Telecommunications Infrastructure and Economic Growth: Evidence from Developing Countries

Abstract

In this study, we investigate empirically the relationship between telephone penetration and economic growth, using data for developing countries. Using 3SLS, we estimate a system of equations that endogenizes economic growth and telecom penetration. We find that the traditional economic factors explain demand for mainline and mobile phones, even in developing countries. We find positive impacts of mobile and landline phones on national output, when we control for the effects of capital and labor. We discuss the associated policy implications related to improvement of telecom penetration in developing countries.

Keywords: Telecommunication, Economic growth, Reverse causality, Developing countries, Telephones

JEL Classification: H54, L96, O47, O57