Abstract
This paper empirically investigates the impact of telecommunications infrastructure in East Africa. The researcher uses the International Telecommunication Union, UN and World Bank data and applies the instrumental variable-generalized method of moments to a panel of 19 countries over the period 2000-2015. Whether telecommunication investment contributes or not to economic growth has been at the center of literature debate over time with varying empirical evidences for developed and developing nation. The effect of telecom market privatization has been controlled through independent panels. The results show that the telecom index composed of the Internet, mobile cellular and fixed line has contributed to economic growth. A one percentage point increase in this telecom index usage raises real per capita growth by 0.02 for the panel of whole countries. The result is more than this for countries that privatized their telecom sector and less for those that failed to privatize. Overall, the results suggest that the expansion of telecommunications infrastructure fosters economic growth in East Africa. With much room for potential growth enhancement of telecommunications infrastructure, policies to expand access to telecom services should be strongly encouraged by respective governments in general and privatization of telecommunication remained under government control in particular is desired. DOI : 10.7176/JIEA/9-7-01 Publication date: December 31 st 2019
Highlights
IntroductionBackground of study The fundamental contribution of information and communications and technology (ICT) in facilitating and accelerating socio-economic development has undoubtedly gained acknowledgment across the world
As depicted in the figure 4.1, the average growth rate of the region was above Zero which shows the region growth rate of real GDP per capita was relatively good as opposed to each countries performance
4.1 Conclusion The objective of this study is to investigate the role of telecommunications services to economic growth in East Africa
Summary
Background of study The fundamental contribution of ICTs in facilitating and accelerating socio-economic development has undoubtedly gained acknowledgment across the world. The notion of Information and Communication Technology’s (ICT’s) role in economic performance of a given country is initially accounted by the American economist Robert Solow in which output per worker depends mainly on savings, population growth, and technological change Growth can occur in through increased use of land, labour, capital and entrepreneurial resources by using better technology or management techniques and increasing productivity of existing resource use through rising labour and capital Productivity. Since 1990, ICT investment has been considered as a proxy of technological progress and the telecommunication sector investment and services have been considered as the good proxy for ICT role in economic growth of a countries or a region. Network readiness Index has been developed by World Economic Forum
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