Does information and communication technologies affect economic complexity?

Area of Science:

• Economics
• Information and Communication Technology

Background:

• Economic complexity and Information and Communication Technology (ICT) are key concepts in recent literature.
• Few studies link ICT and economic complexity, especially regarding the internet's short-term role.
• ICT measures internet access, while economic complexity reflects productive capabilities.

Purpose of the Study:

• To investigate the long-term impact of ICT (quality and quantity) on economic complexity.
• To analyze a large panel of 112 countries from 1986-2017.
• To explore long-run and directional relationships between these variables.

Main Methods:

• Homogeneity test, cross-sectional dependence test, stationary tests.
• Panel cointegration test, Dynamic Ordinary Least Squares (DOLS), Fully Modified Ordinary Least Squares (FMOLS).
• Granger panel causality test to assess directional relationships.

Main Results:

• Long-run relationships identified between ICT, economic complexity, per capita GDP, government spending, and natural resources.
• Quality and quantity of ICT, economic growth, and government spending positively impact economic complexity.
• Natural resource rent negatively affects economic complexity.

Conclusions:

• ICT, particularly its quantity and quality, is a significant long-term driver of economic complexity.
• Government spending also positively influences economic complexity, while natural resources impede it.
• A bidirectional causality exists between ICT and economic complexity.