Repositioning for Increased Digital Dividends: Internet Usage and Economic Well-being in Sub-Saharan Africa

Abstract

ABSTRACTUntil recently, the shortage of rigorous empirical studies has been attributed as the main cause of inadequate policy guidance in enhancing information and communications technology (ICT) and the largely underdeveloped ICT in Sub-Saharan Africa (SSA). While recently there is an increasing number of national initiatives to enhance broadband infrastructure in SSA, there is also a need for evidence-based decision-making with respect to the relationship between internet usage and economic well-being in Africa to reposition the continent for increased digital dividends. This study, therefore, examines the effect of internet usage on economic well-being for 45 SSA countries for the period 1995–2015 using panel fully modified least square (FMOLS) and panel dynamic ordinary least square (DOLS), and within a panel causality analysis. The panel FMOLS and panel DOLS analyses show that internet usage has a significant and positive effect on economic well-being. The panel causality analysis shows that there is bi-directional causality between internet usage and economic well-being in the short and long run, meaning that internet usage plays significant roles in increasing economic well-being, and economic well-being also plays significant roles in the expansion of internet usage both in the short and long run. Interestingly, the study shows that internet scams have a significant and negative effect on economic well-being, meaning that growing internet scams lead to lower economic well-being in SSA.