Internet Use and Economic Growth: Evidences From Lower Middle Income and Low Income Countries

Internet Use and Economic Growth: Evidences From Lower Middle Income and Low Income Countries

Abhijit Bhattacharya (Pingla Thana Mahavidyalaya, India) and Archita Ghosh (University of Kalyani, India)
DOI: 10.4018/978-1-7998-1207-4.ch016

Abstract

A good infrastructure is actually the base behind the growth of an economy. In the present age of globalization accessibility of information is a very important component of infrastructure. Studies carried out on the effect of internet on economic growth are mostly either on high income countries only or on a large number of countries belonging to different income groups. Keeping in mind the differential impact of internet on economic growth of countries with different initial conditions, we have attempted in this chapter a study on the impact of internet use on economic growth in 39 lower middle income and low income countries during 2002-2011. Applying panel data regression techniques we have found a positive significant impact of internet use on economic growth of low income countries. The emergence of crisis adversely affected this growth process, overruling the positive impact of internet use.
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Literature Review

The literature on ICT infrastructure and growth are steadily growing. A study by the World Bank on infrastructure (World Development Report, 1994) focused the critical role of infrastructure in the development of an economy. According to some researchers ICT infrastructure lowers both fixed and variable costs of participating in markets (Norton, 1992). So, ICT infrastructure including telecommunication and their derived services provide huge benefits to an economy.

The first analysis of the impact of fixed telephone density on economic growth was done in the mid-1970s by the researchers of the World Bank. Gradually with the improvement in the quality of data and sophistication of econometric tools it requires further justification of the impact of ICT.

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