Dynamic Systems of Information and Communications Technology, Urbanization, and Economic Growth: Evidence from Bootstrap Panel Granger Causality

Abstract

This study takes advantage of the boot strap Granger panel causality approach to figure out the dynamic Granger causality systems among information and communications technology (ICT),urbanization (URB),and economic growth (ECG)in China. Utilizinga panel data of 11 provinces inChina’s Yangtze River Economic Belt (YREB)from1997to2018, the empirical results indicatethat ICT, URB, and ECG in the YREB have cross-sectional dependence and province-specific heterogeneity. Granger causality from ICT to ECG can be confirmed among most provinces in China’s YREB, while Granger causality from ECG to ICT, as well as two-way Granger causality, are only found in economically developed provinces (Shanghai, Jiangsu, Zhejiang and Chongqing). Moreover, we document thatGranger causality from URB to ECG exists in 9 provinces alongthe YREB,apart from Hubei and Guizhou, while Jiangsu, Anhui and Hubeishowan opposite direction. This finding indicates that URB significantly improves the efficiency of ECG, but the ECG’s effect on URB is restricted by regional bias policies. Therefore, local government should further implement differentiated economic policies and establish the interactive mechanism among ICT, URB and ECG in the YREB.