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BRIC Cell Phones

Mar 12, 2012 • Businesses, Demand, Supply, and Markets, Developing Economies, Households, Macroeconomic Measurement, Money and Monetary Policy, Uncategorized • 145 Views    No Comments

The Tibetan town of Namche Bazaar has yaks, donkeys and cell phones. Located along the route to a Mt. Everest base camp, the town attracts local traders who provision climbers. With the former carrying products and the latter, market information, the animals and phones are an interesting combination.

Between 2001 and 2012, cell phone subscriptions in India and China have soared. Currently approaching one billion in these 2 BRIC countries, the increase far exceeds the minimal upward trend in developed nations like the U.S.

The Economic Lesson

By “moving” information, cell phones enable people to share prices and negotiate transactions. Cell phones have also become the foundation of mobile banking networks. Instead of cash, text messages are used to make purchases at local stores, to make deposits, and to transfer money. Because cell phones create information and financial infrastructures in 21st century developing economies, they propel economic growth.

Another growth yardstick? Beer consumption.

An Economic Question: In addition to facilitating market transactions, how might cell phones contribute to economic growth in an emerging economy?

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