Transaction Costs, Telecommunications, and the Microeconomics of Macroeconomic Growth

The sources of differences in growth rates across nations are unclear. This observation constitutes one of the central intellectual challenges of our time: Why is the whole world not developed?' Consequently, a host of scholars offer various explanations for growth or nongrowth, including cultural factors, politics, and economics.2 The objective of this article is to determine whether a link exists between transaction costs, telecommunications, and economic growth. The article builds on recent research on the macroeconomic determinants of growth as well as on research regarding the significant economic effects of telecommunications on transaction costs. It is organized as follows. Section I reviews the theory of transaction costs; Section II, the link between transaction costs and telecommunications. Section III contains the empirical analysis, and Section IV some conclusions.

[1]  Stanley Fischer,et al.  ‘Long-term contracting, sticky prices, and monetary policy’: A comment , 1977 .

[2]  Kevin M. Murphy,et al.  Human Capital, Fertility, and Economic Growth , 1990, Journal of Political Economy.

[3]  Gerald W. Scully,et al.  The Institutional Framework and Economic Development , 1988, Journal of Political Economy.

[4]  R. Matthews,et al.  The Economics of Institutions and the , 1986 .

[5]  R. Summers,et al.  Improved International Comparisons Of Real Product And Its Composition: 1950–1980 , 1984 .

[6]  J. Hirshleifer.  Exchange Theory- The Missing Chapter , 1973 .

[7]  William L. Silber,et al.  TECHNOLOGY, COMMUNICATION AND THE PERFORMANCE OF FINANCIAL MARKETS: 1840–1975 , 1978 .

[8]  Douglass C. North,et al.  Measuring the Transaction Sector in the American Economy, 1870-1970 , 1986 .

[9]  C. Geertz.  The Bazaar Economy: Information and Search in Peasant Marketing , 1978 .

[10]  Du Boff,et al.  Business Demand and the Development of the Telegraph in the United States, 1844–1860 , 1980, Business History Review.

[11]  Nathaniel H. Leff,et al.  Social benefit-cost analysis and telecommunications investment in developing countries , 1984 .

[12]  R. C. O. Matthews,et al.  Accounting for Slower Economic Growth: The United States in the 1970s. , 1981 .

[13]  Gary Fromm,et al.  The Sources of Economic Growth in the United States and the Alternatives Before Us. , 1963 .

[14]  R. Easterlin.  Why Isn't the Whole World Developed? , 1981, The Journal of Economic History.

[15]  J. Kendrick.  The formation and stocks of total capital , 1978 .

[16]  Alfred D. Chandler,et al.  The Visible Hand , 1977 .

[17]  A. Zellner,et al.  Basic Issues in Econometrics. , 1986 .

[18]  Robert J. Barro,et al.  Fertility Choice In A Model Of Economic Growth , 1989 .

[19]  R. Barro.  Government Spending in a Simple Model of Endogeneous Growth , 1988, Journal of Political Economy.

[20]  Albert O. Hirschman.  Development Projects Observed , 1967 .

[21]  Multinational firms, international trade and international telecommunications , 1984 .

[22]  Victor P. Goldberg.  Production Functions, Transactions Costs and the New Institutionalism , 1985 .

[23]  N. Leff,et al.  Externalities, Information Costs, and Social Benefit-Cost Analysis for Economic Development: An Example from Telecommunications , 1984, Economic Development and Cultural Change.