Telephone Demand and Economic Growth in Africa

This paper uses panel data from African countries from 1992 to 2004 and a dynamic panel data (DPD) estimation method to investigate the demand for telephone services and the impact of telephone use on income growth in African countries. We find that telephone use has a positive and significant impact on income growth in African countries, all things equal. We also find that the demand for telephone is price and income inelastic in both the short and long runs. The demand for telephone services in Africa is strongly influenced by the size of the network. Finally, we find that mobile telephones are substitutes for fixed telephones. The results are robust to different specifications. Our results have telephone research as well as growth policy implications.