The Effect of ICT Formation and Development on the Dynamics of Production Output

Abstract

The purpose of this article is to analyze how differentiation in the development of the ICT sector in terms of two kinds of indicators (for either “formative” or “characterizing” ICT) may affect a country’s or region’s economic output, a relationship which this study seeks to better understand. The research hypothesis is that the degree of impact on the economic indicators of a country’s development that is attributable to heterogeneity in the ICT sector, classified as either “formative” or “characterizing,” is not the same. To test this hypothesis, three types of models were constructed incorporating either general effects, fixed effects, or random effects. The impact on economic growth from control variables that are not directly related to the ICT sector was also tested. The results of the study indicate that the cumulative effect of a single unit increase in each of the components that make up the formative ICT factors (because of development in related components) is greater than the effect from a like increase in components that are among the characterizing ICT factors; and this different impact produces in a 7.96% increase in GRP per capita. The authors’ expectations about the positive effects of a number of factors pertaining to labor resources and capital on the value of GRP per capita were also confirmed. One advantage of the proposed theoretical approach is that it permits the range of explanatory variables to be expanded and the dependent variable to be replaced by one consistent with the goals under consideration and the corresponding tools.