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This paper analyzes the development of our understanding of the causal links between economic growth, the climate for innovation and entrepreneurship, and the deployment of technology, with specific reference to telecommunications. Particular attention is paid to the (mis)use of the Harrod–Domar model by The World Bank and other development agencies, and to the more recent appreciation for "the investment climate," which finds substantial support in the work by Parente and Prescott. The importance of an institutional framework supportive of innovation ("experimentation") and entrepreneurship is underscored by economic historians, such as Rosenberg and Birdzell, and North.The role of telecommunications technology in modern economies and its contribution to total factor productivity is reviewed, as are the obstacles to the technology's effective deployment. Some ofthese obstacles are inherent in the technology itself, but many are the result of government legislative and regulatory decisions that constrain entrepreneurial initiatives, as recent experience in Turkey demonstrates. The paper concludes with a discussion of policy choices that governments face in influencing the climate for market-driven investment in telecommunications services and infrastructure.

DOI: 10.1007/978-0-387-79976-6_2

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