Abstract
This paper examines the effect of investments by telecommunications operators on the growth rate of real GDP, by using time-series data for Finland, Sweden and Norway between the years 1970 and 2001. This study makes use of the production function model provided by Ram (1986). The explanatory variables are chosen in line with stylised facts, and in order to isolate the effect of investment on telecommunications infrastructure. The estimation is based on pooled time-series estimation with corrections for column dependency. The results do not, thus far, provide any evidence that the investment expenditures of telecommunications operators have significantly altered the pace of economic growth. This result is in some contrast to previous studies using data from Central and Eastern Europe and from OECD countries. Moreover, comparing these results with a similar estimation of Finnish data only, the robust relationship between the share of private investment in output and economic growth is blurred. In exchange, the results support the importance of public capital formation to economic growth. The main conclusion of the paper is that in relatively developed economies, the effect of telecommunications on growth may arise from investments in user segments, rather than from investment expenditure on the supply side.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Andreasson K, Helin V (eds.) (1999) Suomen Vuosisata-Trendit. Central Statistical Office of Finland, Helsinki
Aschauer DA (1989) Is Public Expenditure Productive? Journal of Monetary Economics 23: 177–200
Barro RJ (1990) Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy 3, 98, part 2
Barro RJ (1991) Economic Growth in a Cross Section of Countries. Quarterly Journal of Economics 106: 407–43
Barro RJ, Sala-I-Martin X (1995) Economic Growth. MacGraw-Hill, New York
Berndt ER, Hansson B (1992) Measuring the Contribution of Public Infrastructure Capital in Sweden. Scandinavian Journal of Economics 94suppl.: 151–168
Björkroth T (2003) Engine or Wheels of our Prosperity?-Infrastructure and Economic Growth and Effects of Liberalisation of the Finnish Telecommunications Market. PhD-thesis, Åbo Akademi Department of Economics and Statistics
Björkroth T, Kjellman A (2000) Public Capital and Private Sector Productivity-A Finnish Perspective. Finnish Economic Papers, 1/2000: 28–44
Blomström M, Lipsey RE, Zejan M (1996) Is fixed investment the key to economic growth? Quarterly Journal of Economics 111: 269–276
Canning D (1999) Telecommunications and Aggregate Output. CAER II Discussion Papers 56, December, Harvard Institute for International Development
Central Statistical Office of Finland (1981) Revised National Accounts for 1960–1978. Statistical surveys Number 66, Helsinki
Cieslick A, Kaniewska M (2002) Telecommunications Infrastructure and Regional Economic Development: The case of Poland. Paper presented at 13th regional conference of International Telecommunications Society, Madrid
Costa J, da Silva, Ellson RW, Martin RC (1987) Public Capital, Regional Output, and Development. Journal of Regional Science 27: 419–37
Crandall RW (1997) Are Telecommunications Facilities ‘Infrastructure’? If They are, so What? Regional Science and Urban Economics 27: 161–179
Crihfield JB, Panggabbean MPH (1995) Is Public Infrastructure Productive? A Metropolitan Perspective Using New Capital Stock Estimates. Regional Science and Urban Economics 25: 607–630
DeLong JB, Summers LH (1991) Equipment Investment and Economic Growth. Quarterly Journal of Economics, May: 445–502
Draper NR, Smith H (1998) Applied Regression Analysis (3rd ed). John Wiley & Sons, Inc., New York
Duffy-Deno KT, Eberts RW (1989) Public Infrastructure and Regional Economic Development: A Simultaneous Approach. Working Paper No. 8909, Federal Reserve Bank of Cleveland
Easterly W, Rebelo S (1993) Fiscal Policy and Economic Growth: An Empirical Investigation. Journal of Monetary Economics 32: 417–458
Eberts RW (1986) Estimating the Contribution of Urban Public Infrastructure to Regional Economic Growth. Working Paper No. 8610, Federal Reserve Bank of Cleveland, December
Eberts RW (1990) Public Infrastructure and Regional Economic Development. Economic Review Federal Reserve Bank of Cleveland 26: 15–27
Eberts RW, Fogarty MS (1987) Estimating the Relationship between Local Public and Private Investment. Working Paper No. 8703, Federal Reserve Bank of Cleveland
Eisner R (1991) Infrastructure and Regional Economic Performance. New England Economic Review, Federal Reserve Bank of Boston, September/October, pp. 47–58
Ford R, Poret P (1991) Infrastructure and Private-Sector Productivity. OECD Economic Studies 17: 63–89
Harvey AC (1981) The Econometric Analysis of Time-Series. Phillip Allan, London
Holz-Eakin D, Schwartz AE (1995) Infrastructure in a Structural Model of Economic Growth. Regional Science and Urban Economics, 25: 131–151
Hsiao C (1981) Autoregressive Modelling and Money Income Causality Detection. Journal of Monetary Economics 7: 85–106
Judge GG, Hill RC, Griffiths WE, Lütkepohl H, Lee TC (1982) Introduction to the Theory and Practice of Econometrics. John Wiley & Sons, New York
Kiander J, Lönnqvist H (2002) Hyvinvointivaltio, sosiaalipolitiikka ja taloudellinen kasvu. Sosiaali ja terveysministeriön julkaisuja 2002:20. Helsinki
Kmenta J (1986) Elements of Econometrics, (2nd ed.) MacMillan
Kormendi RC (1983) Government Debt, Government Spending and Private Sector Behavior. American Economic Review 73: 994–1010
Kormendi R, Meguire P (1985) Macroeconomic Determinants of Growth: Cross-country Evidence. Journal of Monetary Economics 16: 141–163
Levine R, Renelt D (1992) A Sensitivity Analysis of Cross Country Growth Regressions. American Economic Review 82: 942–963
Madden G, Savage SJ (1998) CEE telecommunications investment and economic growth. Information Economics and Policy 10: 173–195
Mamatzakis EC (1997) The Role of Public Sector Infrastructure on Private Sector Productivity in a Long Run Perspective. Mimeo. Queen Mary and Westfield College
Mankiw NG, Romer D, Weil DN (1992) A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics. May 1992: 407–427
Mera K. (1973) Regional Production Functions and Social Overhead Capital: An Analysis of the Japanese Case. Regional and Urban Economics 3: 157–185
Moen OC (2001) Nordic Economic Growth in Light of New Theory: Overoptimism about R&D and Human Capital. Statistics Norway research department documents 2001/10
Moisala UE, Rahko K, Turpeinen O (1977) Puhelin ja puhelinlaitokset Suomessa 1877–1977. Edited by Jutikkala, E. Puhelinlaitosten Liitto r.y. Helsinki
Munnell AH (1990a) Why has Productivity declined? Productivity and Public Investment. New England Economic Review, Federal Reserve Bank of Boston, January/February: 3–22
Munnell AH (1990b) How does Public Infrastructure Affect Regional Economic Performance? New England Economic Review, Federal Reserve Bank of Boston, September/ October: 11–32
Munnell AH (1992) Infrastructure Investment and Economic Growth. Journal of Economic Perspectives 6: 189–198
Nadiri MI, Nandi B (1992) Communications Infrastructure and Economic Growth in the Context of the U.S. Economy. Mimeo. New York University and NBER, AT&T Laboratories
Otto GD, Voss GM (1998) Is Public Capital Provision Efficient? Journal of Monetary Economics 42: 47–66
Pindyck RS, Rubinfeld DL (1991) Econometric Models and Economic Forecasts (3rd ed.). McGraw-Hill
Ram R (1986) Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data. American Economic Review 76:191–203
Röller LH, Waverman L (2001) Telecommunications Infrastructure and Economic Development: A Simultaneous Approach’, American Economic Review 91: 909–923
Tatom JA (1991) Public Capital and Private Sector Performance. Federal Reserve Bank of St. Louis Review, May/June: 3–15
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2006 Physica-Verlag Heidelberg
About this chapter
Cite this chapter
Björkroth, T. (2006). Investment by Telecommunications Operators and Economic Growth — A Fenno-Scandinavian Perspective. In: Preissl, B., Müller, J. (eds) Governance of Communication Networks. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/3-7908-1746-5_20
Download citation
DOI: https://doi.org/10.1007/3-7908-1746-5_20
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-1745-4
Online ISBN: 978-3-7908-1746-1
eBook Packages: Business and EconomicsEconomics and Finance (R0)