Is ICT an enduring driver of economic growth? Evidence from South Asian economies. (September 2021)

• Record Type: Journal Article
• Authors: Hussain, Ammar; Batool, Irem; Akbar, Minhas; Nazir, Marina
• Is Part Of: Telecommunications policy. Volume 45:Number 8(2021)
• Publication Date: 2021-09
• Subjects: ICT Penetration -- Economic growth -- South Asian economies -- Principal component analysis -- Panel cointegration -- FMOLS and Panel VECM; Telecommunication -- Periodicals; Télécommunications -- Périodiques; 384
• DOI: 10.1016/j.telpol.2021.102202
• Languages: English
• ISSNs: 0308-5961

Abstract

Abstract: South Asian countries have shown remarkable progress in ICT penetration and became the fastest growing countries in the region. This paper empirically investigates the impact of ICT penetration on economic growth of four South Asian economies (India, Pakistan, Bangladesh, and Sri Lanka) for the period from 1995 to 2016. We used the three core ICT indicators (i.e. fixed-phone subscribers, mobile-phone subscribers, and internet users) individually and in composite index form developed through Principal Component Analysis (PCA). To estimate the long run relationship, study used the multiple cointegration tests like panel cointegration and Fully Modified Ordinary Least Square (FMOLS) technique and Panel VECM model particularly to investigate the short-run dynamics. Study finds that, ICT penetration in both forms (i.e. ICT composite index and its individual form) have a long run positive relationship with the economic growth of South Asian economies, supporting the leapfrogging hypothesis. We also find that, internet users penetration has more pronounced effects on economic growth followed by mobile-phone subscribers' penetration and fixed-phone subscribers' penetration, respectively. It suggests that if sampled countries seek to enhance their economic growth in the long run, they should implement particular policies that facilitate ICT with keen focus on internet usage. Highlights: ICT penetration leads to rapid economic gains under "leapfrogging hypothesis". ICT penetration has a positive impact on per capita income in South Asia. Internet penetration has a more pronounced effect on per capita growth.