Nexus between telecommunication infrastructures, defence and economic growth: a global evidence

This study applies the recently developed novel panel vector autoregression models in a generalized method of moments (GMM) estimation framework to investigate the telecommunication infrastructures-defence-growth nexus for 157 countries between 2000 and 2018. To measure the defence sector, defence spending serves as the proxy, while economic growth is measured by the real gross domestic product, and telecommunication infrastructures are measured by a composite index of telecommunication (which comprises of mobile line, fixed line, and internet access penetration) via the principal component method. The empirical results at the global level show that telecommunication infrastructures, defence spending and growth jointly cause one another, while the direction of their effects differs. The direction of the causal-effect among the three variables for the income groups also differ. Thus, there is need to promote holistic policies that will reduce defence spending necessary for the enhancement of telecommunication infrastructures and inclusive economic growth at the global level, low-, upper-middle and high-income countries. A decrease in the allocation of funds to the defence sector will encourage enhancement of telecommunication infrastructures and aggregate output to move in the same direction.