Telecommunication Infrastructure and Economic Growth in Nigeria: New Evidence From ARDL Bound Testing Approach to Cointegration

Abstract

This study investigates the relationship between telecommunication infrastructure and economic growth in Nigeria using time series quarterly data for the period of 2002 to 2014. A functional relationship was modeled between macroeconomic variables such as GDP growth rate, teledensity, number of mobile telephone subscribers, number of landline subscribers, degree of openness in the economy, gross domestic investment and foreign direct investment. This study adopted an autoregressive distributed lag model (ARDL) estimation techniques approach to cointegration test using bound test, stability test and others. The results from the analysis revealed the existence of long run relationship between telecommunication infrastructure and economic growth in Nigeria and concluded that, gross domestic investment, foreign direct investment and degree of openness in the country has improved the teledensity, number of mobile telephone subscribers as well as number of landline which facilitates or enhanced economic activities and in turn leads to increased economic growth. We therefore recommends that government should implement policies that will enhance the development of the telecommunications sectors and complementary factors such as electrification particularly in rural areas, pay more attention to measures that would increase mobile telephone penetration such as reduce tariffs on telecommunication components, as well as formulate policies that will enhance domestic savings and attract more foreign direct investment.

Keywords: Telecommunication Infrastructure, Teledensity, Gross domestic Investment, ARDL, Economic Growth,