2
Introduction
Telecommunications liberalization and its effects are an important issue in research of
communications technology and policy. In theory, telecommunications liberalization is
commonly believed to have a positive effect on network expansion in the telecommuni-
cations industry. However, there are still few empirical studies based on aggregate data.
The aim of this study is to test the conventional wisdom that telecommunications
liberalization has a positive effect on network expansion, using the Asia Pacific
Economic Cooperation (APEC) countries as examples.
Three indicators are used to represent telecommunications liberalization:
competition, privatization, and regulatory independence. Two indicators are used to
represent network expansion: telephone lines per one hundred inhabitants and cellphone
subscribers per one hundred inhabitants. In other words, the assumption of this research
is that competition in the telecommunications market structure, privatization of
telecommunications operators, and independence of regulatory agencies should have
positive effects on expansion of telephone lines and cellphones. That means more people
can benefit from telecommunications liberalization in terms of access to
telecommunications service.
APEC member countries make up the sample for this research because of their
variety in terms of levels of political-economic development and progress in
telecommunications liberalization. Within the twenty-one APEC countries, for example,
the US and Canada are industrial countries with early liberalization of telecommuni-
cations. The economies in transition, like Taiwan and Korea, and the developing
countries, like China and Malaysia, have been speeding up the liberalization of their
Convention