Information and Communications Technology and the Level of Income in Africa

Abstract

Information and communications technology has been identified as a factor that drives income, economic growth, and development. Because of this, several studies have been conducted to ascertain ICT's effects on economic growth. However, such studies failed to examine whether real per capita income influences the effect of ICT on income level and whether the effect of ICT on income level differs among regions of African countries. This study, therefore, investigated the effect of ICT on income level. Specifically, it examined whether real per capita income influences the effect of ICT on income level and whether the effect of ICT on income level differs among the sub-regions of African countries. Thus, empirical models were estimated using the panel regression analysis with fixed-effect and random-effect estimators. The results show that ICT positively affects income level in Africa, and real income per capita influences the effect of ICT on income level. In contrast, the effect of ICT on income level differs among African regions. The effect is larger in Eastern, Southern, and Northern African countries than in other regions. Therefore, authorities should consider investment in ICT as a tool or mechanism for enhancing income.