Nexus between telecommunication infrastructures, economic growth and development in Africa: Panel vector autoregression (P-VAR) analysis

• Published in: Telecommunications policy 2019-09, Vol.43 (8), p.101816, Article 101816
• Main Author: David, Oladipo Olalekan
• Format: Article
• Language: English
• Subjects: Bidirectionality; Causality; Economic analysis; Economic development; Economic growth; Economic growth-development; Economic models; Empirical analysis; GDP; Gross Domestic Product; Human development; Indexes; Infrastructure; Internet access; Mobile computing; Panel causality; Penetration; Principal component analysis (PCA); Principal components analysis; Standard of living; Telecommunication infrastructures; Telecommunications policy; Variance decomposition and impulse response analysis
• ISSN: 0308-5961; 1879-3258
• DOI: 10.1016/j.telpol.2019.03.005

This study examines the causal-effect relationship between telecommunication infrastructures, economic growth and development in selected African countries. It further estimates the trivariate impacts of telecommunication infrastructures, economic growth and development in the region. The analysis considers a panel of forty-six African countries from 2000 to 2015. To measure economic growth, real gross domestic product serves as the proxy, while economic development is measured by the Human Development Index, and telecommunication infrastructures by a composite index of telecommunication computed from mobile line, fixed line and internet access penetration via principal component analysis (PCA). The empirical results suggest the existence of a bidirectional long-run relationship between telecommunication infrastructures, economic growth and development. The causality tests reveal that there is feedback causality between telecommunication infrastructures, economic growth and development. Telecommunication infrastructures promote economic growth and development in Africa and vice versa. Thus, there is need to promote inclusive and holistic policies that will enhance digital provide, economic growth and development simultaneously in Africa. An increase in telecommunication infrastructures will encourage aggregate output and standard of living to move in the same direction in Africa. •Feedback relationships exist between telecommunication, economic growth and development in Africa.•Telecommunication, economic growth and development are interdependent in Africa.•Telecommunication, economic growth and development need concurrent overhaul in Africa.