Telecommunications and growth: The contribution of telecommunications infrastructure investment to aggregate and sectoral productivity

Given the weakening economic performance of the USA in recent years, productivity growth has become increasingly the focus of discussions by policy makers at both the federal and state level. While much attention has been directed towards the institutional and social causes underlying stagnant productivity levels, little effort has been given to identifying and measuring the factors that have consistently contributed to the nation's productivity over recent historical periods. For example, industry-specific advancements that not only affect a sector's own productivity but permeate the economy can contribute to overall national productivity. This is the case with telecommunications. The empirical findings in this study suggest that investment in telecommunications infrastructure is causally related to the nation's total factor productivity and that contributions to aggregate and sectoral productivity growth rates from telecommunications advancements are both quantifiable and substantial.