ICT Adoption and Economic Growth Nexus: Evidence from Leading African Economies

Adekunle Oluwole Binuyo

doi:10.22610/jebs.v7i5(j).605

Abstract

This paper examines the impact of information and communication technology (ICT) on output growth in Nigeria, South Africa, Egypt, Algeria, Morocco, Libya, Sudan, Kenya, and Ghana. We use annual data on GDP (PPP) to proxy economic growth whilst internet users, mobile phone users, telephone users, personal computers users, and school enrolment (tertiary) covering from 1990 â€“ 2013 were used to proxy ICT. The data were analysed in a dynamic panel environment using the 2SLS method. The robustness of the 2SLS result was confirmed by the GMM regression. The results imply a positive relationship between ICT and economic growth in accord with earlier studies. Few of the earlier studies investigate the causality aspect of the relationship and the few that did use ICT directly without resolving it into its sub-variables as done in this study. The Granger causality test results indicate that only fixed wireless communication system Granger cause GDPPPP out of the five predictors suggesting that the other ICT predictors merely associate with GDP not necessarily Granger cause it as most of the earlier studies erroneously suggest. The policy implication is that the affected countries should give policy priority to development of ICT infrastructure with specific emphasis on the fixed wireless communication system as precursors for ensuring sustainable growth in the medium and long - term.

Highlights

Experience in relation to growth has taken diverse direction across countries at different points in times
Leaning on the outcome of an intensive consultation process by the Partnership on Measuring information and communication technology (ICT) for Development held in Geneva in the year 2005, this study identify Personal Computers (PC), Global System of Mobile (GSM), Fixed wireless communication system, and Internet users as ICT basic core indicators
The results suggest that economic growth is significantly influenced by ICT_TP, SCHENR, ICT_IU and ICT_PC in that order with the highest level of influence coming from ICT_TP usage of fixed wireless communication system

Summary

Introduction

Experience in relation to growth has taken diverse direction across countries at different points in times. Other studies investigating effect of ICT on growth at macro level has been targeted at developed countries (Jorgenson and Stiroh, 2000; Jorgenson, 2001; Oliner and Sichel, 2000 (for the US), Oulton, 2002 (for the UK), Jalava and Pohjola, 2002 (for Finland), Jorgenson and Motohashi, 2005 (for Japan), Colecchia and Schreyer (2001), Van Ark, Melka, Mulder, Timmer and Ypma (2002), Daveri (2002), and Timmer, Ypma, and Van Ark (2003) for EU economies; and Jorgenson (2003) for the G7 economies; Jorgenson and Vu (2007) for 110 countries These studies employ the growth accounting technique to estimate the contribution of ICT to economic growth. The study made use of panel data of ten leading African economies covering from 1990 – 2015 sourced from the World Bank database

Literature Review

Data and Methodology

Ethiopia

Data Analyses

Findings

Discussion