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On the endogeneity of telecommunications and economic growth: evidence from Asia

On the endogeneity of telecommunications and economic growth: evidence from Asia The impact of mobile and fixed telephones on economic growth has been the subject of increasing scrutiny in the literature on economic development. It is even of interest to theoretical macroeconomists, as it provides a useful test of the positive network externalities that should be present if endogenous growth theory is correct. We study the relationship between teledensity and growth in Asia, as the countries there have experienced wildly different levels of telephone penetration per capita, and of rates of growth of GDP per capita. We estimate several econometric models, one which explicitly treats telecom as strictly exogenous, and others which treat it as endogenous. Our conclusions are robust to the econometric specification. We find that the impact of teledensity on growth is positive, and increases with the level of telephone penetration. This provides support for endogenous growth theory. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Information Technology for Development Taylor & Francis

On the endogeneity of telecommunications and economic growth: evidence from Asia

24 pages

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References (46)

Publisher
Taylor & Francis
Copyright
Copyright Commonwealth Secretariat
ISSN
1554-0170
eISSN
0268-1102
DOI
10.1080/02681102.2012.694793
Publisher site
See Article on Publisher Site

Abstract

The impact of mobile and fixed telephones on economic growth has been the subject of increasing scrutiny in the literature on economic development. It is even of interest to theoretical macroeconomists, as it provides a useful test of the positive network externalities that should be present if endogenous growth theory is correct. We study the relationship between teledensity and growth in Asia, as the countries there have experienced wildly different levels of telephone penetration per capita, and of rates of growth of GDP per capita. We estimate several econometric models, one which explicitly treats telecom as strictly exogenous, and others which treat it as endogenous. Our conclusions are robust to the econometric specification. We find that the impact of teledensity on growth is positive, and increases with the level of telephone penetration. This provides support for endogenous growth theory.

Journal

Information Technology for DevelopmentTaylor & Francis

Published: Jan 1, 2013

Keywords: telecommunications; development; economic growth; O1; O3; O4; E1; E2

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