Investigating the Impact of ICT Investments on Human Development

Abstract

AbstractIn the last two decades, the worldwide information and communication technology (ICT) market has been growing at a rapid rate. This has led to a global net increase in ICT investments and usage. International organizations, ICT vendors and policy makers have been investigating whether such large investments are worthwhile. The results regarding this issue are inconclusive, for this research area is fraught with complexity, and existing empirical work is limited. This study investigates the impact of ICT investments on human development. Of particular interest are the relationships between different dimensions of ICT investment and the components of human development. ICT investments can be thought of as having four dimensions – hardware, software, internal spending and telecommunication investment, while typical human development indicators are standard of living (GDP per capita), education (literacy and school enrolments) and health (life expectancy). If these variables are not modelled correctly, their effect on each other can be either under‐ or overestimated. In this article, the line of enquiry from a study by Kim et al. (2008) is extended to investigate the relationship between the four aspects of ICT investments and the three key components of human development. The empirical analysis shows that the four dimensions of ICT investment have an impact in various ways on the components of human development, and that these impacts are different, in high income, mid income and low income countries. Based on these findings, this study suggests theoretical propositions to explain the impact of ICT investments on human development.