The impact of communications in the economic growth and development of Kenya

Abstract

In the current global economy, the ability of the communications sector to catalyze the process of economic growth and development requires to be examined in greater detail. In recognition of the recent world-wide investments in communications, quantifying the impact of communications in economic growth and development continues to attract greater focus. In many developing economies, investment data is lacking regarding this subject hence economic analysts have greatly relied on the International Telecommunications Union (ITU) practice of using main telephone lines to determine the stock of communications capital. However, the accuracy of this measure has not been put to careful scrutiny. This study examines the impact of communications on economic growth and development of Kenya by use of time series where; employment rates in communications industry will be used as a proxy for human capital, volume of calls/SMS as a proxy for integration into the world economy and gross revenues as a proxy for investment. The study captures the impact of communications on economic growth and development and data will be gathered for the period ranging from 1999 - 2012. The most widely used communication method is telecommunication. This mode of communication can take various forms, mainly: vojce telephony (mobile, wireline & wireless) and data communication (iIfQ~ing internet). Radio communication (including broadcasting) is also greatly used while communication through postal/courier methods has been seen to be at the minimum. This proposal seeks to study the impact of communications (with special emphasis on mobile voice telephony and data communication) in the economic growth and development of Kenya. The paper focuses on at least the ~past 10 years (1999 - 2012), covering the whole period that mobile (wireless) communication has been in place and lay emphasis in Nairobi. Preliminary survey indicates that Kenya has experienced tremendous growth in the communications sector which has in turn contributed to its overall economic growth and development. This paper investigates communications and assesses its impact on economic growth and development over the period 1999 - 2012. The mobile phone - voice and data (including SMS) communications growth rates - which are used to represent human capital efficiency is expected to impact positively on economic growth and development. On the other hand, it is predicted that the volume of 'postal and courier transactions would have a positive but relatively less significant effect on economic growth-and development. Further analysis is expected to reveal that Kenya's use of radio and internet communications has been steadily on the increase hence impacting positively on its economic growth and development