Telecommunications Infrastructure and Economic Development: A Simultaneous Approach

Posted: 7 May 2000

See all articles by Lars-Hendrik Röller

Lars-Hendrik Röller

ESMT European School of Management and Technology; Centre for Economic Policy Research (CEPR); WZB Berlin Social Science Center - Competitiveness and Industrial Change

Leonard Waverman

London Business School

Date Written: March 2000

Abstract

This paper investigates how telecommunications infrastructure affects economic growth. This issue is important and has received considerable attention in the popular press concerning the creation of the 'information superhighway' and its potential impacts on the economy. We use evidence from 21 OECD countries over a twenty-year period to examine the impacts that telecommunications developments may have had. We estimate a structural model, which endogenizes telecommunication investment by specifying a micro-model of supply and demand for telecommunication investments. The micro-model is then jointly estimated with the macro-growth equation. After controlling for country-specific fixed effects, 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.

JEL Classification: L96, O47, O57

Suggested Citation

Röller, Lars-Hendrik and Waverman, Leonard, Telecommunications Infrastructure and Economic Development: A Simultaneous Approach (March 2000). CEPR Discussion Paper No. 2399. Available at SSRN: https://ssrn.com/abstract=223890

Lars-Hendrik Röller (Contact Author)

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin, 10178
Germany

HOME PAGE: http://www.esmt.org/eng/faculty-research/lars-hendrik-roeller/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

WZB Berlin Social Science Center - Competitiveness and Industrial Change ( email )

Reichpietschufer 50
10785 Berlin
Germany
+49 30 2549 1440 (Phone)
+49 30 2549 1442 (Fax)

Leonard Waverman

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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