Telecommunication Infrastructure Development and Economic Growth: A Panel Data Approach

Kanwal Zahra, Parvez Azim, Afzal Mahmood


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)].

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