This paper demonstrates that a structurally derived, internationally compa- rable index of checks and balances on executive discretion created by varia- tion in political structures and party systems affects relative rates of basic telecommunications infrastructure deployment in 147 countries during the period 1960-1994. Models of infrastructure investment that omit the polit- ical characteristics of a prospective host country confound countries whose economic and demographic characteristics point to rapid demand growth for infrastructure services with those that crate a potential trap for investors due to a higher probability of arbitrary change in the policy environment. The econometric analysis exploits both cross-sectional and temporal variation in the panel. A robust covariance-matrix estimator based on that developed by Newey and West is used to compute valid standard errors in the presence of heteroskedasticity and within unit-serial correlation, two common character- istics in the error-term structure of panel datasets.
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