Telecommunication Infrastructure Development and Economic Growth: A Panel Data Approach

Publication Year : 2008

World is going to be global village due to the introduction of new and advanced technology and new innovations in technology make it more possible day by day. The widely spread economic activities both in real as well as in credit market is possible when they use advance technology to communicate. This is a fact that the world is rapidly moving towards an economic system based on the continuous and ubiquitous availability of information. Developing countries try to maintain and develop their technology in such a way that they can become a part of this global village. Recent developments in telecommunication technology have been an important tool to exchange the information to develop a sharp and valuable commodity market. During 21st century to move into post-industrial, information based economic growth, countries and sector try to equip themselves with the necessary telecommunication system. A modern telecommunication infrastructure is not only important for economic growth but also to connect domestic market of commodities as well as credit with international commodity and financial markets. This would develop the smooth flow of foreign investment, positive value of net exports, increase the value addition in GDP of an economy etc. Once the industrial and agriculture development was considered to be a best tool to enhance economic growth of a country, every country gave more importance to these sectors in its plans and policies, but now the trend has changed because the advancement and development of these two major sector of an economy sustain on the development of other factors, the role of service sector, advancement in technology, and the contribution of foreign sector in economic growth by different ways increases, and the major area of interest for foreign sector or investment was service sector and still it is, countries with the existence of GATS, started to privatise their set up, and after realising the importance of communications, the telecommunication sector is now on their main priorities. With the advancement of telecommunication services, a new market mechanism, low cost structure and expanded value chain of firms is possible [Kambil and Short (1994)], on other hand in developing countries, the average price of agricultural commodities is high in the area where there is telephone facilities available than the area where there is no facilities to communicate [Bayes, et al. (1999)].