The role of technology in the economic growth of South Africa: The case of frequency allocations to cellular operators

Abstract

Economists associate long-term economic growth with technological progress. Earlier growth literature, as well as modern literature, states to sustain a positive growth rate of output per capita in the long run, there must be continual advances in technological knowledge. This fact is embedded in one of the main growth models, namely the Solow growth model. This article firstly discusses the connection between technology and growth in the various models. Any country needs a positive real growth to develop. To create a better scenario for all its inhabitants, it is therefore important that technological development must be employed in the system. Secondly the focus is on analyzing the role of technology and mobile phones from a growth perspective in developing countries. Various studies by independent annalists are referred to regarding studies about the impact of mobile phones in Africa. Various African countries experienced development by using more mobile phones. Finally, attention is given to frequency allocation to provide voice or data access services for mobile phone users by ICASA, as the controlling body in South Africa. This scarce resource is not effectively allocated for the following reasons: the allocation between government institutions and private sector companies is not economically equitable; and the allocation amongst private sector companies is also not economically equitable. Ineffective frequency allocation is then considered to be a waste of a scarce resource. This wastage, against the background of studies in Africa regarding mobile phones and GDP, will accordingly reduce the potential development of all the inhabitants of South Africa.