Does ICT investment widen the growth gap?

Authors:
Hwan-Joo Seo;Young Soo Lee;Jeong Hun Oh
Affiliations:
Division of Business Administration, Hanyang University, 1271, Sa 1-dong, Sangrok-gu, Ansan, Gyeonggi-do, 426-791, South Korea;Department of Business Administration, Korea Aerospace University, 200-1, Whajon-dong Koyang, Gyeonggi-do, 412-791, South Korea;Division of International Studies, Korea University, 1, Anam-dong, Seongbuk-gu, Seoul 136-701, South Korea
Venue:
Telecommunications Policy
Year:
2009

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Abstract

This paper builds a model of cumulative growth to examine the dynamic interdependent relationship between Information and Communication Technology (ICT) investment and economic growth for a sample of 29 countries in the 1990s. We confirm the following facts: First, there is a positive correlation between ICT investment and economic growth. Second, non-ICT investment has as much influence on the growth gap as ICT investment. Third, those countries with a solid economic infrastructure and open trade regime experience more active ICT investments. Fourth, those countries with a comparatively lower productivity level can reduce the gap using knowledge spillovers from more advanced countries. Fifth, reinforcement of patent rights has a positive influence on economic growth by stimulating the accumulation of ICT capital. Finally, ICT investment does not have a strong interdependent relationship with economic growth, while non-ICT investment has a cumulative causal relationship with economic growth and plays a key role in the process of widening the growth gap.