The Impact of Information and Communication Technologies on Economic Growth and Electricity Consumption: Evidence from Selected Balkan and Eastern European Countries

The Impact of Information and Communication Technologies on Economic Growth and Electricity Consumption: Evidence from Selected Balkan and Eastern European Countries

Burcu Berke (Omer Halisdemir University, Turkey), Gülsüm Akarsu (Ondokuz Mayıs University, Turkey) and Gökhan Obay (Omer Halisdemir University, Turkey)
Copyright: © 2017 |Pages: 25
DOI: 10.4018/978-1-5225-2061-0.ch008
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Abstract

Information overload is an important issue in the digital economy. Although, information can be easily accessed and disseminated by widespread use of information and communication technologies (ICT) since 1990s; among countries, there are still significant disparities in information access and utilization as well as ICT access and usage. ICT affect economy, industries and companies holistically and have important functions like increasing economic growth and promoting development. The basic purpose of this study is to analyze the impact of ICT on economic growth and electricity consumption for a group of Balkan and Eastern European countries by using other economic variables that affect electricity consumption and growth, such as income and electricity consumption for control purposes. This study employed a panel data method on a group of Balkan and Eastern European countries to verify the effect of other economic variables, primarily electricity consumption and found that ICT had positive impacts on economic growth.
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Introduction1

Studying the rapid accumulation and dissemination of information and communication technologies (ICT) in the world and its effect on the economic growth of developed and developing countries has gained significance in recent years (Breitenbach, Aderibigbe, & Muzungu, 2005; Abdel-Kader, 2006).

These technologies have created a digital space with the following properties, such as connectivity and emergence of networked environments, inter-operability and organisational boundarylessness, and higher speed and quality of communication and information flow (Filos and Banahan, 2001, p. 2-3).

Today, the structure of global economy has changed considerably with these technologies. The reason behind such a change is the rapid expansion of technologies like personal computers, the internet and mobile phones and the comprehensive impact of these devices have on the economy. Thus, the whole world is on a trajectory towards information-based economy that is always accessible and constantly usable (Seo and Lee, 2006) and information is the core input and result of this new digital economy (Filos and Banahan, 2001; Stewart, 1998). On the other hand, not all the countries, social groups and individuals have access to information, equally. The issues of information inequality and poverty have gained great attention since 1960’s (Yu, 2006). There are many definitions related to information inequality and poverty. In his definition, Sweetland (1993) considered three forms of information deprivation as information poverty such as lack of information access, information overload and self-imposed information deprivation (Yu, 2006, p. 231). Among these forms, information overload is the situation in which there is too much information to process and therefore, there is difficulty to access the necessary information and according to Filos and Banahan (2001), one problem in the digital economy is the information overload rather than access to the information based on the following argument proposed by Simon Herbert “wealth of information creates a poverty of attention” (Shapiro and Varian, 1999). This argument can be valid for countries which have higher access to and utilization of information and ICT; however, among the countries, there are significant differences in information access and utilization as well as ICT access and usage which enables them to reach the information easily as beginning by 1990s, ICT’s have become one of important tools for information dissemination and access and there is a strong relation between information inequality and digital divide (Yu, 2006). Yu (2006) classified different interpretations of information inequality in the literature based on four angles: ethics, political economy, social constructivism and cognitive science. This study focused on the political economy interpretation in which “the information inequality is both determined by and contributes to the political and economic inequality” (Yu, 2006, p. 232) and by considering the significant relation between information inequality and digital divide, i.e. inequality in ICT usage and access, analyzed the effect of ICT on economic growth and electricity consumption.

It is found that studies on the relation between ICT investments and economic growth first appeared in the 1960’s and generally focused on the USA. The first study on the subject belongs to Jipp (1963) who examined the relation between communication technologies and growth. In the study, Jipp approached the relation between the number of telephone lines per capita and GDP per capita as a growth rate indicator. Jipp expressed the existence of a positive relation between telephone use intensity and growth (Alleman et al. 1994). Subsequent to this, a significant number of studies were conducted in developed and developing countries, which mostly suggested that information and communication technologies generally had a positive role on economic growth. Early studies (Jipp, 1963; Hardy, 1980; Saunders et al. 1983) were unable to demonstrate long-term relations between these two variables. However, the relation between ICT development and economic growth started to appear in time series and panel data analyses after the 1990s, with Cronin et al. (1991, 1993).

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