# **4. Economic transformation of individuals’ welfare**

The role of ICT adoption in promoting economic development has been studied from a wide range of perspectives including the effects on market outcomes, poverty, income inequality, and human capital formation. In this section, we engage with studies particularly associated with the effects of ICT adoption on income and wealth equity, as well as its effects on social and human capital formation and correction of market failures that could ultimately affect consumer welfare. Moreover, ICT can also foster opportunities to promote human development through the creation and communication of new knowledge, impacts on agricultural production, and increased connection with the rest of the world (Heeks 2010; Prado et al., 2011). As devices that increasingly rely on mobile broadband technologies, such as smartphones, have become more widespread there has been a significant change in consumers’ access to information (Rennhoff and Routon, 2016). For instance, according to Aker and Mbiti (2010), services such as text-messages are helping development in SSA by increasing access to information on a wide range of topics like communication about fair prices, HIV/AIDS medicine provision and reminders, and crime reporting.

Carabregu et al. (2019) study the re-distributional effects of mobile phone and network penetration by looking at the correlation between mobile broadband and income inequality in Western Balkan countries (Albania, Bosnia, Serbia, among others). The analysis uses as dependent variable income inequality, and cell phone diffusion as one of the predictors, and finds that a 1 percent increase in mobile penetration decreases the Gini index between -0.049 and -0.055 points. In addition, Iqbal et al. (2019) study the correlation between ICT adoption and the Human Development Index (HDI) in South Asian countries during 1990 and 2016. The authors find a positive and significant effect of mobile phone usage on human development. Namely, the findings suggest that a 1 percent increase in mobile phone penetration leads to a 0.12 percent increase in the HDI while internet penetration is not identified as a significant predictor.

Some studies point to the money-making effects of ICT adoption while others place them as a financial burden for the poorest, potentially increasing inequality. For example, Heeks (2010) analyzes various works that look at the relationship between ICT and poverty. The author highlights studies that find a positive association between ICT adoption and money-saving and money-making effects among the poorest (Abraham 2007; Levy et al. 2010). However, such findings are not clear when looking at different technologies. For instance, Scott et al. (2005) conducted a study on the economic impacts of mobile phone usage in India, Mozambique, and Tanzania and found that poor users of mobile services allocate a larger portion of their income towards mobile phones compared to higher income groups, indicating that mobile telephony represents a financial burden for the poorest. Additionally, they found that mobile phones are primarily seen as a means to save money rather than a source of income. Similarly, Malásquez et al. (2021) note that in countries such as Mauritania and Senegal lower welfare quintiles spend a higher share of their income on mobile services than the top quintiles. Furthermore, other studies associate mobile phones with an increase in inequality and poverty. For example, Mpogele et al. (2008) conduct a survey in rural areas of Tanzania to examine how people perceive the relationship between mobile phones and poverty; the results revealed that although people do not see direct financial benefits from mobile phone usage, there are indirect 13