Reuben Abraham on Markets from the Economist Magazine October, 2011
*An ICT4D student has commented and posted about this specific article previously; my goal is to provide an alternative critique of this article, and demonstrate the major flaws with Abraham’s article
This week in class, we continue our presentations and discussions of the various sectors that contribute to ICT development. Today, we had an active dialogue about the state of multi-national firms and businesses, as well as whether or not certain industries and business practices were positively or negatively influencing the developing countries that we focus on.
As part of this week’s dialogue, we read Mobile Phones and Economic Development: Evidence From the Fishing Industry in India from 2007 by Dr. Reuben Abraham, whom posits that mobile phones add an overall increase to the livelihoods of those actively involved in the fishing industry in India. Abraham recognizes previous research by Forestier, Grace and Kenny from 2002, whom found that inequality in the short term increased as a result of disparate access to capital between those at the marketing end of the supply chain and those at the production end. However, Abraham nonetheless attempts to show that individuals actively involved in all facets of the production chain of fishing have experienced an increased sense of safety and security, a closer connection to their loved ones and family, as well a benefit during times of emergencies or illness. This empirical evidence no doubt proves that the mobile, at least as a mere object of daily consumption, plays an integral and treasured role in the lives of fishermen, middlemen, and other players.
Unfortunately, Abraham’s article is initially positioned to determine specific quantitative results proving that the integration of mobile phones reduced risk as well as losses, resulted in less wastage of time and resources by fishermen, as well as aided in the decrease of price dispersion and fluctuation in the marketplace. Not only are these economic conclusions proved misplaced by the empirical and quantitative evidence that Abraham conducts, but also the actual methodology that Abraham uses to conduct these surveys renders any assumptions from his work unfounded and inconclusive.
The first of these market assumptions that he seeks to explore is the notion that mobile phones result in “less wastage of time and resources” by fishermen and middlemen. Abraham notes that the “exploratory data” implies that fishermen should be able to be out at sea for longer periods of time due to the use of mobiles, but unfortunately 50% of those surveyed in the Kerala, India fishing industry did not respond to this question. This lack of conclusive data does not aid his assumption in the least. Additionally, the assumption that mobiles “increased fishermen’s ability to sell their goods in the highest priced markets” was completely undercut by the mere hierarchy within the Indian fishing industry. Due to the relationship between fishermen and the middlemen whom control the commissions from the fish, the fishermen were forced to sell their fish in the markets where the middlemen were able to achieve the highest gains. Unfortunately, this left a gaping hole in the idea that a greater awareness of market prices due to communication from the mobiles would result in a net profit increase by fishermen. Theoretically, this assumption could prove valid in a region where this relationship provides more freedom to fishermen, but as far as Kerala, India and this survey is concerned it is rendered false.
Abraham then attempts to underscore the notion that mobiles result in “decreases in price dispersions and fluctuations”, which would result in greater price transparency along the region. However, due to the inability to collect data in Kerala before mobiles began to be utilized in 1997 (aka: create a control group), it is quantitatively inconclusive to suggest that mobiles have helped to maintain even prices and competition across the region. Abraham’s footnotes add incredulity to the inconclusive, as he post-scripts that market players “would potentially lose subsidies that they currently use” if the data showed “higher incomes than that which was officially reported”.
Finally and perhaps most importantly, the assumption that mobiles helped to reduce risk and losses, which is a valiant and worthwhile market enhancement, was proven by the data to “not translate into increased incomes” by the fishermen. With an equal number of those surveyed responding that they observed both an increase of incomes and no change in their incomes, there was no clear indication that they were reaping a greater benefit from the mobile phone, even though 75% of those surveyed stated that they felt risk had decreased. Additionally, since these phones were not part of any subsidized program or initiative, and since data plans are often paid in a ‘pay-as-you-go” system, if anything the fishermen have witnessed a decrease in income.
Adding insult to injury, Abraham astonishingly mentions in a footnote that those surveyed were “uncomfortable with answering,” honestly, since it seems that they assumed he “was a front for the mobile phone companies”. The potentially catastrophic effects of his lack of proper methodology for this article do not favor Abraham’s market assessment in any way.
What began as an attempt to evaluate the benefits of mobiles in the fishing market in India resulted in demonstrably inconclusive quantitative data, as well as troubling information from an empirical survey that seems to not have been undertaken in a responsible manner. Perhaps there is an industry in the developing world in which mobiles can make an impact, or furthermore, a way to actually increase incomes and achieve higher fishery market results without causing “the poorest of the poor” to suffer initially (better boats and fish freezers perhaps?). But one thing is for sure: it is not the fishing industry in Kerala, India.