Telecommunications Infrastructure and Economic Development: A Simultaneous Approach

American Economic Review · 2001 · Volume 91 · Issue 4

Abstract

In this paper we investigate how telecommunications infrastructure affects economic growth. We use evidence from 21 OECD countries over a 20-year period to examine the impacts that telecommunications developments may have had. We jointly estimate a micromodel for telecommunication investment with a macro production function. 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.

Keywords

Measurement of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence, Telecommunications, Technological Change: Choices and Consequences, Diffusion Processes, National Government Expenditures and Related Policies: Infrastructures, Other Public Investment and Capital Stock

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