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Tropentag, September 14 - 16, 2022, Prague

"Can agroecological farming feed the world? Farmers' and academia's views."

Mobile phone network expansion and agricultural income: A panel study

Svenja Fluhrer, Kati Kraehnert

Potsdam Inst. for Climate Impact Research, Germany


This study provides novel evidence on the effects of mobile phone network expansion on income and income diversity of households in rural Mongolia. Our identification strategy exploits spatial and temporal variation in the expansion of mobile phone networks across districts. Our analysis builds on a detailed household panel survey with four waves that we implemented in western Mongolian between 2012 and 2021. The socio-economic data is combined with annual data on the expansion of mobile phone networks, covering the 2012-2021 period, from all Mongolian network providers. Exploiting the longitudinal dimension of the data, we apply a household fixed effects approach that controls for time-invariant household characteristics.
Our results are twofold. First, we show that mobile phone network expansion strongly and significantly increases the income of pastoralist households. The increase in income is driven by higher income from agriculture, particularly through higher received prices for animal byproducts, and, to a smaller extent, by higher transfer income.
Second, we provide empirical evidence on the negative impact of mobile phone network expansion on rural income diversification. We find no indication that households increase income from non-agricultural economic activities in response to the network expansion but, instead, households increase their specialisation in agriculture. The channel of increased agricultural income does not appear to work through increased herd size overall, but increased profit per animal.
Our results suggest that the expansion of ICT infrastructure is essential for improving the livelihood of the rural population in remote areas and counteracting migration flows to urban centres. The expansion of mobile phone networks supports households in sustaining a livelihood from agriculture by improving their position on the market. Therefore, policies should be directed towards the expansion of mobile phone networks outside of urban centres and in less-developed regions.

Keywords: ICT, income diversity, mobile phone networks, Mongolia, rural development

Contact Address: Svenja Fluhrer, Potsdam Inst. for Climate Impact Research, Telegrafenberg A 26, 14412 Potsdam, Germany, e-mail: fluhrer@pik-potsdam.de

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