ICT Infrastructure and Economic Growth in G-20 Countries: New Insights form ARDL Modelling

Abstract

This paper examines the long-run relationship between information communication technology (ICT) infrastructure and economic growth in G-20 countries for the period 1961–2019. We use six different indicators of ICT infrastructure, namely telephone landlines, mobile phones, internet users, internet servers, fixed broadband, and a composite index. Using autoregressive distributive (ARDL) cointegration technique, the study warrants the support of long-run relationship between ICT infrastructure and economic growth in a few cases, typically with reference to a particular ICT infrastructure indicator and economic growth we use. Using vector error correction model (VECM) for testing the Granger causalities, the study acknowledges mixed evidence of the relationship between the ICT infrastructure and economic growth in the G-20 countries, both by individual country and at the panel setting. In some instances, ICT infrastructure leads to economic growth, lending support to supply-leading hypothesis (S) of ICT infrastructure-growth nexus. In other instances, it is the economic growth that engenders the level of ICT infrastructure, lending support to demand-following hypothesis (D) of ICT infrastructure-growth nexus. There are also circumstances, where ICT infrastructure and economic growth are mutually interdependent. That is the situation where both are self-reinforcing and offer support to feedback hypothesis (F) of ICT infrastructure-growth nexus. In addition, there are also instances, where the ICT infrastructure and economic growth are independent of each other. This is the situation where both are neutral and offer support to neutrality hypothesis (N) of ICT infrastructure-growth nexus. To summarize, Granger causality results vary from country to country within the G-20 countries, depending upon the type of ICT infrastructure and economic growth that we use in a particular empirical exploration process. The policy implication of this study is that the economic policies should recognize the differences in the ICT infrastructure and economic growth in order to maintain sustainable development in these G-20 countries.