Effect of internet penetration on ICT export, economy, and employment in Bangladesh: Evidence from vector error correction and local projection

The advent of Industry 4.0 is imminent, with the internet emerging as a pivotal catalyst for this impending revolution as general-purpose technology (GPT). This study examines the transformative impact of internet penetration on economic development and employment dynamics in Bangladesh. Leveraging time series data from 1996 to 2022, and employing Vector Error Correction Model (VECM) and Linear Projections (LP) methodologies, the research reveals significant insights into the relationship between internet penetration, ICT exports, GDP growth, and employment trends. Findings indicate that a 10% increase in internet penetration led to a notable 4.7% rise in ICT exports and a marginal 0.8% increase in GDP, albeit with a concerning 1.1% decline in formal sector employment. While highlighting the positive influence of internet connectivity on trade and economic activities, the study underscores the challenges of job displacement and the need for inclusive and equitable growth strategies in the face of technological big push.