Electrification, telecommunications, and the finance-growth nexus: Evidence from firm-level data

We explore variations in access to energy and telecommunications improvements across firms in 57 and 112 developing countries, respectively, between 2002 and 2014, and find that national investments in technological infrastructures provide a channel through which financial development promotes firm-level adoption of tangible innovations. In particular, when countries make large investments in their energy (electricity and natural gas) and telecommunications infrastructures, firms with greater access to financial resources are better positioned to benefit from these investments, experiencing significantly fewer power interruptions, more adoptions of power generators, and greater website use, all of which are related to higher firm-level growth in sales and employment. (C) 2020 Elsevier B.V. All rights reserved.

Automated summary

National investments in technological infrastructures facilitate firm-level adoption of tangible innovations, particularly in energy and telecommunications sectors. Firms with greater access to financial resources are better positioned to benefit from these investments, resulting in higher sales and employment growth.