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ICT as a source of economic growth in the information age: Empirical evidence from the 1996-2005 period

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  • Vu, Khuong M.

Abstract

This paper examines the hypothesis that ICT penetration has positive effects on economic growth. On theoretical grounds, this paper discusses three channels through which ICT penetration can affect growth: (i) fostering technology diffusion and innovation; (ii) enhancing the quality of decision-making by firms and households; and (iii) increasing demand and reducing production costs, which together raises the output level. This paper conducts three empirical exercises to provide a comprehensive documentation of the role of ICT as a source of growth in the 1996-2005 period. The first exercise shows that growth in 1996-2005 improved relative to the previous two decades and experienced a very significant structural change. The second exercise uses the traditional cross-country regression method to identify a strong association between ICT penetration and growth during 1996-2005, controlling for other potential growth drivers and country-fixed effects. The third exercise uses the system Generalized Method of Moment (GMM) for dynamic panel data analysis to tease out the causal link between ICT penetration and growth. This analysis also shows that, for the average country, the marginal effect of the penetration of internet users was larger than that of mobile phones, which in turn is larger than that of personal computers. The marginal effect of ICT penetration, however, lessens as the penetration increases. This paper points out several policy implications drawn from its analyses and findings.

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Bibliographic Info

Article provided by Elsevier in its journal Telecommunications Policy.

Volume (Year): 35 (2011)
Issue (Month): 4 (May)
Pages: 357-372

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Handle: RePEc:eee:telpol:v:35:y:2011:i:4:p:357-372

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Related research

Keywords: ICT penetration Economic growth Technology diffusion Internet Mobile phones Personal computers;

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Cited by:
  1. Vu, Khuong M., 2013. "Information and Communication Technology (ICT) and Singapore’s economic growth," Information Economics and Policy, Elsevier, vol. 25(4), pages 284-300.
  2. Ronald Kumar & Madhukar Singh, 2014. "Role of health expenditure and ICT in a small island economy: a study of Fiji," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(4), pages 2295-2311, July.
  3. Emilia Madudova, 2012. "Creative Industries In The ®Ilina Region – Ict Sector," ERSA conference papers ersa12p720, European Regional Science Association.

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