Cellular Technology and the Global Economy: The Overall Impact

Submitted By:
Shivendra Singh Baghel (SM0113046)

Faculty in Charge:
Mr. Nayan Jyoti Pathak
Assistant Professor of Economics

National Law University and Judicial Academy, Assam

31st October, 2015
Table of contents
1. Introduction
1.1 Scope and Objectives
1.2 Research Methodology
1.3 Literature Review
2. Evolution of Cellular Technology
2.1 Pre industrialization scenario
2.2 Growth of cellular technology
2.3 Post industrialization scenario
3. Impact of Cellular Technology in Contemporary world
3.1 Global effect
3.2 Effect in India
4. Cellular Technology and the economic growth
4.1 Online Business
4.2 Contribution to GDP
5. Case study of India
6. Conclusion
Bibliography
 Chapter 1
Introduction
Mobile Phones have changed the scenario of the modern world and have negotiated the
relationship of humans with friends, family and relatives etc. Increased levels of mobile phone
subscriptions are linked with improvements in education, gender equality and political
participation, particularly in developing countries. They are also associated with higher
economic growth. There have been various findings and researches that show the growing
impact of mobile technology on the global as well as domestic market of India which explores
the ways in which mobile technologies influence economics, society and peoples private lives
across 10 countries the UK, Germany, Italy, Spain, China, India, Turkey, Egypt, Kenya and
South Africa.
The report Mobile Technologies: The Digital Fabric of Our Lives, commissioned and
published by the Vodafone Institute for Society and Communications bases its findings on
numerous sources like relationships, economy, health and political participation. Mobile
technologies contribute significantly to GDP growth, with a forecast range of between 1.8% in
the UK and 1.2% per 10% tele density in India over the years 2010-2020, compared with
todays GDP. Again, the effects will be larger in developing countries. The effects of increasing
mobile phone subscriptions on GDP growth across 10 countries are all positive for the years
2010 to 2020, forecast to grow continuously in this period. Mobile phones enable new services
and applications that provide opportunities to generate income. With the growing sector in
mobile services in India it provides a wide range of employment and e0conomy generated
which further helps in the growth of National income.
In this research project the author will try to analyse the growing market of mobile
telecommunications globally and the effects of this growth on the market in terms of
employment and economy generation and the overall contribution of it to the domestic and
overall economy.
1.1 Scope and Objectives
1.1.1 To understand the impact of technology on the society during the different phases of
industrialisation and its indirect effect on the economy of that time.
1.1.2 To know the impact of growing technology in India and its effect on the GDP of the
country.
1.1.3 To understand the various other sectors of the economy related directly or indirectly
to the economy of India and its annual contribution to the economy and the effect it
creates on the global market.

1.2 Research Methodology

The research methodology followed here is that of doctrinal research. Data collected is from
both Primary and Secondary sources. Various Report, article, books, and newspaper had been
used in the completion of the project. The library also proved to be very helpful for the same.
The bibliography enumerates some of the sources used for the completion of the project.

1.3 Literature Review

i. K. Ravishankar, International economics, Black Prints Publications, New
Delhi, 2013
This book gave an elaborate description of the growing impact of the cellular
technology on the society globally and also the effect the growing mobile
technology can create on an economy.
 Chapter-2
Evolution of Cellular Technology
Cellular technology is one of the fastest growing sector in today's world. During the last 25
years it has shown exponential development globally amounting from zero to 4.8 billion mobile
subscribers in the world, which is more than double the number of xed line subscribers and
amounts to a higher than 60% penetration. In 1983, the first commercial telephone system was
developed by U.S.A. that was the analog service called 'Advanced Mobile Phone Service
(AMPS)'. Today, digital cellular telephone services are available throughout the world, and
have well surpassed xed-line telephone services both in terms of availability and number of
users. This wide spreading and fast developing use of the cellular technology since then has
shown the need and desire of the people to connect with other people around the world with
the use of a device to narrow the gap and also to explore the vast arena of the technology which
the cellular world has to offer in form of internet and cellular services.
The effects of technology have more fully materialised in more developed nations, mobile
technology continues to deliver strong benefits to the developing nations as well. Cellular
technology and economic growth work hand in hand in any economy as it plays a major role
in building that economy through direct and sometimes indirect contribution to various
important sectors like communication, agriculture, social inclusion and increases various other
economic and activities and productivity in health, education and finance. It carries a lot of
influence in determining the Gross Domestic Economy of any country as most of the growing
entrepreneurs, industries and companies are depended on the service providing of the cellular
companies as they provide new services and applications, opportunities to generate income. It
has transformed the way in which consumers and businesses operate in the developing markets
globally.
The effects tend to be greater in developing countries. This is explained by the significantly
higher growth rate of mobile phone subscriptions in those countries. In practice, mobiles fill
the vacuum that other poor or non-existent infrastructure in these countries leaves wide open.
It is therefore not surprising that many mobile-related innovations are adopted more rapidly in
developing countries. Mobiles are also often the first and only means of communication
without traveling under difficult circumstances.
In developed countries, there are small effects in mobile subscriptions growth. In these
countries, the effects are likely to be less pronounced due to lower growth in mobile phone
subscriptions in the coming years and generally good infrastructure.
2.1 Pre-Industrialization Scenario
Change is the law on nature, nothing is static and stagnant and subject to change depending on
the need and necessity of the people. Similarly, new technologies are a major source of change
in the societies. Modernization deals with social change from agrarian societies to industrial
ones, so it is important to look at technology changes across contexts. The Agricultural
Revolution led to agricultural cities in the ancient world in the Middle East, Mesoamerica,
China, the Indus Valley, Southern Europe and South America. Then the Industrial Revolution
led to industrial cities in the 19th century such as Manchester, Newcastle upon Tyne and New
York City. In the 20th century the rise of the service economy caused people to leave the
industrial cities and move out into the suburbs.
The Industrial Revolution and Digital Revolution are now taking place concurrently in China
and India as people leave the rural areas for industrial and high tech cities like Beijing,
Shanghai and Mumbai.

2.2 Growth of cellular technology

From basic analog (1G) wireless simple cell phones, it was not until late 1990 that cell phones
turned into more sophisticated devices that the technology inside them began to clear a growing
number features (features that nonetheless seem basic by today's standards). These early
phones have basic call capabilities for their mobile users and practical skills are what has
created the most widely used communication devices them. It was not until the mid to late
1990s, a new communication network, known as GSM-2G or, as it was less frequently called-
began to develop in which the most mobile services could be offered. At this point, the first
pre-smartphone devices started to appear, and the fact that data transmission on these next
generation devices were digital instead of analog allowed them to achieve many of smartphone
more features Basic we use as the basis for modern application development. Features such as
text messaging, downloadable content, and extremely basic Web access has given consumers
the ability to send emails, view a small selection of online multimedia, and download digital
applications such simple ringtones and music files.
The growth of GSM, or 2G, is what has really expanded the use of the mobile phone so broadly
as mobile devices finally eclipsed fixed communication tools. Despite the explosive popularity
2G networks among users of all income levels around the world, these machines were still
pretty basic compared to today's mobile devices.
2.3 Post-Industrialization Scenario
Mobile technology is the technology used for cellular communication. Mobile code division
multiple access (CDMA) technology has evolved rapidly over the past few years. Since the
start of this millennium, a standard mobile device has gone from being no more than a simple
two-way pager to being a mobile phone, GPS navigation device, an embedded web browser
and instant messaging client, and a handheld game console. Since the mid 1990s the cellular
communication industry has witnessed explosive growth. Wireless communication networks
have become much more pervasive than anyone could have imagined when the cellular concept
was first developed in the 1960s and 1970s.The wide spread adaptation of wireless
communication was accelerated in the mid 1990s, when governments throughout the world
provided increased competition and new radio spectrum licenses for personal communication
services.
After what might be described as a humble start, growth in Indias mobile sector rapidly picked
up pace and developed a sustained momentum, aided by higher subscriber volumes, lower
tariffs and falling handset prices. The growth in Indias booming mobile market mobile market
effectively stalled during 2012 and the market looked quite subdued coming into 2013. Mobile
operators had added 370 million new subscribers to their networks in 2010/2011, an average
of 15 million per month over that two year period, to bring the total number of subscribers to
around 900 million by the start of 2012. The year heralded the start of a somewhat erratic period
in the development of the subscriber base that saw 2012 end with just 865 million subscribers.
The drop in subscriber numbers was a combination of falling customer demand and the effect
of operators cleaning out their data bases. By 2014/2015, the market had sorted itself out to
a large extent and subscriber growth was running at a steady 7% per annum. In the meantime,
there has been a major push to take mobile services into the poorer and rural areas of the
country, a move that inevitably weighed down on ARPU.
 Chapter-3
Impact of Cellular Technology in Contemporary world
Todays world has been reduced to a global village with the digitalisation of the society and
the power to connect to every other person living in any part of the world. Some of the biggest
effects of technology are in the field of communication; through the Internet and mobile
phones. It is the advancement of communication and the expansion of economic trade. Thanks
to the information technology, working performance is amplified with less effort and greater
productivity using various operations. The advancement of science and technology enable mass
communication today so that we not only television, radio and in newspapers, but even mobile
phones which makes a versatile service; long distance calls, listening to radio and music, play
games, take pictures, voice and video recording and Internet browsing. The benefits we get as
a result of ICT services have become commonplace in our generation today. It improves the
level of production of individuals and workers because knowledge of people's lives beyond the
area where they lived in is now unlimited. This idea of mass communication also affects deeply
the political as leaders now have many ways that they speak directly to the people. Apart from
going on the air using radio and television, politicians have used social media for some of their
comments and policies of the campaign. Protests and revolutions information is disseminated
online, especially through social media. This caused political turmoil and led to changes of
government in most countries today.

3.1 Global Effect

Todays world is a global village and it is the need of the hour to be connected to every other
nation in the world where one is having their businesses and other occupations which is only
possible through means of advancement of mobile technology. Modern cellular technology has
changed the way many companies produce their products and managing their business. The
idea and the use of video and Web conferencing, for example, has helped companies to
eliminate geographic barriers and gave them the opportunity to reach employees and customers
around the world. In today's economy, businesses it has helped reduce the cost and
inconvenience of travel, to meet them as often as they might like without having to worry about
finding the budget to adjust . Modern technology allows companies to reduce their carbon
footprint and become green due to the fact that almost everything can be done from a computer.
Modern technology has indeed been great for Third World countries, however, it was
difficult, especially the production area.
3.2 Effect in India
In India, mobile communication services have become an essential part and life line of
economies, and the mobile telecommunication sector continues to offer unprecedented
opportunities for economic growth in both developing and developed markets. There has been
a very deep and penetrated relation between mobile technology and economics in the Indian
society.
The certain benefits of increased mobile penetration in the growing economy like India are:
1. Productivity gains to individuals: use of mobile phones increases the productivity gains
in the business and service sector of any economy which are primarily based on the
efficiency levels of the individuals. This be quantified in terms of time and money saved
due to avoidance of travel and saving of time.
2. Productivity gains to businesses: mobile phones prove to be a very fast medium for
communication and logistics etc. and help up in doubling up the productivity like Sales
Force Automation, ERP data input devices, etc.
3. Inclusive financial services: Mobile technology has the potential to expand the reach of
financial services to the poor. Branchless banking using mobile phones and a network
of third-party agents (e.g. post offices, small retailers) can reduce the two biggest costs
associated with the provision of financial services: construction and maintenance of a
physical presence, and manipulation of small transactions. A new area of interest is
microfinance that was made popular by Gramin Bank. Micro-finance using mobile
phones can significantly reduce the cost of funds to a financial institution.
4. Remittance: Remittances play an important role in the development of developing
countries. Mobile phones can play an important role in this market by making it quick,
cheap and easy to transfer funds. Currently, remittances through traditional money
transfer operators like Western Union and MoneyGram is expensive, with fees as high
as $ 16 to send $ 100.19 poor migrants send small amounts of money , so these costs
are very regressive. In the Philippines, wireless providers such as Smart
Communications allow Filipinos working abroad to send money in minutes with a text
message for a fraction of the cost of money transfer operators.
5. Empowerment of poor: Advent of mobile technology to rural areas in India has
increased access to education and health services, and provide a forum for interaction
with government services. Governments across the world are likely to look at mobile
industry to fulfil its basic responsibility. M-Governance would also help reduce the
 corruption as middlemen would not be required for information from government
departments.
6. Women empowerment and security: Mobile phones in hands of women have played a
very keen and important to ensure the security and wellbeing of a woman in the country.
A country develops faster if its women folks feel more liberated and empowered to take
decisions about their kids and family. Mobile is their window to the outside world.
Many women would get the first experience of internet on their mobile. The knowledge
would ultimately unshackle them, liberate them and help them take informed and
confident decisions.
7. Emergencies: There is more likelihood of an emergency in the development of the
nation to a developed country. The emergency response infrastructure is also lacking in
developing countries. Mobile phones reduce time to mobilize response teams
8. Foreign direct investment: Williams (2005) The relationship between mobile
telecommunications and FDI infrastructure in Africa study shows that FDI tends to be
higher in countries where mobile penetration is high.
 Chapter-4
Cellular Technology and the economic growth
Most investments in infrastructure, including telecommunications can favourably influence the
economy in several ways. First, it reduces the cost of production and increases revenue for
reinvestment by companies. The productivity gains made possible with the use of phones
increasing productivity in all industries. Similar to other infrastructure investment, investment
in telecommunications will increase the demand for goods and services used in their production
and increase the total domestic production. These investments may increase employment
through direct and indirect effects. The impact of telecommunications on growth plays a major
role in determining the GDP of the growing economy like India because a lot of section of
people in such developing country are depended on the growing use of technology for easy and
efficient development. Reduced per line cost, quick deployment and better available
technology are reasons for the spectacular growth of cellular services observed in developing
countries.

4.1 Online Business

Mobile technology allows companies to have an unprecedented level of connectivity between
employees, vendors, and/or customers. Workers can download applications on their mobile
devices that allow them to connect with others through social media such as LinkedIn,
Facebook and Twitter; or the firm can use native or web-based applications to enable direct
communication with these audiences in a variety of ways. Real-time communication with the
office can be important in delivering business benefits, such as efficient use of staff time,
improved customer service, and a greater range of products and services delivered. Examples
might include:
1. Making presentations to customers, and being able to download product information to
their network during the visit.
2. Quotations and interactive order processing.
3. Checking stock levels via the office network.
4. Interacting with colleagues while travelling - sending and receiving emails,
collaborating on responses to tenders, delivering trip reports in a timely manner.
Organizations that embrace mobility for business purposes likely will become not just more
efficient, but also places where more people want to work. This could be an edge for employers
in the increasing competitive challenges of recruiting and retaining talent in the coming decade
4.2 Contribution to GDP
Mobile economy in India, the second largest market in the world by subscribers, will contribute
approximately $ 400 billion to Canada's GDP and create 4.1 million jobs by 2020, a report by
the moving body of the industry worldwide operators GSMA said today. Economy Mobile will
also lead to investments of $ 9 billion in telecommunications infrastructure. The Indian mobile
industry is fast and innovative, but it currently lacks the regulatory environment to support its
ambitions.
In India, there are currently 900 mobile connections MN, representing 25% of total mobile
connections in the Asia-Pacific region. This clearly indicates the strong demand for mobile
phones in the country. The penetration of mobile telephony is 72% and is increasing. The
increase in mobile penetration in India could be attributed to the availability of cheap phones
with very low cost tariff plans. India is the second largest market in terms of mobile connections
and unique subscribers worldwide. And to add fuel to the growing number of users, and the
price per minute decreases. Digital India in the next 10 years will have a $550 billion to $1
trillion impact on the GDP resulting from the use of intelligent applications of technology. This
is 20-30 per cent of Indias incremental GDP growth and 3-6 times the current economic
contribution of the industry itself. The impact technologies are going to have on the industries
like manufacturing, financial services, government, energy and agriculture is expected to be
between $16 trillion and $39 trillion in the next 10 years.
 Chapter-5
Case Study of India
Some of the main statistics of the development of mobile technology in India are as follows:
1. Indias mobile subscriber base grew by 7% in 2014 and was growing at a similar rate
in 2015;
2. Mobile penetration had reached 77%, with room for further growth;
3. Mobile ARPUs appeared to be stabilising and even seeing modest growth;
The mobile sector makes a huge contribution to the economy, through direct employment;
enabling an ecosystem of mobile products and services providers; and productivity gains that
mobile technology offers the entire economy of India. Together, these contributions amounted
to 5.3% of GDP in 2012. In terms of employment, the mobile ecosystem contributes directly
to 730,000 jobs and two million additional jobs when the points of sale and distributors
included. In developing markets like India, increase in mobile penetration benefit gross
domestic product (GDP) growth per capita and boost country productivity.
In 2020, the mobile could contribute almost Rs21.6 lakh crore ($ 400 billion) to GDP of India,
the creation of additional jobs 4.1 million, and the important contribution generation through
investments of infrastructure (Rs48,300 crore / US $ 9 billion) and public financing (RS1.8
lakh crore / US $ 34 billion).
In India, the mobile technology creates a great impact on various sectors of the society such as
on healthcare, education, finance and agriculture. Only with a sustainable mobile industry in
India able to achieve the vision outlined in the country's national telecommunications plan -.
"To provide secure, reliable, affordable and high quality converged telecommunication
services anytime, anywhere accelerated the inclusive socio-economic development.
The increased penetration of mobile technology in India will bring with it many social and
economic benefits. In agriculture, mobile solutions to improve yields and provide better access
to markets. Better access to health care and mortality reduction are facilitated by mobile
solutions, while technology brings mobile financial services to rural and disadvantaged
communities. Meanwhile, mobile solutions, education for all is a goal that is increasingly
within reach. In agriculture, mobile solutions create the potential for increased productivity and
greater access to markets. Increasing access to healthcare and reduced mortality will also be
facilitated by mobile solutions, while mobile technology brings financial services to unbanked
rural and underprivileged communities. Meanwhile, with mobile solutions, education for all
is a goal that is increasingly within reach.
 Chapter-6
Conclusion
We now live in a world shaped and defined by our ability to reach friends, loved ones, business
partners and the legions of people in our networks no matter where we are and no matter how
far away they may be. And we dont just reach into our pockets and pull out a device that lets
us talk with one another. Now, the mobile technology behind this age of connectivity isnt just
enhancing and defining our daily lives, it is guiding and enriching our communities and our
world on a macroeconomic level. Meanwhile, in the six countries surveyed, the annual value
of mobile gross domestic product, or GDP spending on mobile devices, mobile connectivity
and mobile commerce is more than $1.2 trillion. Yes, trillion. The United States has the
largest absolute GDP, $548 billion, or about 3.2 percent of GDP, which exceeds the economic
contribution of the auto industry. BCG also calculated the aggregate value of mobile
technologies the value derived by consumers from use of their wireless devices to be
roughly $6.4 trillion.
Mobile technology is especially valuable for consumers in emerging markets. BCG reports that
in China and India, the value to consumers exceeded 40 percent of their annual income.
It also levels the playing field for small and medium-sized enterprises, the report found. SMEs
that reported using at least three mobile applications in their operations or marketing and sales
work saw revenue rise two times faster than other similarly sized firms and created jobs up to
six times faster than their peers. In emerging markets, mobile tech is allowing SMEs to leapfrog
older generations of technology still widely used in more industrialized countries, and the
percentage of these mobile leaders in China, India and Brazil is higher than in their more
developed counterparts. And that, the study concludes, offers a roadmap for future
development technologically and economically.
Bibliography
Books and Articles:
1. Ravishankar K., International economics, Black Prints Publications, New Delhi, 2013

Online Sources:
1. www.jstor.com
2. www.shodhganga.com
3. www.legalserviceindia.com