The role of ICT infrastructure, innovation and globalization on economic growth in OECD countries, 1996-2017

Abstract

PurposeThe rapid development of information and communication technology (ICT) over the past decade has enabled heterogeneous economic sectors to be more integrated, leading to a significant effect on nation’s growth across OECD countries. The objective of this study is to estimate the short run and long run inter-linkages among ICT, innovation technology, globalization, and economic growth for the period 1996-2017 in OECD countries.Design/methodology/approachThis research provides some sophisticated methodologies by using principal component analysis to construct ICT and innovation indices and follow up by employing the panel cointegration test, pooled mean group regression, fully modified ordinary least squares and dynamic ordinary least squares as sophisticated estimation techniques, panel Granger causality and forecast error variance decomposition to examine the robustness of the causal association in the findings.FindingsThe empirical results herein suggest that ICT, innovation and globalization positively contribute to economic growth, while the causality findings reveal strong endogenous relationships among both ICT mobile and internet use, innovation development, globalization and economic growth in both short and long run. The findings further imply that OECD countries have yet to promote economic growth from ICT infrastructure expansion, the enlargement of technology innovation and the spread of globalization.Practical implicationsThe particular policy recommendation is to reinforce the investment and establishment of a reliable ICT infrastructure as well as innovation technology to create sustained economic growth in this progressively interconnected world.Originality/valueThis study is valuable from policy and decision-makers’ perspective, as it highlights the significance of ICT infrastructure development, innovation enlargement and globalization to elevate the economic growth in OECD countries.