Mobile telecommunications service and economic growth: Evidence from China

• Finds substantial effects on economic growth in China from mobile phone usage, but smaller effects from fixed line usage.
• The effects are larger in areas and time periods when China was less developed.
• Fixed line services complement mobile services initially, but have a negative effect later on as mobile phones diffuse more completely.
• Develops an estimation strategy to reduce the potential for endogeneity bias.

We contribute to the role of telecommunications service on economic growth in three ways. We separately examine fixed-line and mobile telephone subscription levels. We compare results across periods and regions that differ by the level of development. In addition, we develop a method designed to address endogeneity of telecommunications with respect to growth. We find that mobile services contribute much more to growth but that the effect diminishes as the provincial economy develops more.