Does ICT maturity catalyse economic development? Evidence from a panel data estimation approach in OECD countries

Area of Science:

• Economics
• Information and Communication Technology (ICT) Studies

Background:

• Existing quantitative studies on ICT and economic development often use incomplete definitions of ICT development, relying on single indicators.
• This limitation hinders a comprehensive understanding of the relationship between ICT maturity and economic growth.

Purpose of the Study:

• To investigate the association between a comprehensive measure of ICT maturity and economic development.
• To address the limitations of previous studies by incorporating a novel composite index of ICT maturity.

Main Methods:

• Development of a novel composite index for ICT maturity, including dimensions like internet connectivity affordability and quality.
• Utilisation of feasible generalised least squares (FGLS) for baseline estimations.
• Cross-validation of findings using the generalised method of moments (GMM) estimation.

Main Results:

• Baseline estimations indicate that ICT maturity is associated with a 1%-3.8% increase in economic development within Organisation of Economic Cooperation and Development (OECD) countries.
• GMM estimation cross-validated these significant positive associations.
• The study highlights the importance of multiple ICT dimensions beyond basic infrastructure.

Conclusions:

• Holistic ICT development, encompassing infrastructure, skills, and affordability, significantly augments economic development in OECD countries.
• The novel composite index provides a more robust measure for assessing ICT's economic impact.
• Policy implications suggest focusing on comprehensive ICT strategies for sustained economic growth.