The impact of mobile phone coverage expansion on market participation: panel data evidence from Uganda

Uganda has experienced recently a rapid increase of area covered by mobile phone. As the information flow increases due to the mobile phone coverage expansion, the cost in crop marketing is expected to decrease, particularly more so for perishable crops, such as banana, in remote areas. We use panel data of 856 households in 94 communities, where the number of the communities covered by the mobile phone network increased from 41 to 87 communities over a two-year period between the first and second surveys in 2003 and 2005, respectively. We find that the proportion of the banana farmers who sold banana increased from 50 to 69 percent in the communities more than 20 miles away from district centers after the expansion of the mobile phone coverage. For maize, which is another staple but less perishable crop, we find that mobile phone coverage did not affect market participation. These results suggest that mobile phone coverage expansion induces market participation of farmers who are located in remote areas and produce perishable crop.

Muto and Yamano (2008)



Rural.Fixed-effects instrumental variable estimation.Expansion of mobile phone coverage.Participation of farmers in marketing bananas (a perishable crop) increased from 50-69% in communities more than 20 kilometers from district centers. No effect on participation of maize marketing (a less perishable crop). in 94 communities where information was collected about men and women in HH.