Impact of Information and Communication Technology on Economic Growth: Evidence from Developing Countries

Raéf Bahrini,Alaa Qaffas

doi:10.3390/economies7010021

Abstract

The present study aims to evaluate the impact of information and communication technology (ICT) on the economic growth of selected developing countries in the Middle East and North Africa (MENA) region and the Sub-Saharan Africa (SSA) region by using a panel Generalized Method of Moment (GMM) growth model over the period 2007–2016. The results extracted from the econometric model show that except fixed telephone, other information and communication technologies such as mobile phone, Internet usage, and broadband adoption are the main drivers of economic growth in MENA and SSA developing countries over the recent period 2007–2016. In addition, our findings confirm the superiority of MENA countries over SSA countries in the areas of Internet usage and broadband adoption. From a policy perspective, the results suggest that authorities in MENA and SSA countries should increase investments in ICT infrastructure. To benefit from the ICT drivers of economic growth, policymakers should enact several important policies that permit the development of financial sectors, provide a more convenient regulatory and institutional environment, increase economy openness, prioritize the allocation of resources to the development of ICT infrastructure, and contain the negative effects of inflation and government consumption.

Highlights

Over the last decades, the great diffusion of information and communication technology (ICT)has caused a dramatic transformation of the world into an information society
In this study we investigated the effect of ICT diffusion on the economic growth of 45 developing countries from the Middle East and North Africa (MENA) and Sub-Saharan Africa (SSA) regions over the period 2007–2016
A two-step panel Generalized Method of Moment (GMM) growth model was employed to explore the nexus between economic growth and four ICT variables: fixed telephone (TEL), mobile phone (MOB), Internet usage (INT), and broadband adoption (BBA)

Summary

Introduction

The great diffusion of information and communication technology (ICT)has caused a dramatic transformation of the world into an information society. Regarding the growing importance of ICT and the way it is transforming the world, many academicians and researchers have focused on studying the impact of ICT on economic growth at the industry level, at the national level, and at the cross-country level. The literature shows that many theories recognize that ICT plays an increasingly key role in speeding up economic growth, but empirical studies on this relationship have produced mixed. While a number of empirical studies confirmed that ICT diffusion plays a positive and significant role in improving economic growth, especially in developed countries (Roller and Waverman 2001; Inklaar et al 2005; Koutroumpis 2009), other studies found that economic growth in many countries and regions of the world is negatively affected by ICT diffusion (Dewan and Kraemer 2000; Pohjola 2002; Papaioannou and Dimelis 2007; Yousefi 2011; Pradhan et al 2015; etc.)

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