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© 1995 Oxford University Press

research-article

Modern Telecommunications Infrastructure and Economic Activity: An Empirical Investigation

SHANE M. GREENSTEIN and PABLO T. SPILLER

(Haas School of Business, University of California #1930, Berkeley, CA 94720–1930, USA)

Abstract

This study focuses on the impact of telecommunication infrastructure on economic activity in two sectors: fire, insurance and real estate; and manufacturing. Results indicate that modernization of the telephone network is associated with more fire, insurance and real estate activity in the local region, while it is not associated with more manufacturing. Once other determinants of growth are controlled for, a doubling of fiber optic cable leads to at least a 10%, and possibly a much higher, increase in the level of economic activity in fire, insurance and real estate. This result implies that the level of modernization of a telecommunications network has an economically important influence on the amount of high tech white collar activity in a region, while it is less important for manufacturing activity, which typically employs less modern telecommunications services.


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