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

Year 2023, Volume: 7 Issue: 2, 131 - 150, 18.10.2023

Tamerlan Mashadihasanli , Haluk Zülfikar

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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