TELECOMMUNICATIONS, FACTOR SUBSTITUTION AND ECONOMIC-GROWTH

De La Grandville (1989) suggests that large elasticities of substituti on between factor inputs and a change in relative prices might (i) exp lain historical economic growth in developing countries and (ii) accou nt for the varying growth among sectors within economies undergoing te chnological change. Yuhn (1991) supports de La Grandville first hypoth esis in his finding that Korea's economic growth relative to the Unite d States, over a given interval, could be explained by the higher elas ticities of substitution between labor and capital in Korea relative t o those of the United States. This paper explores de La Grandville's s econd hypothesis with respect to telecommunications. (JEL L9, O).