The Determinants and Impact of Telecommunications Reforms in Developing Countries

Toulouse School of Economics Working Paper No. 92

41 Pages Posted: 31 Jan 2011

See all articles by Laura Recuero Virto

Laura Recuero Virto

OECD Development Center

Farid Gasmi

University of Toulouse 1 - Toulouse School of Economics (TSE)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2009

Abstract

This paper has two related objectives. First, it seeks to identify the key determinants of some policies that have been at the heart of the reforms of the telecommunications industry in developing countries, namely, liberalization, privatization, and the (re)structuring of regulation. Second, it attempts to estimate the extent to which these policies have translated into actual deployment of telecommunications infrastructure. This simultaneous investigation is conducted by means of an econometric analysis of a 1985-1999 time-series-cross-sectional database on 86 developing countries. Sectoral as well as institutional and financial factors are found to be important determinants of the actual reforms implemented. We uncover a positive relationship between the decision to introduce competition in the digital cellular segment and the growth of the fixed-line segment, suggesting that these two segments have benefited from each other. We also find that countries facing increasing institutional risk and financial constraints are more likely to introduce competition in the digital cellular segment and to privatize the fixed-line incumbent, these policies being economically attractive to both investors and governments. In turn, these policies are those that enhance the deployment of fixed-line infrastructure. In contrast, competition in the analogue cellular segment and the creation of a separate regulator seem to be relatively less attractive policies as they are found to be less likely to be introduced in countries facing increasing institutional risk and budget constraints. Their impact on fixed network deployment is found to be negative or non significant.

Keywords: Telecommunications, reforms, institutional risk, financial constraints

JEL Classification: C23, L51, L96, L98

Suggested Citation

Recuero Virto, Laura and Gasmi, Farid, The Determinants and Impact of Telecommunications Reforms in Developing Countries (September 2009). Toulouse School of Economics Working Paper No. 92 , Available at SSRN: https://ssrn.com/abstract=1750099 or http://dx.doi.org/10.2139/ssrn.1750099

Laura Recuero Virto (Contact Author)

OECD Development Center ( email )

Paris

Farid Gasmi

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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