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ICT, Financial Inclusion, and Growth Evidence from African Countries

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  • Kangni Kpodar
  • Mihasonirina Andrianaivo

Abstract

This paper studies the impact of information and communication technologies (ICT), especially mobile phone rollout, on economic growth in a sample of African countries from 1988 to 2007. Further, we investigate whether financial inclusion is one of the channels through which mobile phone development influences economic growth. In estimating the impact of ICT on economic growth, we use a wide range of ICT indicators, including mobile and fixed telephone penetration rates and the cost of local calls. We address any endogeneity issues by using the System Generalized Method of Moment (GMM) estimator. Financial inclusion is captured by variables measuring access to financial services, such as the number of deposits or loans per head, compiled by Beck, Demirguc-Kunt, and Martinez Peria (2007) and the Consultative Group to Assist the Poor (CGAP, 2009). The results confirm that ICT, including mobile phone development, contribute significantly to economic growth in African countries. Part of the positive effect of mobile phone penetration on growth comes from greater financial inclusion. At the same time, the development of mobile phones consolidates the impact of financial inclusion on economic growth, especially in countries where mobile financial services take hold.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/73.

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Length: 45
Date of creation: 01 Apr 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/73

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Keywords: Economic growth; Developing countries; Information technology; Telephone systems; internet; mobile telephone; telephone subscribers; telecommunications; telecom; mobile telephones; internet users; telephone lines; technologies; telephone penetration; personal computers; information and communication technologies; telecommunications infrastructure; communication technologies; mobile communications; telecommunication services; telecommunication networks; personal computer; computer use; mobile cellular; computer users; international telecommunication union; technological change; automated teller machines; telephone penetration rates; telecommunications sector; telephone companies; telecoms; informatics; data models; telecommunication development; data model; communication networks; telecommunications policy; technological progress; telecommunication network; cellular services; information technologies; telecommunications investment; broadband access; computer access; access to the worldwide network; telecommunication industry;

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  1. Anusua Datta & Sumit Agarwal, 2004. "Telecommunications and economic growth: a panel data approach," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1649-1654.
  2. Beck, Thorsten & Cull, Robert & Fuchs, Michael & Getenga, Jared & Gatere, Peter & Randa, John & Trandafir, Mircea, 2010. "Banking sector stability, efficiency, and outreach in Kenya," Policy Research Working Paper Series 5442, The World Bank.
  3. Kendall, Jake & Mylenko, Nataliya & Ponce, Alejandro, 2010. "Measuring financial access around the world," Policy Research Working Paper Series 5253, The World Bank.
  4. Röller, Lars-Hendrik & Waverman, Leonard, 2000. "Telecommunications Infrastructure And Economic Development: A Simultaneous Approach," CEPR Discussion Papers 2399, C.E.P.R. Discussion Papers.
  5. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  6. Sridhar, Kala Seetharam & Sridhar, Varadharajan, 2004. "Telecommunications infrastructure and economic growth: Evidence from developing countries," Working Papers 04/14, National Institute of Public Finance and Policy.
  7. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  8. Rand, John & Tarp, Finn, 2002. "Business Cycles in Developing Countries: Are They Different?," World Development, Elsevier, vol. 30(12), pages 2071-2088, December.
  9. Sridhar, Kala Seetharan & Sridhar, Varadharajan, 2007. "Telecommunications Infrastructure And Economic Growth: Evidence From Developing Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(2), pages 37-56.
  10. Markus Haacker, 2010. "ICT Equipment Investment and Growth in Low- and Lower-Middle-Income Countries," IMF Working Papers 10/66, International Monetary Fund.
  11. Norton, Seth W, 1992. "Transaction Costs, Telecommunications, and the Microeconomics of Macroeconomic Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 175-96, October.
  12. Shyamal K. Chowdhury, 2006. "Investments in ICT-capital and economic performance of small and medium scale enterprises in East Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(4), pages 533-552.
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Cited by:
  1. Raul KATZ & Pantelis KOUTROUMPIS, 2012. "The Economic Impact of Telecommunications in Senegal," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(86), pages 21-42, 2nd quart.
  2. Malek, Mohammad Abdul & Hossain, Md. Amzad & Saha, Ratnajit & Gatzweiler, Franz W., 2013. "Mapping marginality hotspots and agricultural potentials in Bangladesh," Working Papers 154065, University of Bonn, Center for Development Research (ZEF).

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