The Impact of Privatization and Competition in the Telecommunications Sector Around the World

43 Pages Posted: 21 Jan 2003

See all articles by Wei Li

Wei Li

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Lixin Colin Xu

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2002

Abstract

Using a comprehensive country-level panel data set covering the period from 1981 to 1998, we examine the impact of privatization and competition in the telecommunications sector around the world. Privatization contributed substantially to labor shedding, output growth, network expansion, and improvements in labor productivity as well as total factor productivity. But how countries privatized is important. On the one hand, share-issue privatization facilitated the development of the mobile market segment. Granting a newly privatized operator a period of exclusive market access, on the other hand, reduced the gains from privatization (owing to the output-restricting tendency associated with market power) but did not entirely negate them. The presence of competitive pressure in the market was associated with more employment, higher output, faster network expansion, and higher labor and total factor productivity. We find evidence of complementarity between privatization and competition in that competition increased the gains from privatization and vice versa. Our estimates show that half of the output growth between 1990 and 1998 was attributable to privatization and competition, after controlling for input growth. Competition appeared to have a larger impact on labor and total factor productivity than did privatization.

Keywords: Privatization, Competition, Telecommunications, Reforms, Cross-country

Suggested Citation

Li, Wei and Xu, Lixin Colin, The Impact of Privatization and Competition in the Telecommunications Sector Around the World (October 2002). Darden Business School Working Paper No. 02-13. Available at SSRN: https://ssrn.com/abstract=364140 or http://dx.doi.org/10.2139/ssrn.364140

Wei Li

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-243-7691 (Phone)
804-243-7681 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/li.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Lixin Colin Xu (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
MC 3-427
Washington, DC 20433
United States
202-473-4664 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/cxu

Register to save articles to
your library

Register

Paper statistics

Downloads
1,199
Abstract Views
6,066
rank
16,502
PlumX Metrics