Impact Of Ict Penetration On Economic Growth: Analyzing The Co-Integrating And Causal Relationship In 144 Countries Based On Network Readiness Index
The aim of the study was to understand long run co-integrating and causal relationship between the real GDP per capita and
ICT penetration, and to benchmark it against the country ranking presented by the Network Readiness Index (NRI). To
achieve this, data for mobile, fixed and internet connections per 100 people is taken from World Bank for 144 countries
which are selected through NRI. The sum of connections is defined as the ICT penetration, whereas the second variable real
GDP per capita is taken from World Bank Database. Panel unit root tests are performed to assess level of integration
between the variables. To find the cointegration relationship, a panel error correction model is used. Dynamic fixed effect
model is used with a system GMM estimator to test for instruments and endogeneity, whereas Wald Tests provide
information on causal relationship between the variables. The data set is divided into six panels; five based on rankings from
NRI and one panel representing the complete list of 144 countries. Co-integrating relationship is observed only for very
highly and highly ranked countries. Bidirectional Causality is observed only in very highly ranked countries, whereas
unidirectional causality is observed from real GDP per capita to ICT in all other cases except in highly ranked countries
where causality moves unidirectional from ICT to real GDP per capita.
Index Terms- ICT, Network Readiness Index, Causality, Cointegration.