Linkages Between Formal Institutions, ICT Adoption, and Inclusive Human Development in Sub-Saharan Africa

Abstract

This study empirically assesses the effects of formal institutions on ICT adoption in 49 African countries over the years 2000–2012. It deploys 2SLS and FE regression models (a) to estimate the determinants of ICT adoption and (b) to trace how ICT adoption affects inclusive development. The results show that formal institutions affect ICT adoption in this group of countries, with government effectiveness having the largest positive effects and regulations the largest negative effects. However, while formal institutions generally affect ICT adoption positively, population and economic growth tend to constrain ICT adoption more in low-income countries than middle-income countries. The results further demonstrate that the effects of ICT adoption on development are comparable to those of domestic credit and foreign direct investment. Ceteris paribus, one may conclude that external factors like foreign aid are more limiting to inclusive development than internal factors. This suggests that developing countries, African countries in this specific case, can enhance their ICT adoption for development by improving formal institutions and by strengthening domestic determinants of ICT adoption. Both represent opportunities for further research.