What Causes What? Panel Cointegration Approach on Investment in Telecommunication and Economic Growth: Case of Asian Countries

Mehmood, Bilal
Siddiqui, Wasif
Publication date: 
JEL codes: 
C22 - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models, C23 - Models with Panel Data; Longitudinal Data; Spatial Time Series, L96 - Telecommunications, O4 - Economic Growth and Aggregate Productivity, R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes, R12 - Size and Spatial Distributions of Regional Economic Activity.
This study empirically examines long run relationship between investment in telecommunication and economic growth in selected Asian countries. We resort to econometric tests such as panel unit root tests and panel cointegration test purposed by Pedroni (1997, 1999) for annual data from 1990-2010 of 23 Asian countries. The empirical results suggest that there exists causality between economic growth and investment in telecommunication. Causality runs from investment in telecom to economic growth and not otherwise. Since telecommunication sector has an innate ability to contribute to economic growth in a dual fashion. Firstly, as a part of services sector and secondly as an expediter to other sectors of the economy.Policy recommendations are made on the basis of favorable findings in support of ICT-led growth.
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