Does investment and deregulation of the ICT sector lead to growth?

Abstract: The aim of this thesis is to investigate whether investment in information and communication technology (ICT) and the level of deregulation of these markets do have a positive impact on economic growth. Furthermore, the purpose is to analyse whether the lower economic performance in southern Europe may possibly be explained by lower levels of investment in ICT and slower deregulation of the ICT markets. Several different dynamic panel data estimations on 11 EU countries were performed. The main conclusion from the estimations is that the variable Telecom which measures the level of deregulation in the telecom market, was shown to have a significant negative effect on the dependent variable economic growth. This is in accordance with theory since an increase in the regulations of the telecom markets is expected to have a negative impact on growth. However, the hypothesis that investments in ICT and early deregulation of ICT markets should promote economic growth could not entirely be supported in this analysis. Several different models with different lags, first differences etc. were estimated, but the regression results were not improved. Therefore, the same conclusion remained and the hypothesis could thus still not entirely be supported in this specific analysis.