Rule of Law, Regulation and Growth of Mobile Telecommunications

21 Pages Posted: 7 Dec 2008 Last revised: 25 Dec 2013

See all articles by Adam Candeub

Adam Candeub

Michigan State University - College of Law

Brendan Michael Cunningham

U.S. Naval Academy; Eastern Connecticut State University

Peter J. Alexander

Federal Communications Commission

Date Written: December 5, 2008

Abstract

Motivated, in part, by the new "rule of law" paradigm in development economics, we examine the role of institutions, broadly defined, on the rate of mobile network build-out. We find that the "strict" rule of law (i.e., strong protection of private contract and property) does not exhibit a statistically significant relationship with mobile network growth. More macro-level regulatory policies, however, ranging from lower tariffs, modest import controls, and lower levels of foreign ownership restriction are significant positive correlates of network growth. These findings suggest that a non-democratic regime with a "correct" set of regulatory policies might experience substantial network growth, relative to the international average - without providing strong "classical" protections of private contract and property rights. In addition, we find that corruption and state capture correlate significantly and negatively with mobile network growth. Plausibly, state capture and corruption increase the cost of doing business and these higher costs may slow growth, or preclude it altogether. Finally, examining cultural determinants of network growth, we find that our coefficient on language fractionalization is negative and significant, which implies that nations with greater language diversity experience slower network growth. Plausibly then, network growth in a numerically large, but linguistically heterogeneous, population may be smaller than predicted absent this consideration. Finally, we observe that real GDP per capita is positive and significant, a finding shared with multiple studies exploring growth rates of mobile networks, and economic development more generally.

Keywords: Mobile communications, development economics, institutional economics, network growth

JEL Classification: O017, P16, K23

Suggested Citation

Candeub, Adam and Cunningham, Brendan Michael and Cunningham, Brendan Michael and Alexander, Peter J., Rule of Law, Regulation and Growth of Mobile Telecommunications (December 5, 2008). MSU Legal Studies Research Paper No. 06-19, CELS 2009 4th Annual Conference on Empirical Legal Studies Paper, Available at SSRN: https://ssrn.com/abstract=1312022 or http://dx.doi.org/10.2139/ssrn.1312022

Adam Candeub (Contact Author)

Michigan State University - College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

Brendan Michael Cunningham

Eastern Connecticut State University ( email )

Willimantic, CT 06226
United States

U.S. Naval Academy ( email )

Department of Economics
589 McNair Road
Annapolis, MD 21402
United States
410-293-6894 (Phone)
508-302-2596 (Fax)

Peter J. Alexander

Federal Communications Commission ( email )

Washington, DC 20554
United States

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