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The Impact of ICT on East Asian Economic Growth: Panel Estimation Approach

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  • Elsadig Ahmed
  • Rahim Ridzuan

Abstract

This paper tests the impact of information and communications technology (ICT) on economic growth for ASEAN5+3 countries consisting of Malaysia, Thailand, Singapore, Indonesia, Philippines, Japan, Korea and China using panel data set from 1975 to 2006. In this paper, we investigate the impact of ICT on economic growth (GDP) based on standard production function consisting of capital (CAP) and labour (LAB) (number of employment as proxy of human capital), as independent variables. Telecommunications investment (TELINT) is used as a proxy to gauge the contribution of ICT as new independent variable to output growth in ASEAN5+3 countries. The study divided the ASEAN5+3 countries into two groups: ASEAN5 and ASEAN5+3 countries. We employ panel data set using various test such as panel unit root test, panel cointegration, Hausman test and generalised least squares method in order to detect the relationship between the dependent variable (GDP) and independent variables (CAP, LAB and TELINT) for ASEAN5+3 countries. The existence of long-run relationship between GDP and factor of production (capital, labour and telecommunications investment) is proven from the panel cointegration test for ASEAN5. Based on fixed effect for model 1 (ASEAN5) and random effect for model 2 (ASEAN5+3), the paper found out that labour, capital and telecommunications investment have positive relationship towards GDP. Thus, the study concludes that ICT has played an important role as engine of growth for sustainable development in ASEAN5 and ASEAN5+3 countries. In this context, ASEAN leader should take this opportunity from the formation of ASEAN5+3 to widen their cooperation with China, Japan and Korea throughout knowledge sharing especially in the area of ICT. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Elsadig Ahmed & Rahim Ridzuan, 2013. "The Impact of ICT on East Asian Economic Growth: Panel Estimation Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 4(4), pages 540-555, December.
  • Handle: RePEc:spr:jknowl:v:4:y:2013:i:4:p:540-555
    DOI: 10.1007/s13132-012-0096-5
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    Keywords

    ICT; Economic growth; Panel data; ASEAN5+3;
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