Telecommunications Infrastructure and Economic Development: A Simultaneous Approach

Abstract

Telecommunications Infrastructure and Economic Development: A Simultaneous Approach *In this paper we investigate 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 the past twenty years 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 micromodel is then jointly estimated with the macro-growth equation. After controlling for country-specific fixed effects, we find evidence of a positive causal link, provided that a critical mass of telecommunication infrastructure is present. ZUSAMMENFASSUNG Telekommunikations-Infrastruktur und Wirtschaftsentwicklung: Ein simultanes ModellIn diesem Beitrag wird untersucht, welchen Einfluß die Telekommunikations-Infrastruktur auf die wirtschaftliche Entwicklung ausübt. Diese wichtige Frage hat im Zusammenhang mit der Diskussion um "Informationsautobahnen" Aktualität erlangt. In der vorliegenden Studie wird der Einfluß der Telekommunikations-Infrastruktur für 21 OECDLänder für die vergangenen 20 Jahre analysiert. Es wird ein Strukturgleichungsmodell geschätzt, in dem Investitionen in die Telekommunikations-Infrastruktur als endogene Variable erfaßt werden und in einem Mikromodell Angebot und Nachfrage nach Telekommunikations-Investitionen spezifiziert werden. Das Mikromodell wird dann zusammen mit der Makro-Wachstumsgleichung geschätzt. Als Ergebnis stellen die Autoren dann eine positive Kausalbeziehung zwischen Telekommunikations-Investitionen und wirtschaftlicher Entwicklung fest, wenn eine kritische Masse an TelekommunikationsInfrastruktur existiert.

Volition versus feasibility: state aid when aid is looked upon favourably: the broadband example

“…Among the pioneers, Saunders et al (1983) established the relationship between communications and the growth of the services industry, which in turn was correlated with that of the GNP. This correlation between economic activity level and investments in telecommunications infrastructures was described by Cronin et al (1991), Dholakia and Harlam (1994) or, more recently, Roller and Waverman (2001), using econometric techniques. However, are telecommunications the cause or the consequence of the level of development?…”

Facility- and service-based competition and investment in fixed broadband networks: Lessons from a decade of access regulations in the European Union member states

“…However, regarding communications markets and broadband markets, in particular, one can first argue that the "Averch-Johnson" effect (too much capital employed) can be expected to be small because service-based as well as infrastructure-based competition has already transformed legacy monopoly-like market structures into more competitive market structures since the beginning of liberalization and sectorspecific regulation. Second, as argued convincingly in the empirical literature (e.g., Czernich et al (2011); Koutroumpis (2009) ;Röller and Waverman (2001); Thompson and Garbacz (2007)), one can expect substantial positive externalities related to broadband infrastructures that are not captured in the markets. incorporates investment data in physical units at the EU27 country-level.…”

Expectations versus Reality: A Case of Internet in Nepal

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