The Advancement in Information and Communication Technologies (ICT) and Economic Development: A Panel Analysis

Audi, Marc and Ali, Amjad (2019): The Advancement in Information and Communication Technologies (ICT) and Economic Development: A Panel Analysis.

Abstract

This study analyses the impact of advancement in information and communication technologies (ICT) on economic development over the period of 2000 to 2017 in the case of 87 developed and developing countries. The developed and developing countries are selected following the ranking of International Monetary Fund's World Economic Outlook Database, October 2018. This article uses three types of analysis: the first is based on the whole sample, and for comparative analysis developed and developing countries’ analysis are done separately. The results of panel least squares reveal that advancement in information and communication technologies has an insignificant relationship with economic development, whereas the advancement in information and communication technologies is playing a positive and significant role in the economic development of developing countries. This shows that developed countries are getting more benefits from advancement in information and communication technologies in comparison with developing countries in the process of economic development. The developed countries have a more stable macroeconomic environment in comparison with developing countries, so macroeconomic stability is playing more significant role in the case of developed countries. If developing countries want to achieve higher economic development, they must increase trade and physical capital with stable macroeconomic environment. Moreover, developing countries should adopt advancement in information and communication technologies (ICT) to compete with developed countries in the process of economic development.

• Item Type: MPRA Paper
• Language: English
• Keywords: ICT, economic development, macroeconomic stability
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; L - Industrial Organization > L8 - Industry Studies: Services > L86 - Information and Internet Services ; Computer Software; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development

References

Ali, A. (2015). The impact of macroeconomic instability on social progress: an empirical analysis of Pakistan (Doctoral dissertation, National College of Business Administration & Economics Lahore).

Ali, A., & Rehman, H. U. (2015). Macroeconomic instability and its impact on gross domestic product: An empirical analysis of Pakistan. Pakistan Economic and Social Review, 285-316.

Auty, R. M. (Ed.). (2001). Resource abundance and economic development. Oxford University Press.

Averitt, R. T. (1987). The Dual Economy Twenty Years Later. Journal of Economic Issues, 21(2), 795-802.

Barba-Sánchez, V., Martínez-Ruiz, M. D. P., & Jiménez-Zarco, A. I. (2007). Drivers, benefits and challenges of ICT adoption by small and medium sized enterprises (SMEs): a literature review. Problems and Perspectives in Management, 5(1), 103-114.

Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.

Barro, R. J., & Sala-i-Martin, X. (1992). Convergence. Journal of political Economy, 100(2), 223-251.

Barro, R. J., & Sala-i-Martin, X. (2003). Economic Growth, volume 1 of MIT Press Books.

Berndt, E. R., Morrison, C. J., & Rosenblum, L. S. (1992). High-tech capital formation and labor composition in US manufacturing industries: an exploratory analysis (No. w4010). National Bureau of Economic Research.

Bhatia, R. J. (1960). Inflation, deflation, and economic development. Staff Papers, 8(1), 101-114.

Bleaney, M. F. (1996). Macroeconomic stability, investment and growth in developing countries. Journal of development economics, 48(2), 461-477.

Bon, A., Akkermans, H., & Gordijn, J. (2016). Developing ICT services in a low-resource development context. CSIMQ, 9, 84-109.

Braga, C. A., & Alberto, C. (1998). Inclusion or exclusion. Unesco Courier, 12, 24-6.

Bresnahan, T. F., Brynjolfsson, E., & Hitt, L. M. (2002). Information technology, workplace organization, and the demand for skilled labor: Firm-level evidence. The Quarterly Journal of Economics, 117(1), 339-376.

Brown, L. R. (2001). State of the world, 2001: A Worldwatch Institute report on progress toward a sustainable society. WW Norton & Company.

Brynjolfsson, E., & Hitt, L. M. (2003). Computing productivity: Firm-level evidence. Review of economics and statistics, 85(4), 793-808.

Castells, M. (1999). Information technology, globalization and social development (Vol. 114). Geneva: United Nations Research Institute for Social Development.

Chow, G. C. (1993). Capital formation and economic growth in China. The Quarterly Journal of Economics, 108(3), 809-842.

Chow, G. C. (2017). Capital formation and economic growth in China (pp. 1186-1221). BRILL.

Chowdhury, N. (2000). Information and Communication Technologies and IFPRI's Mandate: A Conceptual Framework (No. 594-2016-39941).

Christopoulos, D. K., & Tsionas, E. G. (2004). Financial development and economic growth: evidence from panel unit root and cointegration tests. Journal of development Economics, 73(1), 55-74.

Cirera, X., Lage, F., & Sabetti, L. (2016). ICT use, innovation, and productivity: evidence from Sub-Saharan Africa. The World Bank.

Cuervo-Cazurra, A., & Genc, M. (2008). Transforming disadvantages into advantages: developing-country MNEs in the least developed countries. journal of international Business Studies, 39(6), 957-979.

d’Orville, H. (2000). Knowledge and information–New levers for development and prosperity. Choice Magazine, June, 23-55.

Daveri, F. (2000). Is growth an information technology story in Europe too?.

De Long, J. B., & Summers, L. H. (1991). Equipment investment and economic growth. The Quarterly Journal of Economics, 106(2), 445-502.

Dorrance, G. S. (1963). The effect of inflation on economic development. Staff Papers, 10(1), 1-47.

Erdil, E., Yetkiner, I. H., & Türkcan, B. (2010). Does Information and Communication Technologies Sustain Economic Growth? The Underdeveloped and Developing Countries Case. In Sustainable Economic Development and the Influence of Information Technologies: Dynamics of Knowledge Society Transformation (pp. 147-160). IGI Global.

Esping-Andersen, G. (Ed.). (1996). Welfare states in transition: National adaptations in global economies. Sage.

Fischer, S. (1993). The role of macroeconomic factors in growth. Journal of monetary economics, 32(3), 485-512.

Garcia-Mila, T., & McGuire, T. J. (1992). The contribution of publicly provided inputs to states' economies. Regional science and urban economics, 22(2), 229-241.

Ghura, M. D. (1997). Private investment and endogenous growth: Evidence from Cameroon (No. 97-165). International Monetary Fund.

Gillis, M., Perkins, D. H., Roemer, M., & Snodgrass, D. R. (1992). Economics of development (No. Ed. 3). WW Norton & Company, Inc..

Greenstein, S. M., & Spiller, P. T. (1995). Modern telecommunications infrastructure and economic activity: An empirical investigation. Industrial and Corporate Change, 4(4), 647-665.

Grier, K. B., & Tullock, G. (1989). An empirical analysis of cross-national economic growth, 1951–1980. Journal of monetary economics, 24(2), 259-276.

Grossman, G. M., & Helpman, E. (1994). Endogenous innovation in the theory of growth. Journal of Economic Perspectives, 8(1), 23-44.

Hameed, T. (2007). ICT as an enabler of socio-economic development. Retrieved June, 24, 2007.

Hardy, A. P. (1980). The role of the telephone in economic development. Telecommunications policy, 4(4), 278-286.

Hendry, D. F., & Krolzig, H. M. (2005). The properties of automatic Gets modelling. The Economic Journal, 115(502), C32-C61.

Holtz-Eakin, D., & Schwartz, A. E. (1995). Infrastructure in a structural model of economic growth. Regional Science and Urban Economics, 25(2), 131-151.

Hulten, C. R., & Schwab, R. M. (1984). Regional productivity growth in US manufacturing: 1951-78. The American Economic Review, 74(1), 152-162.

Hummels, D., Ishii, J., & Yi, K. M. (2001). The nature and growth of vertical specialization in world trade. Journal of international Economics, 54(1), 75-96.

Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of econometrics, 115(1), 53-74.

Kamel, S., Rateb, D., & El‐Tawil, M. (2009). The impact of ICT investments on economic development in Egypt. The Electronic Journal of Information Systems in Developing Countries, 36(1), 1-21.

Kelejian, H. H., & Robinson, D. (1994). Infrastructure productivity: A razor's edge. University of Maryland, Department of Economics.

Kim, W. T. (2003, February). Performance of STBC with Turbo Code in HARQ Scheme for Mobile Communication System. Telecommunications, 2003. ICT 2003. In 10th International Conference (pp. 85-59).

King, R. G., & Levine, R. (1994, June). Capital fundamentalism, economic development, and economic growth. In Carnegie-Rochester Conference Series on Public Policy (Vol. 40, pp. 259-292). North-Holland.

Kormendi, R. C., & Meguire, P. G. (1985). Macroeconomic determinants of growth: cross-country evidence. Journal of Monetary economics, 16(2), 141-163.

Landau, R., & Jorgenson, D. W. (Eds.). (1989). Technology and Capital formation (pp. 1-35). Mit Press.

Lau, L. J., & Tokutsu, I. (1992). The impact of computer technology on the aggregate productivity of the United States: An indirect approach. unpublished paper, Stanford University,(August).

Levin, A., Lin, C. F., & Chu, C. S. J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of econometrics, 108(1), 1-24.

Mago, S., & Mago, S. (2015). Information and communications technologies (ICTs) and livelihoods enhancement in agro-rural communities in Zimbabwe: Connections using the capabilities approach. Journal of Communication, 6(1), 93-103.

Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The quarterly journal of economics, 107(2), 407-437.

Mansell, R., & Wehn, U. (Eds.). (1998). Knowledge societies: Information technology for sustainable development. United Nations Publications.

Morrison, C. J. (1997). Assessing the productivity of information technology equipment in US manufacturing industries. Review of Economics and Statistics, 79(3), 471-481.

Nadiri, I. M., & Mamuneas, T. P. (1996). Constitution of highway capital to industry and national productivity groups. Report submitted to the Federal Highway Administration, Washington, DC.

Nasir, S., & Kalirajan, K. (2016). Information and communication technology-enabled modern services export performances of Asian economies. Asian Development Review, 33(1), 1-27.

Niebel, T. (2018). ICT and economic growth–Comparing developing, emerging and developed countries. World Development, 104, 197-211.

Norton, S. W. (1992). Transaction costs, telecommunications, and the microeconomics of macroeconomic growth. Economic Development and Cultural Change, 41(1), 175-196.

Parsons, D., Gotlieb, C. C., & Denny, M. (1993). Productivity and computers in Canadian banking. In Productivity Issues in Services at the Micro Level (pp. 91-109). Springer, Dordrecht.

Poh, K. L., Ang, B. W., & Bai, F. (2001). A comparative analysis of R&D project evaluation methods. R&D Management, 31(1), 63-75.

Polder, M., Leeuwen, G. V., Mohnen, P., & Raymond, W. (2010). Product, process and organizational innovation: drivers, complementarity and productivity effects.

Ricardo, D. (1891). Principles of political economy and taxation. G. Bell.

Robinson, J. A., Torvik, R., & Verdier, T. (2006). Political foundations of the resource curse. Journal of development Economics, 79(2), 447-468.

Roller, L. H., & Waverman, L. (2001). Telecommunications infrastructure and economic development: A simultaneous approach. American economic review, 91(4), 909-923.

Romer, P. M. (1986). Increasing returns and long-run growth. Journal of political economy, 94(5), 1002-1037.

Rosenstein-Rodan, P. N. (2013). Capital Formation and Economic Development: Studies in the Economic Development of India. Routledge.

Sala-i-Martin, X. X. (1997). I just ran four million regressions (No. w6252). National Bureau of Economic Research.

Sala-i-Martin, X., Doppelhofer, G., & Miller, R. I. (2004). Determinants of long-term growth: A Bayesian averaging of classical estimates (BACE) approach. American economic review, 813-835.

Samimi, A. J. (2010). Ict and economic growth: New evidence from some developing countries. In 第二届服务科学与创新国际会议论文集.

Schreyer, P. (2000). The contribution of information and communication technology to output growth: a study of the G7 countries (No. 2000/2). OECD Publishing.

Shirazi, F., Gholami, R., & Higón, D. A. (2009). The impact of information and communication technology (ICT), education and regulation on economic freedom in Islamic Middle Eastern countries. Information & Management, 46(8), 426-433.

Solow, R. M. (1958). A skeptical note on the constancy of relative shares. The American Economic Review, 48(4), 618-631.

Steinmueller, W. E. (2001). ICTs and the possibilities for leapfrogging by developing countries. International Labour Review, 140(2), 193-210.

Stiroh, K. J. (2005). Reassessing the Impact of IT in the Production Function: A Meta-Analysis and Sensitivity Tests. Annals of Economics and Statistics, (79-80), 529-561.

Timmer, M. P., Inklaar, R., O'Mahony, M., & Van Ark, B. (2011). Productivity and economic growth in Europe: A comparative industry perspective. International Productivity Monitor, (21), 3.

Todaro, M. P., & Smith, S. C. (2012). Economic development.

Wang, E. H. H. (1999). ICT and economic development in Taiwan: analysis of the evidence. Telecommunications Policy, 23(3-4), 235-243.

Yanikkaya, H. (2003). Trade openness and economic growth: a cross-country empirical investigation. Journal of Development economics, 72(1), 57-89.