Digital infrastructure and innovation in Africa: Does human capital mediates the effect?

Abstract

While both theory and empirical evidence have established the critical role of digital infrastructure in promoting innovation, there needs to be more understanding of factors mediating this nexus, especially from the African context, which is understudied. This paper argues that digital infrastructure spurs innovation, but the overall effect depends on countries’ level of human capital. Relying on data from 28 African countries spanning 2011–2019 and the system Generalized Method of Moment (GMM) estimator, this study departs from the extant literature by examining the synergistic effect of digital infrastructure and human capital on innovation while placing much emphasis on the multidimensional measurement approach of digital infrastructure. The results show a positive relationship between digital infrastructure and innovation in Africa. Furthermore, the interactive effect of digital infrastructure and human capital is significantly related to innovation, implying that digital infrastructure can indirectly enhance innovation through human capital accumulation. To promote innovation, the study recommends that policies that improve digital infrastructure should be pursued simultaneously with policies that enhance human capital.