In this CGD Note, post-doctoral fellow Jenny Aker assesses the impact of mobile phones on grain market performance in one of the world’s poorest countries. She finds that the introduction of mobile phones is associated with a 20 percent reduction in grain price differences across markets, with a larger impact for markets that are farther apart and those that are linked by poor-quality roads. Cell phones also have a larger impact over time: as more markets have cell phone coverage, the greater the reduction in price differences. This is primarily due to changes in grain traders’ marketing behavior: cell phones lead to reduced search costs, more market information, and increased efficiency in moving goods across the country.
Aker concludes by outlining the ways in which information technology can be used as an effective poverty-reduction strategy in low-income countries. While information—rather than information technology—is crucial for market performance, cell phones are particularly well-suited to the way in which many households search for information, and should be central to any debate on market information systems.
This note is based on a longer CGD Working Paper. Read the paper to follow the analysis more closely and to see the data behind it.