On the contribution of information and communication technology (ICT) sector to economic growth in Nigeria: Vector error correction modelling approach

Abstract

The Information and Communication Technology (ICT) has been the major front- runner in addressing the needs and industries of low- income communities in countries likes Nigeria. However, it was in the last fifteen years that the awareness for the importance of the ICT’s role in widening the economic break through was identified. Thus, this study examined the impact of ICT sector on economic growth in Nigeria using vector error correction model for the period 1981-2020. The data for the study were collected from National Bureau of statistic. The ADF test, Johansen Co-Integration Test and Vector Error correction model was used to test the stationarity, long run relationship and short run relationship between GDP and ICT sector. The results from the data analysis indicates that all the variables were not stationary; however, become stationary after first difference. The Johansen co-integration test result showed the existence of long run relationship between the GDP and ICT sector. The study also found that LNMPSRM has positive and significant effect on GDP, also LNTIS has negative and significant effect on GDP. The ECT coefficient of 0.251 indicates that a deviation from the long run equilibrium level of the contribution of ICT sector in one year is corrected by 25.1 percent over the following year. The Granger Causality result indicates a bi-directional relationship between LNMPSRM and LNGDP; and independent relationship between LNPUB, LNTIS, LNBRD and LNGDP. In order to ensure sustainable economic growth, the study recommends that Nigeria as a country should increase her investments in ICT sector as this will enable all the sub-sectors to contribute positively toward GDP of the Country.