Telecommunications Revolution and Its Effects on Economic Development : An Applied Study of Developing Economies Such as Egypt, Saudi Arabia and India

This paper examines econometrically the relationship between Telecommunication Revolution (TR) and economic development in three developing countries (Egypt, Saudi Arabia, and India) through period from 1990 to 2011. It measured (TR) by three variables ((Mobile Cellular Telephone Subscribers, Internet Subscribers, Fixed Telephone Connections) as independent variables and took five indicators for economic development as Dependent Variables {Gross Domestic Product (GDP) Growth Rate (GR), Rate of Inflation (consumer prices, annual %) (IR), Rate of Unemployment (% of total labor force) (UR), Growth Rate of Exports (XR), and Exchange Rate (ER)}, and used Factor analysis technique to obtain command factor: Principal Component Values (PCV) as a proxy variable for economic development, which consists of total sum of component matrix multiply by each of five variables of economic development ((GR, IR, UR, XR, and ER) in the three countries. The result of estimation shows that telecom revolution has a positive and significant effect on economic development in both Egypt and India, but the relationship is weak in Saudi Arabia, except with the effect of mobile cellular telephone subscribers having a positive effect on some economic development indicators such as Growth Rate of GDP, and Exchange Rate, and Command Factor and negative relation with unemployment and inflation rate). This in turn supports the hypotheses of the paper. Where telecom revolution leads to reduce unemployment and inflation in Saudi Arabia, but this result is not achieved in other two countries of the study