Mobile Phones and Local Economic Development: A Global Evidence

Abstract

In this paper, I present global evidence on the impact of expansion in mobile telephony and broadband Internet services on economic development at the subnational level. Leveraging two decades of satellite data on nightlights and the global expansion of 2G and 3G mobile networks in 3419 subnational regions in 201 countries, I document three main findings on the effects of mobile phones on local economic development (proxied by nightlights): I. The expansion in 2G and 3G mobile coverage has a positive effect on economic activity. Using the GDP-nightlights elasticity from Henderson et al. (2012), our estimates suggest a GDP-mobile phone penetration elasticity of 0.21-- 0.36; II. Mobile broadband (3G) Internet is associated with economic development mainly in middle and high-income countries. 2G mobile expansion however spurs economic activities in countries across all income groups; and III. The development effect of mobile broadband Internet is present mainly in countries without Internet censorship.