Institutions and Telecommunications Investment

摘要

Closing the digital divide and fostering the digital economy is considered one of the keys for the countries to increase productivity and economic growth. To achieve those objectives, investment in telecommunications networks is crucial. This paper develops a theoretical framework to explain the link between public institutions and telecommunications investment. This model is estimated for a sample of 13 European countries during the period 2007-2015. Results were clear in verifying a positive association between institutional quality and investment levels. These findings were robust to different specifications of the model, and to the control of potential endogeneity linked to the institutional variable. Novel findings also pointed out at institutional quality being more relevant for most disadvantaged countries, in terms of development and digital connectivity. Furthermore, we found evidence of Property Rights being the main cause of concern for telecom operators, followed by corruption, judicial independence, transparency, and in a lesser degree, by political favoritism and trust. (C) 2020 Elsevier B.V. All rights reserved.