Does Political Accountability Matter for Infrastructure Regulation? The Case of Telecommunications

Abstract:     
This paper discusses the link between political accountability, regarded as an important aspect of institutional design, and infrastructure regulation that has been emphasized in the recent literature on the role of institutional on economic development. We report the findings and lessons drawn from an analysis of telecommunications data covering the period 1985-1999 on two sets of countries; one comprising of 29 developing countries and the other of 23 developed countries. The main point highlighted by the analysis is that infrastructure regulation in any country cannot be independent of the institutional environment, in particular, the degree of political accountability that supports the country institutions. The argument is demonstrated by means of an econometric estimation of dynamic panel data models that shows evidence of a significant effect of pro-political accountability factors on regulatory performance as reflected in measures of sector output and efficiency. Expectedly enough, this effect is found to be more pronounced in the developing countries data set. A key poliy implication of this result is that efforts to enhance institutional quality and support politically accountable systems in developing countries should yield large benefits for infrastructure regulation.

Number of Pages in PDF File: 14

Keywords: Infrastructure Regulation, Regulatory Performance, Political Accountability

Accepted Paper Series