Telecommunications productivity, catch-up and innovation

This study examines telecommunications productivity, technological catch-up and innovation in 74 countries for the period 1991-1995. A summary of part ial productivity indicators is presented, and total factor productivity (TF P) growth is calculated using the Malmquist productivity change index. Deco mposition of the Malmquist index provides preliminary evidence that develop ing countries can enhance productivity through catch-up. An econometric mod el is estimated that relates innovation to market size and two measures of market structure, viz., market concentration and private ownership. Model e stimates support the Schumpeterian hypothesis that market size is conducive to innovation. However, the hypothesis that concentration (the dominant ca rrier's share of international message telephone service (IMTS) traffic) is positively related to innovation is rejected. Finally, the model suggests that increased private ownership of the dominant local-exchange carrier can enhance innovation. (C) 1999 Elsevier Science Ltd. All rights reserved.