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Gapminder and developing countries September 25, 2006

Posted by Jasper in General, Mobile.
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In his blog Greg Mankiw points to the to the excellent and amusing presentation by Hans Rosling on how the well-being around the world has changed over the past forty years. He uses the program Gapminder which I briefly discussed in a previous post.

He wraps-up his presentation with a depiction of internet penetration plotted against GDP per capita. He shows how the world “is flattening out” as he puts it, because the internet has become more accessible over time in developing countries relative to their growth in GDP per capita.

After watching the presentation I thought I would have a look for any research in that area. I didn’t find anything directly related to the presentation but did find an interesting paper how on investments in mobile communications effects developing countries: The impact of telecoms on economic growth in developing countries by Leonard Waverman, Meloria Meschi, Melvyn Fuss, part of the The Vodafone Policy Paper Series. Waverman et al. examine 38 developing countries for which data was available for the period 1996-2003. They conclude:

Differences in the penetration and diffusion of mobile telephony certainly appear to explain some of the differences in growth rates between developing countries…

… There are increasing returns to the endowment of telecoms capital (as measured by the telecoms penetration rate).

Given the speed with which mobile telecoms have spread in developing nations, it is unlikely that large gaps in penetration will persist for ever. However, differences in the speed of adoption will affect the speed with which poor countries converge to rich countries’ level. Relative poverty still poses serious political problems, such as instability and increased demand for emigration. Our analysis suggests the need for regulatory policies that favour competition and encourage the speediest possible rollout of mobile telephony.

This is in-line with other research that suggests that telecommunications investments play an important role in improving well-being and wealth. To attract outside capital and investment in the mobile sector, devloping countries should open up for competition, implement an enforceable regulatory regime, reduce restrictions on foreign direct investment and (probably the most difficult of all) get rid of corruption.

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