Telecommunications Infrastructure And Gdp /Jipp Curve/

The relationship between telecommunications infrastructure and economic activity is under discussion in many scientific papers. Most of the authors use for research and analysis the Jipp curve. A lot of doubts about the correctness of the Jipp curve appear in terms of applying econometric models. The aim of this study is a review of the Jipp curve, refining the possibility of its application in modern conditions. The methodology used in the study is based on dynamic econometric models, including tests for nonstationarity and tests for causality. The focus of this study is directed to methodological problems in measuring the local density types of telecommunication networks. This study offers a specific methodology for assessing the Jipp law, through VAR-approach and Granger causality tests. It is proved that mechanical substitution of momentary aggregated variables (such as the number of subscribers of a telecommunication network at the end of the year) and periodically aggregated variables (such as GDP per capita) in the Jipp’s curve is methodologically wrong. Researchers have to reconsider the relationship set in the Jipp’s curve by including additional variables that characterize the Telecommunications sector and the economic activity in a particular country within a specified time period. GDP per capita should not be regarded as a single factor for the local density of telecommunications infrastructure. New econometric models studying the relationship between the investments in telecommunications infrastructure and economic development may be not only linear regression models, but also other econometric models. New econometric models should be proposed after testing and validating with sound economic theory and econometric methodology.