INVESTMENT AND ADOPTION IN ADVANCED TELECOMMUNICATIONS

This paper investigates the determinants of the international diffusion of advanced telecommunications, a network technology with high levels of interrelatedness. The empirical analysis shows that late comers with a late start of adoption, a fast growth of output and investment, and a small installed base of the inferior technology performed far better than many advanced countries. Advanced countries were locked-in by lower growth of output and investments and a large installed base of young vintages of the inferior technology so that they face high costs for switching to the new technology.