When “more is less”: Connecting for a better life in rural Mexico

A growing body of literature has shown that Internet penetration boosts economic development. However, the impact of mobile Internet coverage on social backwardness is not well-documented, especially in rural settings. On the one hand, mobile Internet coverage reduces transaction costs and facilitates access to new markets, offering significant benefits to remote rural villages. On the other hand, unequal diffusion of the mobile Internet may exacerbate the digital divide, preventing the most deprived villages from taking full advantage of its benefits. Using an ordered probit model with instrumental variables and a dataset that integrates novel and spatial data on the 3G and 4G coverage of major mobile network operators, official information on social backwardness, and data from National Population and Housing Censuses, this paper examines whether mobile Internet coverage impacts social backwardness in rural Mexico considering the endogeneity of Internet diffusion. Our results suggest that mobile Internet coverage reduces social backwardness, thereby helping to mitigate social inequality among populations residing in rural Mexican villages. Moreover, the evidence indicates that the combined presence of both 3G and 4G technologies yields a slightly greater impact on diminishing social backwardness than either technology alone. These findings highlight the need to strengthen public-private collaborations and public intervention aimed at expanding mobile Internet coverage across rural Mexico.