Advancement of indices assessing a nation׳s telecommunications development status: A PLS structural equation analysis of over 100 countries

• Develops a new composite measure of the achievement level of countries with regard to their telecommunication infrastructures and their end customer use.
• The index merges telecommunications-related supply, adoption and usage intensity facets.
• The index is designed to predict two socio-economic target criteria.
• Partial Least Squares structural equation modeling is suited for deriving subindex weights.
• Ranks of 111 countries based on the new index deviate from rankings resulting from an earlier popular ITU measure.

The literature has already presented quite a number of composite metrics seeking to quantify the achievement level of countries with regard to their telecommunication infrastructures and their use by end customers. However, prior measures leave room for extensions. Therefore, this paper introduces a new second-order overall index assessing the availability, adoption and usage intensity of telecommunication networks and services at the country level. The proposed Telecommunications Development Index (TDI) integrates 11 indicators, which are grouped into three first-level subindices labeled Supply, Adoption and Usage. Indicator and subindex weights used in combining them into higher-order measures are computed drawing on Partial Least Squares (PLS) structural equation modeling (SEM) techniques. The modeling rests on the assumption that TDI weights should be outcome-specific and thus constructed in a way that maximizes the indicators׳ and subindices׳ capability, respectively to predict socially desirable national performance criteria such as per capita gross domestic product (GDP) change or a country׳s Human Development Index (HDI) value. Based on data from 111 countries, this approach was used to calculate weights of the indicators and subindices merged into a total TDI predicting either GDP per capita change or a country׳s HDI. In both TDI variants the Adoption subindex variable fixed broadband subscriptions per household and the Supply subindex variable international bandwidth capacity available per Internet user achieved the highest relative weights of all indicators in the prediction of the two studied social outcome criteria. The PLS SEM results were used to calculate scores of the two TDI variations for each of the sample countries. TDI-based rankings of the countries were compared with a ranking derived from the Information and Communication Technologies Development Index of the International Telecommunication Union.