Telecommunication and economic growth, evidence from Kenya (1980-2010)

Abstract

This study seeks to investigate how telecommunication expenditure affects economic growth. The study use time-series data over the last thirty years (1980-2010). To estimate the time -series data, unit root tests were conducted to establish whether the variables were no-stationary or stationary. After determining the order of integration.Cointegration test was carried out and the test established that there is a positive relationship between telecommunication expenditure and economic growth. However, the Granger causality test failed to confirm bi-directional causality between GDP growth rate and telecommunication expenditure during the time under investigation.

This is not entirely unexpected since most of the investments have been carried out by the private sector and not the government. It is therefore likely that the investments done by the government in the telecommunication sector were not high enough to cause major changes in terms of economic growth during period under investigation.