The Impact of Telecommunications on Economic Growth: A Report

This report analyzes the causal relationship between telecommunications development and economic growth, focusing on a study of 105 countries. The research utilizes a dynamic panel data model to measure the impact of telecommunications on economic growth across different regions and income levels from 1980 to 2006. The findings reveal a bidirectional relationship between telecommunications development and economic growth in European countries and high-income groups, while other regions and lower-income countries show a unidirectional relationship, with economic growth driving telecommunications development. The report also highlights research gaps, such as the failure to fully address the impact of low teledensity on less developed countries and limitations in the data used. The study suggests that future research should focus on developing a comprehensive structural model that includes various determinants of economic growth beyond telecommunications.

Table: Summary of previous literature on ………………………………………………………………………………………………
Author(s), year Main Focus Research method Research findings
Alice SHIU, Pun-Lee
LAM
The focus of the article
is to study about the
importance of the
development of the
telecommunication
sector with regards to
the economic growth in
around 150 countries. It
links the growth of the
telecommunication
sector with the
development of the
economy and
contributes to the
society.
The research method
includes collection of
data for causality test.
The data that was
collected was applied to
empirical methods of
calculation and analysis
and from that the
conclusion was drawn.
It applies the dynamic
panel data model that
examines the casual
relationship between
the economic growth
and the
telecommunication
model.
The research findings
were that there exists a
bidirectional
relationship between
real GDP and
telecommunications
development for the
European countries and
to the high-income
group. It states that as
the real GDP increases
it also increases the
need for better
telecommunication
services. In case of less
developed countries the
overall relationship is
very unidimensional,
and there is a
decoupling of
telecommunication
development and
economic growth in
developed countries. In
less developed
countries the tele
density is at much lower
level.

Telecommunication is
not found to be an
important engine that
will fuel the economic
growth in low
developed countries
and hence we see that
development of
telecommunication is
still due in those
countries.
Research gaps:
The article overall states the growth of telecommunication with respect to already developed countries
but fails to acknowledge how the lower level of tele density can affect the growth of the economy in the
less developed countries. The data that has been collected is mostly related to the developed
economies and developed economies will foster to better telecommunication as that would help them
in fueling their business operations and development but that never indicates the fact that growth in
GDP has a direct relation to the growth in telecommunication. It can be said that there is a reverse
connection between the two. In case of less developed economy the article fails to highlight why there
exists a low level of tele density but the major reason with respect to that has not been explained
accordingly. Thus, we see that low level of GDP affects the growth of the telecommunication sector I an
economy and not the vice versa. The data that has been collected is also related to the developed
nations and not to the less developed economies, more over the variables that has been used are not
properly defined so that makes it difficult for the users to understand which variables relate to what ad
and how the equation build between that are helping them in reaching to the conclusion that the article
wants to reach at. The article aims that in future they would develop a structural model that will include
all the determinants of economic growth and factors other than telecommunications like business
environment, foreign investment, education, network and manpower training among other.