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Understanding the role of mobile technology in economic growth

Posted by Economic Impact on Mar 3, 2017 12:08:59 PM

Recent years have seen startling growth in the reach of mobile technology. Such growth has been truly ‘global’ with vast investment in mobile infrastructure, supporting increased network coverage across emerging markets in all six continents. The impact of this extends far beyond convenience and consumer choice. Mobile internet technologies are transforming product and labour markets the world over. They are helping to propel ideas, connect businesses and customers and match workers to opportunities.

Our research, commissioned by Google, shone a light on how the rapid ascent of mobile internet has supported widespread economic and social gains. Our pioneering econometric model identified a causal relationship between mobile internet penetration and two vital enablers of supply-side growth: labour productivity and the labour force penetration rate. Our research quantified how mobile internet technology could deliver long-term economic benefits both by making the existing workforce more productive and by enabling more people of working-age to actively seek work in the formal economy. As a result, we demonstrated how mobile internet technologies help to underpin long-term economic growth—to an extent that goes far beyond the demand-side footprint of firms involved in the manufacture, design and distribution of smartphones.

The application of this research to countries in the Association of South East Asian Nations (ASEAN) revealed the major stakes at play.  We estimated that across the region the increase in mobile internet penetration over the past five years has boosted GDP by US $47.2 billion—the equivalent of over seven percent of total recorded growth. Moreover, the resulting increase in labour market participation was sufficient to support an extra 900,000 jobs. Looking ahead, given our projections for the future growth in mobile internet, we forecast that over the next five years this impact will be worth some US $58.1 billion in GDP and over one million jobs.   

Such an increase in GDP and employment will naturally translate into higher government revenues given the associated rise in wages and profits. These revenues have the potential to support considerable social benefits. For example, we estimated that the extra tax would be sufficient to fund the construction of close to 7,400 km of new two-lane highways, to finance the implementation of routine immunisation programmes for 22 years or to support 1.3 million students through primary education across the region. 

Topics: Technology, Economic impact, Business and economic outlook, Emerging markets, Global economics

   

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