Human Development and Macroeconomic Returns within the Context of Investments in Telecoms: An Exploration of Transition Economies

Abstract

Previous investigations into macroeconomic impact of investments in information and communications technology (ICT), while primarily focused on developed economies, have yielded some important insights. For example, it was determined that: (1) the investments-to-revenues model works well only if a threshold level of ICT capital infrastructure has been developed, (2) it is not the quantity but the quality of the full-time ICT workforce that plays an important role in converting a stream of investments in ICT into revenues and in achieving a spillover effect of investments that is captured by total factor productivity (TFP). In this study we investigate the impact of human development, as measured by the human development index (HDI), on macroeconomic outcomes and TFP. The subject of the study is a group of transition economies, a set of highly related economies that has the Leaders group that has some of the characteristics of developed economies and the Followers group that has some of the characteristics of less-developed economies. Results of our investigation offer evidence that HDI has a statistically significant impact on GDP (gross domestic product) and TFP only in the case of the Leaders.