ICT and economic growth in Sub-Saharan Africa: Transmission channels and effects. (September 2022)

• Record Type: Journal Article
• Authors: Awad, Atif; Albaity, Mohamed
• Is Part Of: Telecommunications policy. Volume 46:Number 8(2022)
• Publication Date: 2022-09
• Subjects: Information and communication technology -- Transmission channels -- Economic growth -- Sub-Saharan Africa; Telecommunication -- Periodicals; Télécommunications -- Périodiques; 384
• DOI: 10.1016/j.telpol.2022.102381
• Languages: English
• ISSNs: 0308-5961

Abstract

Abstract: Despite significant progress in the empirical analysis of the impact of information and communication technology (ICT) on economic growth, previous studies have not empirically examined the mechanisms by which ICT hinders or expands economic growth. The specific aim of the present study was to identify the transmission channels through which ICT contributes to economic growth. The examined channels included; openness, FDI inflows, education, domestic investment, political institution, and inflation. The study employed the panel-corrected standard errors (PCSE) and system two step system GMM techniques on a sample of 44 countries in Sub-Saharan Africa (SSA) over the period 2004–2020. Using an ICT composite index, the causal mediation analysis identified that ICT contributed directly to growth, as proposed by the growth theories. Furthermore, the same analysis identified; domestic investment, openness, and education as crucial variables through which ICT penetration indirectly promoted per capita growth in the SSA region. The robustness of this result was verified using a variety of tools. The present findings suggested that the current efforts to expand ICTs in Sub-Saharan Africa should be continued since this sector has a considerable indirect impact on promoting economic growth. Highlights: Existing studies have overlooked the importance of the channels through which ICT may affect per capita GDP growth. The specific aim of the present study was to identify the transmission channels through which information and communication technology (ICT) contributes to economic growth. The study employed the panel-corrected standard errors (PCSE) and system GMM techniques on a sample of 44 countries in Sub-Saharan Africa (SSA) over the period 2004–2020. The causal mediation analysis identified domestic investment, openness, and education as crucial variables through which ICT penetration indirectly promoted per capita growth in the SSA region. The robustness of this result was verified using a variety of tools.