongoing debate over the digital divide, “many critics argue that investments in ICTs should not be a priority for low-income countries, given more basic needs in areas such as nutrition, health, and education,” Jensen writes. “However, this argument overlooks the fact that…for most of the world’s poorest, living standards are determined largely by how much they get for their output.”
Read the journal article here.