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Mobile Broadband Internet Increases Household Income in Vietnam

By Guest Writer on March 27, 2024

mobile broadband household income

New developments of existing technologies over time have led to emergent patterns of technology adoption and accordingly changing impacts on economy and society. Mobile internet and income improvement: Evidence from Vietnam by Trang Thi Pham focuses on the arrival of mobile Internet in the early 2010s in developing countries, and identifies significant positive effects of mobile Internet on provinces’ average household income in Vietnam.

The effect sizes are larger for lower-income quintiles groups and for rural areas, suggesting the more inclusive changing impact of the innovation over the last decade. Additionally, there is preliminary evidence of impact mechanisms via skilled employment rates and (formal) wages.

The evidence from Vietnam, a lower middle-income country, can bring further understanding in the extent of development impacts of second-generation mobile for development in particular and ICT4D in general.

Mobile Broadband in Vietnam

Among developing countries, Vietnam’s smartphone penetration rates have been among the top 10, reaching 71% of the total population in 2017. Percentages of individuals using the internet has surpassed the upper-middle income country average since 2017

Mobile Internet users account for the majority of Internet users in Vietnam; with 68% of the population getting online via smartphone more often than desktops/laptop or PC. In 2017 smartphone penetration rates were 84% for key cities and 68% for rural areas, suggesting a small but real digital divide between urban and rural.

In Vietnam, the activities that smartphone users do the most often weekly are 1) watching videos; 2) social networking; 3) using search engines; 4) playing games; 5) looking for product information; and 6) purchasing products and services.

For daily use, besides the aforementioned activities, people also check mail, view maps, e-banking, read book, and check health. Regarding online commerce, online shoppers in Vietnam in 2017 were estimated to be over 35 million people, with 72% of total visits on e-commerce websites and 53% of purchases being made using mobile phones

Mobile Broadband Increases Household Income

Mobile broadband coverage has positive effects on household income. The paper found that as 3G towers increased – a proxy for greater mobile broadband availability – poor Vietnamese benefited more and all Vietnamese benefited somehow.

  • For the poorest Vietnamese, ten percent increase of number of 3G towers per thousand population per province will cause 0.6 percent rise in household income per month, or 7.2% per year.
  • For the next quintile group, ten percent increase of number of 3G towers per thousand population per province will cause around 0.9 percentage points rise in household income per month, or 10.8% per year.
  • Nationally, a ten percent increase in the number of 3G cell towers per thousand population per province will cause approximately 0.4 percentage points increase in household income per month, or 4.8 percentage points per year.

Rural households, who typically have multiple income streams but are still poor, may stand to benefit more from mobile digitalization in three ways.

  1. More Businesses: Lowered expenses associated with doing business from distance thanks to mobile communication, mobile banking, online marketing, more businesses can be established in rural areas, possibly serving nationwide or urban market.
  2. Lower Costs: Business costs will also be reduced while sales can be promoted with increased efficiency of transportation and logistics. The paper identified positive significant outcomes of mobile internet and transportation volumes for both passenger and freight services.
  3. Greater Sales: e-Commerce platforms and social media can help rural citizens to market and sell their products online. Fourth, remittances and social transfers have been increased through more (im)migration (thanks to more information and cheap communication) and monetary flows (via mobile banking with lower fees and more user-friendly utilities).

There is no data on informal wages, self-employment or entrepreneurship, migration and remittances, which needs further study. These may benefit both rural areas and urban areas though still with stronger effects for rural regions.

Mobile Internet Improves Income

Mobile internet and income improvement: Evidence from Vietnam by Trang Thi Pham contributes further evidence for M4D particularly for developing countries.

In Vietnam in the last decade the technologies have produced more inclusive impacts for the lower-income groups and for rural areas. These groups in particular have skipped PCs and used smartphones as the only device to integrate into the digital world.

This paper offers new evidence of stronger effect sizes and additional impact mechanisms of the new smartphone generations which have better quality and more functionalities with a growing app ecosystem. It shows that mobile internet can offer a pathway for improvement on livelihoods (income, employment) and productivity (wages), not only on welfare (consumption).

Now read related academic research, including: How Mobile Broadband Internet Reduced Poverty in Rural Tanzania and Now Scientific Fact: Mobile Money Can Lift Women Out of Poverty.

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