Does ownership or competition matter? The effects of telecommunications reform on network expansion and efficiency

I use newly released data from the International Telecommunications Union t o examine the effects of privatization and competition on network expansion and efficiency. Using a fixed-effects model, I find that during the 1986-1 995 time period, those countries that have at least fifty percent of the as sets of their main telecommunications provider in the private sector have s ignificantly higher main lines per 100 inhabitants and, to a lesser degree, have higher growth in main lines per 100 inhabitants. There is no evidence , however, that privatization leads to higher growth in main lines per 100 inhabitants in those countries whose GDP per capita is less than $10,000. P rivatization is positively associated with main lines per employee and grow th in main lines per employee. While competition is not found to affect net work expansion, it is found to positively affect efficiency as measured in main lines per employee. In order to account for the possible endogeneity o f the privatization and competition dummy variables, all equations are esti mated using an instrumental variable approach as well.