Telecommunication liberalization and economic development in European countries in transition

Developed and widely available telecommunications services are regarded as key enablers of a new economy. In Eastern European countries in transition, investment in telecommunications is generally perceived as a stimulus for economic growth. We investigate empirical correlation and Granger causality between certain indicators of telecommunications activity and economic growth. The indicators include total investment in the telecommunications sector and other parameters such as the penetration rate of services. We also propose additional indicators that may describe telecommunications sector development better than traditional, fixed, telephony-based measures. This is due to the migration of users from fixed to mobile networks, and from basic to broadband Internet access in the last few years. In the near future one also can expect broadband Internet users to move to mobile network infrastructure.