Institutions and telecommunications infrastructure in low and middle-income countries: The case of mobile telephony

This paper studies the relationship between regulation and performance in the mobile telecommunications sector. The analysis takes account of the economic impact of telecommunications infrastructure on aggregate income and of the role of country institutions in promoting economic growth. More specifically, we try to separate the impact of regulation from the potential indirect effects due to country institutions. We address these questions by estimating a system of equations for a panel of 30 low and middle-income countries over the period 1990–2004. In summary, the evidence we present confirms the positive effect of regulatory institutions on mobile telecom penetration and also highlights the contribution of a more widespread mobile telecoms infrastructure to higher levels of per capita GDP.