The Economic Importance of Mobile Phone Ownership in Poverty Reduction in the Kyrgyz Republic

Abstract

Reduction of poverty is one of the main challenges of economy. Many studies have investigated the potential impact of mobile information and communication technologies on poverty alleviation from the agricultural perspective on the example of developing countries. However, no research has been conducted to identify the relationship between poverty and mobile communication networks in Central Asian countries. The paper examines the potential effect of mobile phone ownership on poverty reduction in the Kyrgyz Republic. Poverty is measured by daily per capita consumption. The cross-sectional analysis is based on the Kyrgyz Integrated Household Survey data of 2010. An endogenous switching regression model that considers both observable and unobservable factors that may affect households’ decision to own mobile cell phones, is applied to examine proposed estimating model. The findings of this study illustrate significant and positive relationship between mobile phone ownership and daily per capita consumption. Moreover, the sample households’ decision to own mobile phones is based on demographic, economic and social factors such as fixed landline connection availability, household size, age of the household head, years of education of the household heads, owned land, remittances, off-farm work employment, and peer households that own mobile cell phones.