Impact of Information Communication Technology on Economic Growth: Empirical Evidence from SAARC Countries

Abstract

This study investigates the impact of information and communication technology (ICT) on economic growth i.e. gross domestic product (GDP) for a panel consisting of member countries of South Asian Association for Regional Cooperation (SAARC) using annual data for the period 1990-2014. We have included only four SAARC countries (Bangladesh, India, Sri Lanka, and Pakistan) in our study due to data constraints. We have employed augmented Cobb-Douglas production function by incorporating ICT, along with capital and labor. We have taken teledensity (number of fixed and mobile phones per 10000 people) as a proxy for ICT. Our main findings reveal a positive and statistically significant effect of ICT on economic growth using panel data techniques. However, impact of ICT on economic growth is highest for India followed by Sri Lanka, Bangladesh and Pakistan respectively. Since SAARC countries have started giving due significance to issues related with ICT these years, our study, based on most recent data of these countries, has crucial policy implications for them.

Keywords: ICT, Information and communication technology, Economic growth; Panel data, SAARC, South Asia

JEL Classification: L86, O47, C33, G38