Institutions, Telecommunications and Economic Performance in Nigeria

Abstract

One of the views that is fast and widespread across countries is the view that telecommunications plays a pivotal role in economic development. This has led to massive reformation of institutions in the sector. The reformation of the institutions is contingent on the theoretical underpinnings that good institutions enhance the efficiency of the telecommunications sector. This in turn, directly and through other sectors improves economic performance. This paper sets out to examine the separate effects of the reform and the reformed telecommunications on the various measures of economic performance. We estimated the Modified Engle-Granger cointegration test that allows for structural break using Nigeria’s data for the period 1984-2011. A step dummy variable is used to measure the effects of the reform on the various indicators of economic performance, while a slope dummy is used to measure the effects of the reformed telecommunications sector on economic performance. The results of this model show that the reform and the reformed telecommunications have significant effects on economic performance. Their effects on growth are found to be statistically significant both in the short-run and in the long-run. The effects, however, on unemployment and Poverty are found to be significant only in the long-run. In addition, we found the effects of the reform to be the most important. This, we recommend that the regulatory body should concentrate more effort in designing and improving good institutions that will enable the maximum benefits from telecommunications to be derived.

Keywords: Institutions, Telecommunications, Economic Performance and MEG

JEL Classification Codes: E02, O43, O11