Infrastructure and rural development: insights from a Grameen Bank village phone initiative in Bangladesh^⋆

Abstract The intention of the present paper is to evaluate the role of telecommunications within the contexts of rural development in general and of poverty reduction in particular. Bangladesh has been selected as a case study due to the uniqueness it displayed in an innovative program for expanded telecom infrastructure, in which Grameen Bank (GB) of Bangladesh, the village‐based micro‐finance organisation, leased cellular mobile phones to successful members. GB calls these phones village pay phones (VPPs). The effects of VPPs are assessed from two angles: sellers of services (telephone lessees/owners) and buyers of services (villagers). The findings of the study lead to two basic conclusions: first, pursuance of pragmatic policies can turn telephones into production goods, especially through lowering transaction…