Telecommunications Infrastructure & Economic Development: A Simultaneous Approach

Abstract

In this paper we investigate how telecommunications infrasture affects economic growth. This issue is important and has recieved considerable attention in the popular press concentrating the creation of the 'information superhighway' and its potential impacts on the economy. We use evidence from 21 OECD countries over the past twenty years to examine the impacts that telecommunications developments may have had. We estimate a structural model which endogenzie telecommunication investment by specifying a micro-model is then jointly estimated with the macro-growth equation. After controlling for country-specific fixed effects, we find evidence of a positive casual link, provided that a critical mass of telecommunications infrasture is present.