Replicating the Mobile Revolution

Daniel F. Runde, Austin Hardman, and Paula Reynal

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Introduction

On April 3, 1973, Martin Cooper, an engineer from Motorola, made the first-ever call on a mobile phone to another engineer at a telecommunications rival company. Fifty years later, the mobile phone is arguably the most transformational invention in recent human history. In just 50 years, the number of people using the device went from zero to more than 7.1 billion as of 2021. Over 91 percent of the world owns a mobile phone, and 90 percent of the world is covered by a commercial wireless signal. Once seen as a consumer luxury, mobile phones have become a near necessity for people of all income levels. More people today have mobile phones than have access to clean water or electricity. Of the roughly seven billion mobile telephone subscriptions around the world, over 70 percent belong to citizens of low- or middle-income countries. According to a Pew Research Center report, approximately 93 percent of people in emerging economies reported that mobile phones help them keep in contact with people living far away. Mobile phones have proved to be more than a tool for communication; they are a catalyst for economic empowerment, and there is no indication that these devices will stop playing a central role in global development.

The mobile revolution is a global phenomenon that has changed how civilization exists and operates. With how commonplace mobile phones are, it is easy to forget the arc in human existence that the technology ignited. Beginning with the shattering of physical boundaries as a restraint for instant communication, the mobile phone revolution has profoundly affected the human experience and processes of societal development. How this transformative technology came to fruition is worthy of inspection and, if possible, replication.

The themes among innovations that have contributed to heightened levels of human flourishing must not be overlooked. Administrative adjustments to public and private development programs to improve efficiency have yet to jolt economies across nations of all income levels and varying quality of institutions to the same intensity as market-creating innovations have. The field of economic development would benefit from organizing and strategizing accordingly.

Administrative adjustments to public and private development programs to improve efficiency have yet to jolt economies across nations of all income levels and varying institutional quality to the same intensity as market-creating innovations have.

Rise of the Mobile Phone

The first commercially available cell phone, the Motorola DynaTAC 8000X, was announced in 1984. The initial demand for mobile phones was, of course, rooted in the ability to have heightened levels of communication and connectivity fit in the palm of one’s hand. Given the capabilities of today’s smartphones, a phone call to the other side of the world may seem rudimentary; however, access to direct global communication channels dramatically improved the productivity of users. The cell phone releases resources by saving time and labor; these newly freed resources can then be devoted to, in the words of Adam Smith, “other wants and fancies.” Research conducted by the World Bank presents causal evidence of the mobile phone’s contribution to local economic growth around the world. The econometric analysis of over 34,000 subnational districts shows that a district moving from no network coverage to full coverage increases GDP growth by 1.8 to 2.2 percentage points on average. From 2000 to 2019, mobile telephony accounted for 10 percent of the $3,000 increase in global income per capita. The mobile phone dramatically increases the human capacity to share information and engage in economic activity, resulting in increased division of labor and more robust economies.

The demand for mobile phones brought with it the demand for supporting infrastructure. There are now more activated cell phones than people on earth, an impossibility at the dawn of the mobile phone due to limited spectrum. Information that is carried wirelessly—whether over a radio broadcast, Wi-Fi, radar, baby monitor, or mobile phone—uses radio spectrum. Intel cofounder Gordon Moore observed that over the history of computing the number of transistors on a microchip doubles approximately every two years, significantly enhancing computer power and reducing costs. This empirical trend is so reliable that the exponential generation of technological capacities such as spectrum is referred to as Moore’s law.

In keeping with the empirical pattern of Moore’s law, technological innovation has repeatedly met demand for greater availability of spectrum to accommodate the expansion of mobile telephony. The first radio broadcast took place in 1920. The first phone call on a mobile phone was made in 1973. The first commercial cellular network was launched in 1983. Wireless local area networks (WLANs) were developed in the 1990s. Wi-Fi products were introduced to the market in 1999. The first 3G cellular networks, which allowed internet connection at faster speeds, were developed in the 2000s and followed by 4G, 5G, and now 6G. Human nature’s craving for connectivity, information, and commerce inspired innovators to conquer the limitations of spectrum.

Similarly, there was new demand for the expansion of mobile networks to reach remote areas and connect people who previously had limited or no access to communication infrastructure. From 2014 to 2020, global mobile service subscribers grew from 3.6 billion to 5.2 billion, with significant increases in Asia and Sub-Saharan Africa. By the end of 2022, the number had reached over 5.4 billion, including 4.4 billion mobile internet users. The rapid increase in mobile service subscribers underscores the pivotal role of mobile technology in bridging communication gaps, fostering economic development, and enhancing access to crucial services in some of the world’s most remote and underserved areas. Although 2.7 billion people continue to lack access to the internet, this number would be far larger if not for the low-barrier technology.

The mobile industry continues to evolve and is expected to add almost $1 trillion to the global economy by 2030. This growth is most notably impactful in developing regions, with private 5G networks expanding the productivity of the industrial and logistics sectors. Furthermore, mobile devices have been at the forefront of digitization worldwide. Mobile phones are usually the first pieces of advanced technology to reach isolated areas. Mobile application developers, entrepreneurs, and start-ups use mobile phones as a vehicle for providing solutions to a myriad of local challenges. For example, the Digital Frontiers program, which is part of the Feed the Future project funded by the U.S. Agency for International Development (USAID), promotes digital methods to combat agricultural pests in Sub-Saharan Africa. The mobile phone continues to help problem solvers better grasp local contexts to tailor the design of mobile applications accordingly.

Transforming the Human Experience and Societal Development

Mobile phones have forever altered how people access government services, education, and healthcare; consume information and media; and navigate the world. Cell phones have played a significant role in empowering economies and individuals, particularly in developing countries. This innovation has affected virtually every aspect of how humans interact with each other and the world around them.

Political Participation and Civic Engagement

Social media platforms not only are a great tool for connection but also have become a vital part of mass mobilization and activism in the twenty-first century. Examples from China, Taiwan, Hong Kong, Egypt, Tunisia, and Latin America demonstrate that social media and internet communication have increased interpersonal political discussions and have indirectly affected political participation. Even when physical mobilization is not possible, mobile phones still contribute to political participation, as increased calls for accountability and transparency force governments to adhere to the voice of the people. Using technology, citizens keep a close eye on their government, express opinions directly to the highest seats of power, and engage with government initiatives. For this reason, a handful of totalitarian states, such as North Korea and Cuba, have imposed harsh internet restrictions.

Mobile phones have played a vital role in promoting transparency, accountability, and citizen engagement in developing countries. In a 2009 study involving 46 African countries, researchers concluded that a higher mobile phone penetration rate is significantly correlated with lower levels of perceived corruption. Mobile-based platforms allow citizens to report issues, provide feedback, and receive public services administered by government entities. For example, the Pakistan passport office sends an average of 15,000 text messages a day to survey all its customers asking if they experienced any corrupt practices. Mobile phones have facilitated voter registration, election monitoring, and dissemination of government information and services. The documentation of human rights violations and journalism more broadly are now more accessible to citizens.

Information and Education Accessibility

With the widespread availability of mobile phones, access to information has become more decentralized. Mobile applications provide anyone anywhere instant access to information once limited to the powerful and wealthy. News, educational resources, banking, weather forecasts—the entire information economy is now accessible via the mobile phone. Instant access to endless information was unfathomable just a few decades ago during a seemingly ancient era when expensive physical encyclopedias had relevance. Now the only barriers to full participation in the age of information are a stable internet connection, electricity, and a fairly basic level of digital literacy.

Mobile phones have also transformed education in developing countries by expanding access to educational resources and learning opportunities. In 2021, more than 220 million students were enrolled in online courses worldwide. Mobile-based educational applications and platforms provide access to online courses, interactive learning materials, and digital textbooks. They enable distance learning, skill development, and literacy programs to reach areas with limited educational infrastructure. By facilitating teacher training and professional development with e-learning platforms, they have helped increase the standards of learning worldwide. In 2023, the UN Global Education Monitoring report showed that about 50 percent of the world’s lower-secondary schools were connected to the internet for pedagogical purposes. Mobile devices will become increasingly popular and will be used to help facilitate teacher training and professional development, empowering educators to enhance their instruction in the classroom.

Most adults in developing economies agree that mobile phones have a positive impact on their children’s education. Geographical location is no longer a constraint. Mobile applications and platforms provide interactive learning experiences, language learning tools, and skill development opportunities, thus enabling continuous learning beyond the traditional classroom. The educational technology market will expand to an estimated $342 billion by 2025. One caveat is that excessive usage of mobile phones reportedly affects students’ comprehension, reading proficiency, and test scores depending on how they are used, making it important for parents and educators to monitor students’ mobile phone activity. The China is addressing this issue in its typical top-down fashion: the Cyberspace Administration of China proposed equipping all mobile devices with a “minor mode” that would restrict screen time based on age bracket.

Health

The gap between doctors and patients is shrinking as telemedicine and online consultations allow individuals living in remote areas to receive medical advice and services. Over 37 percent of adults in the United States used telemedicine in 2021. Between 2015 and 2018, the number of mobile health applications available for download doubled. There are currently thousands of mobile health applications in circulation worldwide. Mobile health applications have positively affected health outcomes such as maternal and infant mortality, treatment adherence, immunization rates, and prevention of communicable diseases. Applications linking patients and healthcare practitioners provide the information necessary for effective healthcare, especially through point-of-care tools, including clinical decisionmaking and patient management. Moreover, mobile health applications and wearable devices help individuals monitor fitness, track health parameters, and promote healthier lifestyles.

Mobile applications and other telemedicine platforms equip individuals in developing nations to consult with doctors remotely, access health information, receive reminders for medication, and monitor their health conditions. In Uganda, the SMS-based mobile health application mTrac uses mobile technology to monitor medicine stocks, helping to prevent shortages. In Kosovo, shortly after the 1998–99 conflict in the Balkans abated, the establishment of satellite links equipped local physicians with current medical literature and websites, replacing decade-old medical journals.

The global community is currently facing a growing threat of noncommunicable diseases, which kill approximately 41 million people each year—71 percent of all deaths worldwide. Mobile phones are predicted to play a significant role in improving healthcare access and delivery, particularly in remote and underserved areas. Mobile phones facilitate data collection and track cases critical for disease surveillance and public health interventions. Telemedicine services will expand, allowing individuals to consult with healthcare professionals remotely, receive medical advice, and access health information. The mobile health market is expecting continuous growth in the coming years and is predicted to exceed $300 billion by 2025. Mobile health applications and wearable devices will continue to facilitate health monitoring, disease management, and behavior change interventions.

Banking

As mobile access has increased, a subsector of innovation has emerged that works to leverage mobile technology in addressing the challenge of financial inclusion. For many in developing nations, mobile phones have made banking and modern finance tools available for the first time. From 2011 to 2021, worldwide, the percentage of adults owning a bank account increased by 50 percent. A sizeable portion of this growth is attributed to mobile money accounts or digital wallet services in the developing world. Mobile phones have become tools for basic financial services such as making payments, transferring funds, accessing credit, and managing their finances conveniently and at low or no cost. In 2022, over two-thirds of adults worldwide made or received a digital payment. Over 1.4 billion mobile wallets are currently in use in Asia alone. Participants in the formal economy expanded as mobile phones became vehicles to significantly lower the barrier to entry.

The use of online banking and mobile payment is expected to increase as banking and financial systems continue to adapt and take advantage of the growing use of mobile phones and innovation continues to cater to local contexts. In Kenya, the mobile phone-based money transfer system M-Pesa, launched in 2007, revolutionized banking and increased financial inclusion. The service greatly affected rural areas, where access to the traditional banking system is limited. A mobile application called bKash, launched in Bangladesh in 2011, became one of the largest mobile services in the world, bringing financial services to the unbanked populations in the country. In the Philippines, UnionBank adopted blockchain technology to streamline its remittance services, making cross-border transactions faster and cheaper, thus freeing capital.

Mobile banking makes accessing finances easier and cheaper. The relative ease with which individuals can buy and use a mobile phone has greatly empowered them economically. Mobile phones will continue to advance financial inclusion and economic empowerment globally, as 1.7 billion people still do not have access to a traditional bank account.

Business and Entrepreneurship

Mobile phones have created opportunities for entrepreneurship, as they serve as tools for small businesses and enable market access for artisans and craftsmen. They have become tools for digital literacy and skill development, providing access to educational resources and online learning platforms. Mobile applications and social media platforms have also enabled individuals to showcase their talents, market their products, and engage in online entrepreneurship, creating new economic opportunities. These opportunities have helped level the field for small and medium-sized enterprises (SMEs). SMEs that use at least three mobile applications in their marketing or operations may see their revenue rise twice as fast as competing SMEs that did not, and they have created jobs up to six times as fast.

Mobile phones have significantly affected the growth of opportunities for business and entrepreneurship in developing countries. By serving as a tool for communication, market research, and access to business information, mobile applications and e-commerce platforms enable small businesses and artisans to reach a broader customer base and engage in online trade. In 2022 alone, retail e-commerce sales were estimated to be over $5.7 trillion worldwide. Through services such as mobile banking and payment, phones have facilitated financial inclusion for entrepreneurs, giving them access to loans, the ability to manage transactions, and the support to expand their businesses.

Energy

Mobile phones have played a key role in addressing the challenge of limited access to electricity in many developing countries. Mobile phones can reduce energy poverty, particularly in rural areas, by raising social capital and increasing “off-farm income,” also termed household consumption. The mobile phone has enabled the delivery of solar energy in off-grid locations in Africa, Asia, and Latin America through pay-as-you-go solar businesses. Mobile phones have also enabled individuals to access and pay for utilities such as electricity, water, and gas through mobile payment services.

Agriculture

The mobile phone has also become a valuable tool for farmers in developing countries by facilitating access to agricultural information, improving farming practices, and enhancing food security. These enable farmers to access market information, weather updates, and agricultural best practices through mobile applications, SMS services, and voice calls. In turn, farmers can make informed decisions about crop selection, pricing, and timing for harvest and sales. Many applications have been created to facilitate this process, including iCow, an app a Kenyan farmer designed to help other small farmers track the gestation periods of their cows in order to monitor their health. Additionally, mobile phones have facilitated mobile-based payments for agricultural produce, reducing the need for cash transactions and improving transparency in the supply chain.

Emergency Response and Disaster Relief

Mobile phones have played, and will continue to play, an important role in assisting in disaster response and resilience-building efforts. During emergencies, mobile networks and communication services are critical for disseminating timely information, coordinating relief efforts, and providing safety alerts to affected communities. Mobile applications will assist in early warning systems, emergency preparedness, and disaster recovery by enabling access to resources, tracking supplies, and facilitating communication.

Tools for Economic Development

The strategies of large economic development entities now prioritize mobile phone penetration, and rightly so: a 10 percent increase in mobile technology is estimated to create anywhere from 0.5 to 2.5 percent growth in GDP. Continued work toward achieving the UN Sustainable Development Goals (SDGs) will rely on mobile phones and the networks they necessitate. The mobile phone industry was the first sector to commit to the 17 SDGs. The construction of the necessary infrastructure will lay the groundwork for a digital economy and continue to act as a catalyst for innovations. Broadband infrastructure will also provide access and connectivity and enable services to sectors that are essential to the SDGs. Mobile technology will assist in addressing challenges related to poverty, healthcare, education, gender equality, clean energy, and other critical areas outlined in the SDGs.

The World Bank sees information and communication technologies as a force multiplier in the effort to end extreme poverty and believes that mobile phones specifically strengthen the ability to address development issues. The promotion of broadband connectivity is one of the key elements of the World Bank’s strategy on how to stimulate demand for digital applications, digital skills, and digital platforms to support governments, businesses, and individuals participating in the digital economy.

There are countless other instances of development programs using and prioritizing mobile phones. The mobile health platform m-mama in Kenya, a project funded by USAID, is an emergency referral system for timely transportation of pregnant women and newborns facing complications. More efficiently moving patients to appropriate healthcare facilities has the potential to save the roughly 6,000 women and 35,000 newborns dying annually during birth.

A Pattern of Prosperity

Given how positive these advances in mobile phone technology are, the specifics of the technology’s mass adoption are of interest to the field of economic development. State initiatives, institutions, infrastructure, and top-down aid approaches have failed to accomplish the same magnitude of improvement as the mobile phone revolution. Studying the distribution of the mobile phone may offer insight into how to approach scaling successful development programs.

Just as Cooper pioneered the creation of the first handheld mobile phone, Iqbal Z. Quadir was the pioneer of mobile mass adoption in Bangladesh. Quadir, founder of Grameenphone, took mobile phone technology to the country at a time when the cost of a cell phone was more than the nation’s GDP per capita. He recognized certain characteristics of the technology that he could leverage in the design of his business model to roll out this expensive technology.

First, the mobile phone is a tool of production: it enables people to free up resources, boost productivity, and, ultimately, increase income. The purchasing power of the consumer is less pertinent for tools of production. Perhaps a familiar scenario is a worker purchasing a car to commute to a higher-paying job in the city. The commuter may not be able to afford the car outright but is willing to take on a monthly car payment because the salary of the new city job justifies the added expense. Recognizing this, Grameenphone partnered with Grameen Bank, a microcredit institution founded by Nobel laureate Muhammad Yunus, to allow its members to take mobile pay phones out on credit and then retail the phones in rural villages. Therefore, the entire village became customers for entrepreneurs taking phones out on credit, increasing access to mobile telephony and all its benefits. The Polli Phone (village phone) program enabled rural women to operate mobile payphones, offering them a source of income and connecting remote populations to the rest of the world. The program’s success was such that it reached 55,000 villages with over 255,000 mobile-to-mobile payphone centers by September 2006, significantly narrowing the urban-rural digital gap.

Second, Quadir recognized the more people who use the infrastructure needed for mobile telephony, the less costly it becomes per customer. This logical assumption, in addition to the price-reducing implications of Moore’s law, explains how Bangladesh went from one mobile phone subscription per 100 people in 2002 to 105 subscriptions per 100 people in 2022.

Established in 1997, Grameenphone was the first to launch prepaid services in Bangladesh and rapidly expanded its network coverage. As is often the case with mobile phone penetration, the impact of Grameenphone and its village phone program extended far beyond the commercial success of telecommunications. What occurred in Bangladesh was not just the selling of mobile phones but the empowering of rural women, facilitation of entrepreneurship, and bridging of the digital divide. The success of Grameenphone in Bangladesh is a compelling example of how market-creating innovation is a vehicle for widespread socioeconomic transformation.

Of course, the mobile revolution did not occur only in Bangladesh. Mo Ibrahim, like Quadir, was a visionary businessman who insisted mobile telephony could be brought to the continent of Africa, where opportunity is too often overlooked. He accomplished this feat not through charity but through investment in a for-profit business. The mobile phone revolution demonstrates the power of innovation tailored to base of the pyramid markets. Entrepreneurs in emerging markets continue to prove how reductions in the cost, time, and skill needed to consume and participate in new technologies can be a force for social good. Private sector entities have incentives to quickly adapt to changing market conditions and consumer preferences, whereas government institutions do not possess the same incentives to create or expand markets. By staying attuned to the pulse of the market, private companies and individuals identify opportunities to drive economic growth and contribute to societal welfare by catering to market needs.

By staying attuned to the pulse of the market, private companies and individuals identify opportunities to drive economic growth and contribute to societal welfare by catering to market needs.

Implications for Economic Development Theory

Theories on what ignites development fail to fully capture the story of mobile telephony, exemplified in Quadir’s success in Bangladesh and the subsequent technological innovations centered on the mobile phone. The economic development field could benefit from incorporating the characteristics contributing to innovations that boost income and quality of life. Institutions and organizations may include mobile phones in various development programs, yet there remains a fundamental gap between what made the mobile revolution so successful and the sometimes-competing priorities of development.

The mass adoption of mobile phones on a global scale was not set into motion by a research grant, a randomized controlled trial, or any other formal development program. While this does not negate the interventions that development institutions currently favor, it does suggest the need to reassess how best to achieve desired development outcomes sustainably (from a business standpoint) and at scale. Development organizations and government agencies would benefit from questioning whether anything can be done to improve the probability and speed of the next globally transformative product.

The dominant theories commonly reflected in development experts’ assumptions submit that the two core drivers of economic growth are institutions and ideas. The leading international organizations, including the United Nations and the World Bank, have adopted the institutional engagement approach in their development aid, channeling resources toward institution building and reform and aiming to create a stable and reliable environment conducive to growth and development. Dissemination of ideas is essential for economic resilience and competitiveness. Strong institutions create an enabling environment in which economic activities better flourish. Rule of law, property rights, and contract enforcement are absolutely fundamental for a stable economic environment. The subsequent political and social stability helps attract investment and mitigates hindrances to economic growth such as corruption. When properly aligned, a nation’s financial, judicial, legal, political, and social systems may act as fertile ground for ideas to grow.

However, studying the mobile phone revolution reveals the incompleteness of conventional development theories. The two dominant theories lack “market-creating innovation,” or “the third answer.” Market-creating innovations do not merely improve an existing good or service or more efficiently produce existing products, as efficiency innovation and sustaining innovation do; products and services that address unmet needs and/or introduce products and services to new populations catalyze economic growth. This feat is not accomplished by more efficiently managing existing resources or creating stable environments but by equipping individuals with the tools and knowledge required to enter into or better participate in economic activity.

Additionally, infrastructure and institutions tend to be the byproduct of such innovations. New markets bring with them new needs for tailored governance, regulations, and support systems. For example, the National Telecommunications and Information Administration, located within the Department of Commerce, was established five years after Cooper made his famous phone call. Incorporating the objective of market creation and expansion versus market management would address the diverse needs of the global consumer base and lead to more holistic and impactful development outcomes.

Additionally, infrastructure and institutions tend to be the byproduct of such innovations. New markets bring with them new needs for tailored governance, regulations, and support systems.

Replicating the Mobile Phone Revolution

The prosperity paradox describes how countries fail to permanently alleviate poverty by treating its symptoms through foreign aid. Rather, market-creating innovations break the cycle of poverty by creating prosperity. Nations with private and public sectors prioritizing innovation see the most economic growth. Therefore, it is in the interest of the public and private sector to adopt strategies that recognize the mobile phone revolution’s implications.

One way development agencies have tried to equip individuals—youth and women particularly—with new or better employment opportunities is through entrepreneurship training. A 2023 study found that incorporating psychological growth mindset training into traditional technical-based entrepreneurship training programs increased entrepreneurial action. The study consisted of a randomized field experiment conducted with 165 entrepreneurs in rural Tanzania. Those who received the growth mindset training exhibited more willingness to take entrepreneurial actions in their businesses compared to the control group. Perhaps scaling growth mindset training would scale the conception of market-creating innovations.

Capital and skills are frequently points of friction for SMEs and entrepreneurs. Capital allocation and workforce development should favor innovative ventures that provide mechanisms for individuals to advance. The innovation and venture capital arm of the Inter-American Development Bank (IDB) Group, IDB Lab, has the correct prioritization of activating new industries in frontier markets, but IDB Lab has only a regional focus. Organizations outside of the Americas should adopt this attitude in seeking to catalyze transformative changes by skilling individuals, scaling ideas, creating new industries, and reshaping existing ones so as to pave the way for a future where innovation is continuous, inclusive, and impactful.

Human potential, like spectrum, repeatedly proves itself to be endless. A goal of development programs should be to set the stage for the next big thing: the creative conglomeration of existing technology that will be the transformative innovation of a fourth industrial revolution. U.S. foreign policy and foreign aid programs should leverage existing and emerging innovations changing the way business is done—such as telephony, cloud-based services, digital services, blockchain, artificial intelligence, and machine learning—to reach people in remote and less economically developed parts of the world.

In the era of great power competition, the comparative U.S. advantage over China and Russia is the ability to use markets to deliver innovative, life-changing services in education, health, nutrition, and employment. Markets are dynamic, efficient, and innovative and are proven to achieve scale, sustainability, and replicability in improving people’s lives. Humanitarian programs, foreign aid, and institution strengthening should all work toward enhancing the probability of the next revolution coming to fruition.