ICT Diffusion, Trade Openness and Growth: Empirical Evidence from Asian Countries

Abstract

The present study contributes to the existing literature of trade-growth and information and communication technology (ICT)-growth nexus by examining the impact of ICT-trade nexus on economic and inclusive growth in 17 developing Asian countries for the time period 2005–2019. Using system generalised method of moments (GMM), the study confirms whether ICT diffusion enhances or distorts the impact of trade on growth. ICT diffusion is measured through a composite index of ICT (mobile, telephone, broadband, internet) constructed using principal component analysis (PCA) along with trade (per cent of GDP), GDP per capita and human development index (HDI) as a proxy for trade openness, economic growth and inclusive growth, respectively. Findings confirm positive impact of ICT diffusion and trade openness on both economic growth and inclusive growth. Thus, trade openness and ICT can be outlined as essential contributors to the growth of the major emerging Asian economies. The study concludes with policy implications focusing on investment in ICT sector and human capital development, which will consequently foster trade and uplift growth. JEL Codes: C23, F14, F43, O33