Impact of ICT Infrastructure, Financial Development, and Trade Openness on Economic Growth: New Evidence from Low- and High-Income Countries

Abstract

This study investigates the joint impact of information communications technology (ICT) infrastructure, financial development (FD), and trade openness (TO) on economic growth (EG). This study includes two contrasting countries that differ from each other based on income level and consider the total sample size of 85 countries (including 27 low- and 58 high-income countries) for the period 2000–2019. We framed various hypotheses and then applied the ordinary least square (OLS) regression, fixed effect regression (FER), and generalized method of moments (GMM) method. Our findings are fourfold: (a) the individual effects of ICT (Internet, secure Internet, broadband, and telephone) on EG are positive, excluding only telephone in LIC and excluding broadband in the HICs context; (b) in case of individual effects, the majority of ICT proxies have a positive and significant relationship with EG in LICs and HICs; (c) the joint effect of ICT infrastructure and FD in both samples indicates that FD complements the positive impact of EG; (d) the result of the joint impact of ICT infrastructure, FD, and TO on EG in both countries is contradictory to each other. Thus, the results of joint effect conclude that in the LICs context, the joint effect of ICT infrastructure, FD, and TO positively affects EG, but the results are reversed in the HICs context. Our findings are important for the policy implications, especially in countries with highly required ICT infrastructure.