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Discussion Paper Details

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Title: Telecommunications Infrastructure And Economic Development: A Simultaneous Approach

Author(s): Lars-Hendrik R�ller and Leonard Waverman

Publication Date: March 2000

Keyword(s): Economic Development, Economic Growth and Telecom

Programme Area(s): Industrial Organization

Abstract: This paper investigates how telecommunications infrastructure affects economic growth. This issue is important and has received considerable attention in the popular press concerning the creation of the 'information superhighway' and its potential impacts on the economy. We use evidence from 21 OECD countries over a twenty-year period to examine the impacts that telecommunications developments may have had. We estimate a structural model, which endogenizes telecommunication investment by specifying a micro-model of supply and demand for telecommunication investments. The micro-model is then jointly estimated with the macro-growth equation. After controlling for country-specific fixed effects, we find evidence of a significant positive causal link, especially when a critical mass of telecommunications infrastructure is present. Interestingly, the critical mass appears to be at a level of telecommunications infrastructure that is near universal service.

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Bibliographic Reference

R�ller, L and Waverman, L. 2000. 'Telecommunications Infrastructure And Economic Development: A Simultaneous Approach'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2399