The Impact of Macroeconomic Factors and Policy Issues on Telecom Sector Performance in Pakistan: An Econometric Analysis

Using a time-series data, the paper appraises allocative efficiency of the telecom sector in Pakistan through some of the macroeconomic and policy variables. Results of the study reveal that the openness of the telecom sector to foreign firms and the existing size of population have led to an improvement in efficiency of both the fixed and cellular networks. However, findings on the impact of real per capita GDP and the existence of a separate regulator remain mixed. The study also discloses that cellular networks appear to be benefiting from slow growth of fixed-line networks. The paper suggests that the attractiveness of Pakistan’s telecom sector to foreign firms needs to be maintained so that the country could benefit from the latest technological developments and could attract essential finance needed for development of the country.