Does ICT Participate in Economic Convergence among Asian Countries: Evidence from Dynamic Panel Data Model

Abstract

Conventional Convergence models usually oversee the role of information and communications technology (ICT) as a determinant of convergence. This paper introduces ICT as a factor contributing towards economic convergence in Asian countries. In addition to ICT, other factors like demographic traits, level of human development and electricity consumption are used as regressors. System GMM technique is used to estimate convergence regression for selected Asian countries for data of time span 2001-2010. Support for ICT-augmented convergence is found, implying that ICT has the tendency to participate in convergence process. Suitable demographic features, human development and electricity consumption are also found to contribute to economic convergence in the sample countries of Asia. Findings of this paper indicate the need to complement the favorable demographic endowments in Asian economies with economically productive usage of ICT to proceed towards economic convergence in Asian Region.Keywords: Convergence Models, Information and Communication Technology (ICT), System Generalized Method of Moments (SYS-GMM), Human Development Index (HDI), Electricity Consumption(ProQuest: ... denotes formulae omitted.)1 IntroductionImportance of information has been pivotal since beginning of human civilization. Since time immemorial the information has been serving as a competitive edge for its possessors [12], During 20th century, the advent of digital devices has hotfooted the flow of information and ability to process it. This technology is termed as Information and communication technology (ICT). During the last half of 20th century, 'information revolution' was made possible through the 'digital' Information and Communication Technology 'ICT' [12], The ICT revolution is crucial insofar as it involves technologies geared to the production and dissemination of knowledge and information. These new technologies, that first emerged in the 1950s and then really took off with the advent of the Internet, have breathtaking potential. It is worth noting that the differences between communication technology and information technology have become fuzzy, e.g. mobile phones are principally tools for communication. But with the invention of wireless technology, users can access information via cellular phone. Internet is primarily a tool of information technology, yet many Internet users communicate mutually through their personal computers.Economic convergence refers to the process by which relatively poorer regions or countries grow faster than their rich counterparts. The convergence hypothesis is advanced by [22] and is documented by [8] and [5], This paper includes ICT and in economic convergence and calls it ICT-augmented. For the sake of simplicity, the word 'Economic convergence' is interchangeably used as 'convergence' . As documented in empirical literature, conditional beta convergence is a more realistic exercise because it reflects the convergence of countries after controlling for differences in steady states. Absolute sigma (o) convergence is another form of convergence theory but suffers with lack of empirical evidence. Conditional convergence is simply a confirmation of a result predicted by the neoclassical growth model: those countries with similar steady states exhibit convergence. This does not imply that all countries in the world would converge to the same steady state; rather they would converge to their own steady states.2 ObjectiveThis paper inquires the role of ICT in achieving economic convergence among Asian countries. It is expected due to miraculous ability of ICT to process information and hence become economically meaningful. Classic evidence of this ability is Moore's law that purports an exponentially increasing 'information processing' capability in microelectronics, society and economy. Another instance is Gilder Law that asserts bandwidth of network would triple each year for the span of 25 years. …