IDEAS home Printed from https://ideas.repec.org/a/spr/eurase/v10y2020i2d10.1007_s40822-019-00133-1.html
   My bibliography  Save this article

Does the digital gap matter? Estimating the impact of ICT on productivity in developing countries

Author

Listed:
  • Ronia Hawash

    (Butler University)

  • Guenter Lang

    (Kuehne Logistics University)

Abstract

Could the adoption of Information and Communication Technology (ICT) be the means to higher growth and productivity in developing countries? An alarming slump of global productivity growth rates, especially after the global financial crisis, underlines the relevance of this question which does not find a clear answer in the literature. What we do is to estimate the impact of ICT on total factor productivity using capacity and usage-based approaches. Latest panel data of 76 developing countries from 1991 to 2014 is entering our regression models. The results of the different approaches, which allow for unobserved country effects and non-linear relationships, are not optimistic: ICT is only a minor engine of TFP growth. Countries with relatively high ICT investment may be able to increase their TFP growth rates by between 0.1 and 0.3% annually relative to those with modest investment rates. That is, the digital gap matters, but reducing the digital gap alone is not enough to markedly increase growth rates.

Suggested Citation

  • Ronia Hawash & Guenter Lang, 2020. "Does the digital gap matter? Estimating the impact of ICT on productivity in developing countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 189-209, June.
    • Handle: RePEc:spr:eurase:v:10:y:2020:i:2:d:10.1007_s40822-019-00133-1
    DOI: 10.1007/s40822-019-00133-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40822-019-00133-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40822-019-00133-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    2. Berndt, Ernst R. & Morrison, Catherine J., 1995. "High-tech capital formation and economic performance in U.S. manufacturing industries An exploratory analysis," Journal of Econometrics, Elsevier, vol. 65(1), pages 9-43, January.
    3. Paul Schreyer, 2000. "The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries," OECD Science, Technology and Industry Working Papers 2000/2, OECD Publishing.
    4. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2004. "The Case of the Missing Productivity Growth, or Does Information Technology Explain Why Productivity Accelerated in the United States but Not in the United Kingdom?," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 9-82, National Bureau of Economic Research, Inc.
    5. Pohjola, Matti, "undated". "Information Technology and Economic Growth: A Cross-Country Analysis," WIDER Working Papers 295500, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    6. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    7. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
    8. Pierre-Richard Agénor, 2017. "Caught In The Middle? The Economics Of Middle-Income Traps," Journal of Economic Surveys, Wiley Blackwell, vol. 31(3), pages 771-791, July.
    9. Federico Biagi, 2013. "ICT and Productivity: A Review of the Literature," JRC Working Papers on Digital Economy 2013-09, Joint Research Centre.
    10. T. D. Stanley & Hristos Doucouliagos & Piers Steel, 2018. "Does Ict Generate Economic Growth? A Meta†Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 32(3), pages 705-726, July.
    11. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    12. Niebel, Thomas, 2018. "ICT and economic growth – Comparing developing, emerging and developed countries," World Development, Elsevier, vol. 104(C), pages 197-211.
    13. Evelyn Wamboye & Kiril Tochkov & Bruno S Sergi, 2015. "Technology Adoption and Growth in sub-Saharan African Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(1), pages 136-167, March.
    14. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    15. Sotiris Papaioannou & Sophia Dimelis, 2007. "Information Technology as a Factor of Economic Development: Evidence from Developed and Developing Countries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(3), pages 179-194.
    16. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK?," NBER Working Papers 10010, National Bureau of Economic Research, Inc.
    17. Sanjeev Dewan & Kenneth L. Kraemer, 2000. "Information Technology and Productivity: Evidence from Country-Level Data," Management Science, INFORMS, vol. 46(4), pages 548-562, April.
    18. Indjikian, Rouben & Siegel, Donald S., 2005. "The Impact of Investment in IT on Economic Performance: Implications for Developing Countries," World Development, Elsevier, vol. 33(5), pages 681-700, May.
    19. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, July.
    20. Charles Kenny, 2003. "The Internet and Economic Growth in Less-developed Countries: A Case of Managing Expectations? 1," Oxford Development Studies, Taylor & Francis Journals, vol. 31(1), pages 99-113.
    21. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Chapters, in: Resource and Output Trends in the United States since 1870, pages 1-23, National Bureau of Economic Research, Inc.
    22. Sophia P Dimelis & Sotiris K Papaioannou, 2010. "FDI and ICT Effects on Productivity Growth: A Comparative Analysis of Developing and Developed Countries," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 22(1), pages 79-96, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Larisa Găbudeanu & Iulia Brici & Codruța Mare & Ioan Cosmin Mihai & Mircea Constantin Șcheau, 2021. "Privacy Intrusiveness in Financial-Banking Fraud Detection," Risks, MDPI, vol. 9(6), pages 1-22, June.
    2. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    3. Yang Liu & Yanlin Yang & Huihui Li & Kaiyang Zhong, 2022. "Digital Economy Development, Industrial Structure Upgrading and Green Total Factor Productivity: Empirical Evidence from China’s Cities," IJERPH, MDPI, vol. 19(4), pages 1-23, February.
    4. Julian Duran & Rubén Castillo, 2023. "Factors related to information and communication technologies adoption in small businesses in Colombia," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-14, December.
    5. Hayet Kerras & Susana Bautista & Danilo Santos Piñeros Perea & María Dolores de-Miguel Gómez, 2022. "Closing the Digital Gender Gap among Foreign University Students: The Challenges Ahead," Sustainability, MDPI, vol. 14(19), pages 1-28, September.
    6. Mladen Čudanov & Aleksandar Rakićević & Gheorghe Savoiu, 2022. "Composite Indicator of the Organisational Information and Communication Technologies Infrastructure—A Novel Statistical Index Tool," Mathematics, MDPI, vol. 10(15), pages 1-17, July.
    7. Rudra P. Pradhan & Ajoy K. Sarangi & Ashim Sabat, 2022. "The effect of ICT development on innovation: evidence from G-20 countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 361-371, June.
    8. Afzal, Ayesha & Hasnaoui, Jamila & Noor, Ramsha & Banerjee, Arindam, 2023. "Is saving the non-renewable resources worthwhile? Evidence of paradox of plenty on human capital development," Resources Policy, Elsevier, vol. 83(C).
    9. Ilya Ivaninskiy & Irina Ivashkovskaya, 2022. "Are blockchain-based digital transformation and ecosystem-based business models mutually reinforcing? The principal-agent conflict perspective," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 643-670, December.
    10. Shuaitao Jiao & Qiubi Sun, 2021. "Digital Economic Development and Its Impact on Econimic Growth in China: Research Based on the Prespective of Sustainability," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    11. Shuangcheng Luo & Yangli Yuan, 2023. "The Path to Low Carbon: The Impact of Network Infrastructure Construction on Energy Conservation and Emission Reduction," Sustainability, MDPI, vol. 15(4), pages 1-20, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ronia Hawash & Guenter Lang, 2010. "The Impact of Information Technology on Productivity in Developing Countries," Working Papers 19, The German University in Cairo, Faculty of Management Technology.
    2. Niebel, Thomas, 2018. "ICT and economic growth – Comparing developing, emerging and developed countries," World Development, Elsevier, vol. 104(C), pages 197-211.
    3. Bakry, Walid & Nghiem, Xuan-Hoa & Farouk, Sherine & Vo, Xuan Vinh, 2023. "Does it hurt or help? Revisiting the effects of ICT on economic growth and energy consumption: A nonlinear panel ARDL approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 597-617.
    4. Bakari, Sayef & Tiba, Sofien, 2020. "The Impact of Internet on Economic Growth in North Africa: New empirical and policy analysis," MPRA Paper 100609, University Library of Munich, Germany.
    5. Sedika, Wesam M. & Emamb, Waleed, 2019. "The impact of ICT capital and use on economic growth," 2nd Europe – Middle East – North African Regional ITS Conference, Aswan 2019: Leveraging Technologies For Growth 201738, International Telecommunications Society (ITS).
    6. Vu, Khuong & Hanafizadeh, Payam & Bohlin, Erik, 2020. "ICT as a driver of economic growth: A survey of the literature and directions for future research," Telecommunications Policy, Elsevier, vol. 44(2).
    7. 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.
    8. Agnieszka Gehringer & Inmaculada Martinez-Zarzoso & Felicitas Nowak.Lehmann Danziger, 2013. "The Determinants of Total Factor Productivity in the EU: Insights from Sectoral Data and Common Dynamic Processes," EcoMod2013 5343, EcoMod.
    9. Albiman, Masoud Mohammed & Sulong, Zunaidah, 2017. "The linear and non-linear impacts of ICT on economic growth, of disaggregate income groups within SSA region," Telecommunications Policy, Elsevier, vol. 41(7), pages 555-572.
    10. Francesco Venturini, 2009. "The long-run impact of ICT," Empirical Economics, Springer, vol. 37(3), pages 497-515, December.
    11. Ronald Kumar, 2014. "Exploring the role of technology, tourism and financial development: an empirical study of Vietnam," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2881-2898, September.
    12. Edquist, Harald, 2022. "The economic impact of mobile broadband speed," Telecommunications Policy, Elsevier, vol. 46(5).
    13. Ajoy Ketan Sarangi & Rudra Prakash Pradhan, 2020. "ICT infrastructure and economic growth: a critical assessment and some policy implications," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(4), pages 363-383, December.
    14. Kim, Keungoui & Bounfour, Ahmed & Nonnis, Alberto & Özaygen, Altay, 2021. "Measuring ICT externalities and their contribution to productivity: A bilateral trade based approach," Telecommunications Policy, Elsevier, vol. 45(2).
    15. Oulton, Nicholas, 2012. "Long term implications of the ICT revolution: Applying the lessons of growth theory and growth accounting," Economic Modelling, Elsevier, vol. 29(5), pages 1722-1736.
    16. Marcin Piatkowski, 2003. "The Contribution of ICT Investment to Economic Growth and Labor Productivity in Poland 1995-2000," Development and Comp Systems 0308002, University Library of Munich, Germany.
    17. 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.
    18. Hulten, Charles R., 2010. "Growth Accounting," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 987-1031, Elsevier.
    19. Awad, Atif & Albaity, Mohamed, 2022. "ICT and economic growth in Sub-Saharan Africa: Transmission channels and effects," Telecommunications Policy, Elsevier, vol. 46(8).
    20. Stanley, T. D. & Doucouliagos, Chris & Steel, Piers, 2015. "Does ICT generate economic growth? A meta-regression analysis," Working Papers eco_2015_9, Deakin University, Department of Economics.

    More about this item

    Keywords

    Information technology; Productivity; Digital divide; Development;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eurase:v:10:y:2020:i:2:d:10.1007_s40822-019-00133-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.