THE IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGIES ON ECONOMIC GROWTH: THE CASE OF SELECTED EUROPEAN COUNTRIES

Abstract

This paper investigates the impact of information and communication technologies on economic growth in 35 selected European countries during 2001-2021. With rapid advancements in information and communication technologies, understanding its influence on economic growth becomes imperative for policymakers and researchers alike. Utilizing a comprehensive dataset, this study employs rigorous econometric techniques to analyze the relationship between information and communication technologies indicators and economic growth indicators by applying system generalized method of moments method. According to the Levin–Lin–Chu unit root test, all variables are stationary at the I (0) level except TEL which is stationary at the I (1) level. According to the results of the two-step system generalized method of moments estimator, lagged GDP, telephone lines, mobile use, and internet usage positively affected GDP, although consumer price index, trade and final consumption expenditure affected negatively. In terms of significance of the effects, the effect of lagged GDP, consumer price index, final consumption expenditure and mobile use was significant, whereas the effect of trade, telephone lines and internet usage were not significant. The Arellano-Bond test showed that there is no autocorrelation, and according to the Sargan and Hansen tests results, the instrumental variables are appropriate and consistent in the model and the model has no speciation errors. From the results it can be concluded that information and communication technologies positively affected economic growth in 35 selected European countries. These findings strongly confirm the theoretical assumption that information and communication technologies are now a critical strategic aspect in assuring economic development and high long-term growth.

Keywords

• ICT
• Economic Growth
• Panel Data Analysis
• GMM
• European countries

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