Identifying Convergence in Telecommunication Infrastructures and the Dynamics of Their Influencing Factors Across Countries

This study examines the convergence of telecommunication infrastructures in 205 countries over the period 2000–2018. We employ the approach of Phillips and Sul which tests for the existence of convergence clubs and the modelling of different transition paths of convergence. We further use the System GMM to investigate factors influencing telecommunication infrastructure convergence across countries. We measure telecommunication infrastructures by using a composite index of telecommunications computed from mobile line, fixed line and internet access penetration using principal component analysis (PCA). Our findings suggest panel convergence for the full sample, developed, less developed, upper-middle and high-income countries, while the low- and lower-middle-income countries diverge. This implies strong evidence for conditional/relative convergence. The key findings from the club convergence algorithm suggest that there is convergence and divergence of the clubs. The System GMM results further suggest that the variables (economic, human capital, financial deepening and demographic) play a significant positive role in telecommunication infrastructure convergence across the countries. This study finds that emergence of convergence clubs reflects similar characteristics among telecommunication products and services in developed, less developed, upper-middle and high-income countries and vice versa for the other income groups.