ICT adoption and its influence on economic growth and innovation
The rapid growth of Information and Communication Technology (ICT) has been found to be an important element in enhancing countries’ economic growth and innovation. The question of why some countries grow faster while some are lagged behind has ever been one of the debated topics. However, ICT ad...
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| Format: | Thesis |
| Language: | English |
| Published: |
2020
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/90080/1/SPE%202020%2012%20ir.pdf |
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| Summary: | The rapid growth of Information and Communication Technology (ICT) has been
found to be an important element in enhancing countries’ economic growth and
innovation. The question of why some countries grow faster while some are
lagged behind has ever been one of the debated topics. However, ICT adoption
contributes to a broadening gap between the better-off and worse-off countries,
which characterizes the unequal distribution across the world. Hence, this study
aims to: (a) investigate the determinants of ICT adoption: (b) examine the
influences of ICT adoption on economic growth: (c) identify the impact of ICT
adoption on innovation.
Two methodologies were used to achieve the objectives of the study. In the first
objective, the study applies dynamic panel estimator GMM which covers 44
developed countries and 58 developing countries from 2008 until 2016. The
result indicates that for all four types of ICT adoption (mobile broadband, fixed
broadband, mobile telephone subscriptions and internet user) were highly
correlated with income. Countries with more prosperity and prosperous
populations tend to spend more on ICT products and services. However, the
adoption of fixed broadband subscriptions and Internet user seems to decrease
with the rise of income in developing countries. Higher education is essential to
determine the ICT adoption in developed and developing countries. On top of
that, the capacity of the countries to innovate is associated with ICT adoption in
developing countries compared to developed countries.
As for second objective, the study proceeds to examine the impact of ICT
adoption on economic growth using the dynamic panel estimator GMM based
on the data obtained from 2008 until 2016 covering both developed and
developing countries. The analysis covers 44 developed countries and 45 developing countries using the Cobb-Douglas production function. The results
suggest that for the type of ICT adoption; mobile broadband and mobile
telephone subscriptions drive the economic growth for developed countries.
Moreover, the findings indicate that human capital is associated with the high
economic growth in developed countries. In developing countries, all types of
ICT adoption (mobile broadband, fixed broadband, mobile telephone
subscriptions and internet use) seem to have greater influence on economic
growth. Besides, developed and developing countries have shown to have larger
coefficients of labor and capital inputs which lead to faster growth.
For the third objective, the study applies fixed-effect model based on the data
spanning from 2008 until 2016 for 38 developed countries and 30 developing
countries. The results indicate that high levels of Internet use are associated with
high levels of ICT innovation in developed countries. Most of the wealthy
countries, particularly, developed countries are actively rolling out ultrafast
internet connections, and providing for the foundation innovations such as
artificial intelligence, the Internet of Things, and Industry 4.0. As for developing
countries, mobile and fixed broadband subscriptions are strongly influencing ICT
innovation of the nation. It is believed that ultrafast broadband internet
connections are becoming the critical foundation of boosting the digital economy
in developing countries.
In conclusion, countries with more wealth and prosperous populations are willing
to adopt ICT. Compared with the older population, the young population
students, tend to be more adventurous and highly demand for ICT specifically
on the Internet. A good and innovative package of ICT offer might further
promote the demand for ICT. The skilled and knowledge worker is essential to
enable better adoption of new technology and implementing domestic innovation
and influence the economic growth. In addition, good infrastructure network
enables individuals and entrepreneurs engage in e-commerce, and businesses
to manage their supply chains on cloud computing. |
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