Telecommunications Capital Intensity and Aggregate Production Efficiency: a Meta-Frontier Analysis

Repkine, Alexandre (2009): Telecommunications Capital Intensity and Aggregate Production Efficiency: a Meta-Frontier Analysis.

Abstract

This study explores the link between telecommunications capital intensity and the aggregate production efficiency in the framework of meta-frontier analysis. The latter makes it possible to compare technical efficiency levels between countries operating under different technological frontiers. Our analysis suggests that increases in per capita levels of telecommunication capital will be most helpful in increasing the efficiency with which the existing technological knowledge and production resources are used, but not the technological frontier itself. We thus identify countries where additional investments in telecommunications are desirable as the ones where the technological lag is relatively small and efficient usage of productive resources is a problem. Africa appears to be the region where policies providing incentives for firms and households to purchase more telecommunications equipment will produce the most sizeable effect. In contrast, in the OECD countries where production practices are already the most efficient ones globally and the existing per capita telecommunications capital stock is high, further increases in the latter are not likely to result in any sizable production efficiency gains.

• Item Type: MPRA Paper
• Language: English
• Keywords: telecommunications; meta-frontier analysis; economic growth; production efficiency
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

References

Aigner, D., et al., “Formulation and estimation of stochastic frontier production function models”, Journal of Econometrics, 6, 1977

Barry, B., and Triplett, J., “What’s new about the new economy? IT, economic growth and productivity”, Brookings Institution, 2000

Battese, G.E., and Coelli, T.J., 1988, “Prediction of firm-level technical efficiencies with a generalized production function and panel data”, Journal of Econometrics, 38(3), pp. 387-399

Battese, G.E., and Coelli, T.J., 1995, “A model for technical inefficiency effects in a stochastic frontier production function for panel data”, Empirical Economics, 20, pp. 325-332

Battese, G.E., Rao, G.S.P., and O’Donnell, C.J., 2004, “A metafrontier production function for estimation of technical efficiencies and technology gaps for firms operating under different technologies”, Journal of Productivity Analysis, 21(1), pp. 91-103

Central Intelligence Agency, 2008, The 2008 World Factbook, https://www.cia.gov/library/publications/the-world-factbook/index.html

Coelli, T.J., 1992, “A computer program for frontier production function estimation: Frontier version 2.0”, Economics Letters, 39(1), pp. 29-32

Creti, A., 2001, “Network technologies, communication externalities and total factor productivity”, Structural Change and Economic Dynamics, 12, pp. 1-28

Dewan, S., and Kraemer, K.L., “Information technology and productivity: evidence from country-level data”, Management Science 46(4), 2000.

Estevao, M.M., 2004, “Why is productivity growth in the euro area so sluggish?”, 2004, IMF working paper WP/04/200.

Hardy, A.P., 1980, “The role of the telephone in economic development”, Telecommunications Policy

Jipp, A., 1963, “Wealth of Nations and Telephone Density”, Telecommunications Journal, July

Jorgenson, D.W., and Stiroh, K.J., 2000, “Raising the speed limit: U.S. economic growth in the information age,” Brookings Papers on Economic Activity: 1, pp. 125-211

Jorgenson, D.W., and Vu, K., 2005, “Information technology and the world economy,” Scandinavian Journal of Economics, 12, pp. 631-650

Oliner, S.D. and Sichel, D.E., “Computers and output growth revisited: how big is the puzzle?”, Brookings Papers on Economics Activity, 1994

Schreyer, P., “The Contribution of Information and Communication Technology to Output Growth: a Study of the G7 Countries”, STI Working Paper, 2000

Thompson, H.G., and Garbacz, Ch., 2007, “Mobile, fixed line and internet service effects on global productive efficiency”, Information Economics and Policy, 19.