The Effects of IT and Financial Development on Economic Growth in BRICS-T Countries: Insights from the Solow Growth Model

Year 2024, Volume: 5 Issue: 2, 197 - 211, 27.09.2024

Cuma Demirtaş

https://doi.org/10.57116/isletme.1530329

Abstract

The aim of the study is to examine the impact of IT and financial development on economic growth in BRICS-T countries for the period 1990-2022 using the panel quantile technique. For this purpose, IT technology and financial development variables were added to the basic Solow model. According to the findings, the impact of physical capital stock on economic growth is positive in all quantiles. The effect of population growth on economic growth is significant starting from 0.4 quantile and the negative effect increases as the quantile level increases. Information technology, which is the subject of the study, positively affects economic growth and this effect decreases as the quantile level increases. The variables we used to represent the level of financial development, financial institutions have a positive but statistically insignificant coefficient sign, while financial markets have a statistically significant but negative coefficient sign. This negative effect increases as the quantile level increases.

Keywords

Economic growth, financial development, information technologies, BRICS-T countries

BRICS-T Ülkelerinde BT ve Finansal Gelişimin Ekonomik Büyüme Üzerindeki Etkilerinin Araştırılması: Solow Büyüme Modelinden İçgörüler

Abstract

Çalışmanın amacı, BT teknolojisinin ve finansal gelişmenin BRICS-T ülkelerinde ekonomik büyüme üzerindeki etkisini 1990-2022 dönemi için panel kantil tekniğini kullanılarak araştırmaktır. Bunun için temel Solow modeline BT teknolojisi ve finansal gelişme değişkenleri ilave edilmiştir. Elde edilen bulgulara göre fiziki sermaye stokunun ekonomik büyüme üzerine etkisi tüm kantilllerde pozitiftir. Nüfus büyümesinin ekonomik büyüme üzerindeki etkisi 0.4 kantilden itibaren anlamlı olmakta ve kantil düzeyi arttıkça da negatif etki artmaktadır. Çalışmanın konusunu oluşturan bilgi teknolojisi ekonomik büyümeyi pozitif etkilemekte ve bu etki kantil düzeyi arttıkça azalmaktadır. Finansal gelişme düzeyini temsilen kullanmış olduğumuz değişkenlerden finansal kurumlar pozitif ancak istatiksel olarak anlamsız, finansal piyasalar ise istatiksel olarak anlamlı fakat negatif katsayı işaretine sahiptir. Bu negatif etki ise kantil düzeyi arttıkça artmaktadır.

Keywords

Ekonomik büyüme, finansal gelişme, bilgi teknolojileri, BRICS-T ülkeleri

References

• Ahmed, S. M., & Ansari, M. I. (1998). Financial sector development and economic growth: The South-Asian experience. Journal of Asian Economics, 9(3), 503-517.
• Andrianaivo, M., & Kpodar, K. (2012). Mobile phones, financial inclusion, and growth. Review of Economics and Institutions, 3(2), 30.
• Asteriou, D., Spanos, K., & Trachanas, E. (2024). Financial development, economic growth and the role of fiscal policy during normal and stress times: Evidence for 26 EU countries. International Journal of Finance & Economics, 29(2), 2495-2514.
• Aziz, T., Khan, M. G. U., Islam, M. T., & Pradhan, M. A. H. (2023). An analysis on the relationship between ICT, financial development and economic growth: Evidence from Asian developing countries. The Journal of International Trade & Economic Development, 32(5), 705-721.
• Behera, B., Haldar, A., & Sethi, N. (2024). Investigating the direct and indirect effects of Information and Communication Technology on economic growth in the emerging economies: role of financial development, foreign direct investment, innovation, and institutional quality. Information Technology for Development, 30(1), 33-56.
• Blomquist, J., Westerlund, J. (2013). Testing slope homogeneity in large panels with serial correlation. Econ Lett, 121:374–378.
• Breitung, J, (2005). A Parametric approach to the Estimation of Cointegration Vectors in Panel Data. Economet Rev., 24(2):151–173.
• Breusch, T.S. & Pagan, A.R. (1980) The LM Test and Its Applications to Model Specification in Econometrics. Rev Econ Stud., 47:239–254.
• Cheng, C. Y., Chien, M. S., & Lee, C. C. (2021). ICT diffusion, financial development, and economic growth: An international cross-country analysis. Economic modelling, 94, 662-671.
• Cutcu, I., Cil, D., Karis, C., & Kocak, S. (2024). Determining the green technology innovation accelator and natural resources towards decarbonization for the EU countries: evidence from MMQR. Environmental Science and Pollution Research, 31(12), 19002-19021.
• Granger, C.W. (2003). Some aspects of causal relationships. J Economet, 112(1):69–69.
• Hassan, M. K., Sanchez, B., & Yu, J. S. (2011). Financial development and economic growth: New evidence from panel data. The Quarterly Review of economics and finance, 51(1), 88-104.
• Hieu, V. M., & Mai, N. H. (2023). Impact of renewable energy on economic growth? Novel evidence from developing countries through MMQR estimations. Environmental Science and Pollution Research, 30(1), 578-593.
• Horvey, S. S., & Odei-Mensah, J. (2024). Towards economic growth in Sub-Saharan Africa: is there a synergy between insurance market development and ICT diffusion?. Information Technology for Development, 1-28.
• Hussain, M. N., Li, Z., Yang, S., & Benabdejelil, M. (2024). Effect of ICT and Urbanization on Economic Growth: New Insight from OIC Countries. Journal of Global Information Technology Management, 27(2), 100-118.
• Islam, M. S., Rehman, A. U., Khan, I., & Abdelrasuol, I. (2024). ICT and Economic Growth Nexus in Saudi Arabia, Controlling Human Capital in the COVID-19 Era: A NARDL Exercise. SAGE Open, 14(2), 21582440241241883.
• Islam, N. (1995). Growth Empirics: A Panel Data Approach. The Quarterly Journal Economics, 110(4), 1127-1170.
• Koenker, R., & Hallock, K. F. (2001). Quantile regression. Journal of economic perspectives, 15(4), 143-156.
• Kumari, R., & Singh, S. K. (2023). Impact of ICT infrastructure, financial development, and trade openness on economic growth: New evidence from low-and high-income countries. Journal of the Knowledge Economy, 1-30.
• Levine, R. (1997). Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35(2), 688–726.
• Machado, J. A., & Silva, J. S. (2019). Quantiles via moments. Journal of econometrics, 213(1), 145-173.
• Majeed, M. T., & Khan, F. N. (2019). ICT and e-Government as the sources of economic growth in information age: Empirical evidence from South Asian economies. South Asian Studies, 34(01), 227-249.
• Moradi, M. A., & Kebryaee, M. (2010). Impact of information and communication technology on economic growth in selected Islamic countries. Quarterly Journal of New Economy and Commerce.
• Öncel, A., Saidmurodov, S., & Kutlar, A. (2024). Financial development, export and economic growth: Panel data evidence from Commonwealth of Independent States. The Journal of International Trade & Economic Development, 33(1), 29-56.
• Pesaran, M.H. & Yamagata, T. (2008). Testing slope homogeneity in large panels. J Economet, 142(1):50–93.
• Pesaran, M.H. (2004). General Diagnostic Tests for Cross Section Dependence in Panels. CESifo Working Paper Series No. 1229; IZA Discussion Paper No. 1240. Available at SSRN: http://ssrn. com/abstract=572504
• Pesaran, M.H. (2007). A simple panel unit root test in the presence of cross-section dependence. J Appl Econom. https://doi.org/10. 1002/jae.951
• Pesaran, M.H., Ullah, A. & Yamagata, T. (2008). A bias-adjusted LM test of error cross section independence. Economet J, 11:105–127.
• Polimeni, J. M., Polimeni, R. I., & Trees, W. S. (2007). Extending the Augmented Solow Growth Model to Explain Transitional Economies. Romanian Journal of Economic Forecasting, 1(1), 67-70.
• Sassi, S., & Goaied, M. (2013). Financial development, ICT diffusion and economic growth: Lessons from MENA region. Telecommunications Policy, 37(4-5), 252-261.
• Schumpeter, J. A. (1911). The theory of economic development. Cambridge: Harvard University Press.
• Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.
• Tang, C. F., & Rosidi, M. A. I. (2024). Investigating the effects of ICT infrastructure on Malaysia’s economic growth: Insights from the Solow growth model. Information Technology for Development, 1-16.
• Tian, R., Xu, J., Feng, H., & McFarlane, A. (2024). A maximum entropy bootstrap approach to financial development and economic growth in China. Economic Systems, 101219.
• Verma, A., & Giri, A. K. (2022). ICT diffusion, financial development, and economic growth: Panel evidence from SAARC countries. Journal of Public Affairs, 22(3), e2557.
• Verma, A., Dandgawhal, P. S., & Giri, A. K. (2023). Impact of ICT diffusion and financial development on economic growth in developing countries. Journal of Economics, Finance and Administrative Science, 28(55), 27-43.
• Wang, W., Ning, Z., Shu, Y., Riti, M. K. J., & Riti, J. S. (2023). ICT interaction with trade, FDI and financial inclusion on inclusive growth in top African nations ranked by ICT development. Telecommunications Policy, 47(4), 102490.
• Yahyaoui, I. (2024). Does the interaction between ICT diffusion and economic growth reduce CO2 emissions? An ARDL approach. Journal of the Knowledge Economy, 15(1), 661-681.