Given the digital divide between the developed and developing world, and recent findings that mobile phones can bridge this divide, we develop a causal model that analyses the effect of telecom penetration on economic development in developing economies. The paper addresses the following questions to understand the dynamics of this causal connection, i e, is it telecommunication services that accelerates economic growth or overall economic growth that creates the demand for more telecommunication services for their growth to occur? In the context of developing economies, what are the factors that determine demand for and supply of telecom services? Finally, given the importance of telecom infrastructure in growth, what determines changes in telecom penetration in these economies? We present select quantitative and qualitative evidence from a few developing countries to understand the nature of the impact telecommunications has on their economy and society.
