IDEAS home Printed from https://ideas.repec.org/a/eee/iepoli/v50y2020ics0167624519300770.html
   My bibliography  Save this article

Institutions and Telecommunications Investment

Author

Listed:
  • Jung, Juan

Abstract

Closing the digital divide and fostering the digital economy is considered one of the keys for the countries to increase productivity and economic growth. To achieve those objectives, investment in telecommunications networks is crucial. This paper develops a theoretical framework to explain the link between public institutions and telecommunications investment. This model is estimated for a sample of 13 European countries during the period 2007–2015. Results were clear in verifying a positive association between institutional quality and investment levels. These findings were robust to different specifications of the model, and to the control of potential endogeneity linked to the institutional variable. Novel findings also pointed out at institutional quality being more relevant for most disadvantaged countries, in terms of development and digital connectivity. Furthermore, we found evidence of Property Rights being the main cause of concern for telecom operators, followed by corruption, judicial independence, transparency, and in a lesser degree, by political favoritism and trust.

Suggested Citation

  • Jung, Juan, 2020. "Institutions and Telecommunications Investment," Information Economics and Policy, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:iepoli:v:50:y:2020:i:c:s0167624519300770
    DOI: 10.1016/j.infoecopol.2020.100849
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167624519300770
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.infoecopol.2020.100849?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. Agnès Bénassy‐Quéré & Maylis Coupet & Thierry Mayer, 2007. "Institutional Determinants of Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 30(5), pages 764-782, May.
    4. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    5. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    6. Witold J. Henisz, 2002. "The institutional environment for infrastructure investment," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(2), pages 355-389.
    7. Alberto Alesina & Silvia Ardagna & Giuseppe Nicoletti & Fabio Schiantarelli, 2005. "Regulation And Investment," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 791-825, June.
    8. Cambini, Carlo & Jiang, Yanyan, 0. "Broadband investment and regulation: A literature review," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 559-574, November.
    9. Christian Daude & Ernesto Stein, 2007. "The Quality Of Institutions And Foreign Direct Investment," Economics and Politics, Wiley Blackwell, vol. 19(3), pages 317-344, November.
    10. Johannes Moenius & Daniel Berkowitz, 2004. "Institutional Change and Product Composition: Does the Initial Quality of Institutions Matter?," William Davidson Institute Working Papers Series 2004-662, William Davidson Institute at the University of Michigan.
    11. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    12. Andonova, Veneta & Diaz-Serrano, Luis, 2009. "Political institutions and telecommunications," Journal of Development Economics, Elsevier, vol. 89(1), pages 77-83, May.
    13. Nina Czernich & Oliver Falck & Tobias Kretschmer & Ludger Woessmann, 2011. "Broadband Infrastructure and Economic Growth," Economic Journal, Royal Economic Society, vol. 121(552), pages 505-532, May.
    14. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    15. Koutroumpis, Pantelis, 2009. "The economic impact of broadband on growth: A simultaneous approach," Telecommunications Policy, Elsevier, vol. 33(9), pages 471-485, October.
    16. Witold J. Henisz & Bennet A. Zelner, 2001. "The Institutional Environment for Telecommunications Investment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 123-147, March.
    17. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
    18. Dawson, John W, 1998. "Institutions, Investment, and Growth: New Cross-Country and Panel Data Evidence," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 603-619, October.
    19. Olson, Mancur, 1993. "Dictatorship, Democracy, and Development," American Political Science Review, Cambridge University Press, vol. 87(3), pages 567-576, September.
    20. Li, Quan & Resnick, Adam, 2003. "Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries," International Organization, Cambridge University Press, vol. 57(1), pages 175-211, January.
    21. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
    22. Andonova, Veneta, 2006. "Mobile phones, the Internet and the institutional environment," Telecommunications Policy, Elsevier, vol. 30(1), pages 29-45, February.
    23. Anil Mishra & Kevin Daly, 2007. "Effect of quality of institutions on outward foreign direct investment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(2), pages 231-244.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Katz, Raúl & Jung, Juan, 2023. "The impact of taxation in the telecommunications industry," Information Economics and Policy, Elsevier, vol. 62(C).
    2. Faheem Ur Rehman & József Popp & Ejaz Ahmad & Muhammad Asif Khan & Zoltán Lakner, 2021. "Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach," Sustainability, MDPI, vol. 13(24), pages 1-18, December.
    3. Jung, Juan & Katz, Raúl, 2022. "Spectrum flexibility and mobile telecommunications development," Utilities Policy, Elsevier, vol. 75(C).
    4. Liang Wang & Qiming Sun, 2022. "Market Competition, Infrastructure Sharing, and Network Investment in China’s Mobile Telecommunications Industry," Sustainability, MDPI, vol. 14(6), pages 1-17, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Komlan Fiodendji & Kodjo Evlo, 2015. "Do Institutions Quality Affect FDI Inflows in Sub-Saharan African Countries?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 5(1), pages 1-8.
    2. Vahagn Jerbashian & Anna Kochanova, 2016. "The impact of doing business regulations on investments in ICT," Empirical Economics, Springer, vol. 50(3), pages 991-1008, May.
    3. Zergawu, Yitagesu Zewdu & Walle, Yabibal M. & Giménez-Gómez, José-Manuel, 2020. "The joint impact of infrastructure and institutions on economic growth," Journal of Institutional Economics, Cambridge University Press, vol. 16(4), pages 481-502, August.
    4. Tag, Mehmet Nasih, 2021. "Judicial institutions of property rights protection and foreign direct investment inflows," International Review of Law and Economics, Elsevier, vol. 65(C).
    5. Juan Jung & Angel Melguizo, 2022. "Rules, institutions, or both? Estimating the drivers of telecommunication investment in Latin America," Journal of Cyber Policy, Taylor & Francis Journals, vol. 7(1), pages 5-23, January.
    6. Eslamloueyan, Karim & Jafari, Mahboubeh, 2019. "Do better institutions offset the adverse effect of a financial crisis on investment? Evidence from East Asia," Economic Modelling, Elsevier, vol. 79(C), pages 154-172.
    7. Hamza Belfqih & Ahlam Qafas & Mounir Jerry, 2022. "Investigating the Nexus Between FDI and Institutional Quality: Evidence from Morocco," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(3), pages 390-418, September.
    8. Céline Azémar & Rodolphe Desbordes, 2009. "Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 18(4), pages 667-709, August.
    9. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    10. Haggard, Stephan & Tiede, Lydia, 2011. "The Rule of Law and Economic Growth: Where are We?," World Development, Elsevier, vol. 39(5), pages 673-685, May.
    11. Federico Carril-Caccia & Juliette Milgram Baleix & Jordi Paniagua, 2019. "The foreign direct investment-institution nexus in oil-abundant countries," Working Papers 1903, Department of Applied Economics II, Universidad de Valencia.
    12. Pinar, Mehmet & Volkan, Engin, 2018. "Institutions and information flows, and their effect on capital flows," Information Economics and Policy, Elsevier, vol. 43(C), pages 34-47.
    13. repec:mth:ijafr8:v:8:y:2018:i:4:p:324-351 is not listed on IDEAS
    14. Tamer Cetin & Yildirim B. Cicen & Kadir Y. Eryigit, 2016. "Do Institutions Matter for Economic Performance? Theoretical Insights and Evidence from Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1610, Koc University-TUSIAD Economic Research Forum.
    15. Una Okonkwo Osili & Anna L. Paulson, 2006. "What can we learn about financial access from U.S. immigrants?," Working Paper Series WP-06-25, Federal Reserve Bank of Chicago.
    16. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    17. Kerekes, Carrie B. & Williamson, Claudia R., 2008. "Unveiling de Soto's mystery: property rights, capital formation, and development," Journal of Institutional Economics, Cambridge University Press, vol. 4(3), pages 299-325, December.
    18. Andrea Asoni, 2008. "Protection Of Property Rights And Growth As Political Equilibria," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 953-987, December.
    19. Federico Carril-Caccia & Juliette Milgram-Baleix & Jordi Paniagua, 2019. "Foreign Direct Investment in oil-abundant countries: The role of institutions," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-23, April.
    20. Philipp Harms & Pierre-Guillaume Méon, 2013. "The Composition of FDI in the MENA Region and Other Countries: Econometric Investigation and Implications for MENA Countries," Working Papers 793, Economic Research Forum, revised Nov 2013.
    21. Timothy Besley & Torsten Persson, 2011. "Pillars of Prosperity: The Political Economics of Development Clusters," Economics Books, Princeton University Press, edition 1, number 9624.

    More about this item

    Keywords

    Investment; Institutions; Telecommunications;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:50:y:2020:i:c:s0167624519300770. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505549 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.