The Impact of Information and Communication Technology (ICT) in a Depressed Economy
Chapter One
Research Objectives and Hypotheses
The main objective of this study is to investigate the impact of ICT on the economic growth of West African countries and to analyze the degree of ICT’s contribution to economic growth.
As the part of the objective and discussions on this issue, we need to clear the related uncertainties and strength of confident relationships.
CHAPTER TWO
REVIEW OF LITERATURE
Theoretical Background
Technological advance, latent in new knowledge and happening accidentally or automatically, appears to be the only likely counterbalance to the natural learning [Knight, 1944].
Information and Communication Technology (ICT)
Introduction
The vast evolution in information and communication technology and its applications in different areas is the most important distinguishing of developments through the last decades of the last century and the beginning of the new century. Information through the advances of electronic and digital developments has made a revolution in the global economy, particularly in the developed countries. The information revolution has changed (during the last four decades of the last century) the structure of wealth sources than the industrial revolution itself. The source of wealth is no later physical but it has become an information or knowledge which is applied to work to serve a production with an economic value. The ICT formed a general economic trends including: mixing techniques of digital communication, strategic alliances in the field of information, the creation of a unified universal network of communications, and the increasing prevalence of personal, mobile and cloud computing devices linked to the network remotely specially through the web network applications.
The rapid change in the ICT in recent years has led to a revolutionary and radical changes in the processing and distribution of data, with a substantial impact on production, services and cultural values, economic development and community as a whole, not only this but ICT has led to the emergence of the knowledge economy, where Nations became measured by what produces of knowledge and its value added in production, business and economics. So this section arises to address the importance and quality of information, also address the most fundamental concepts of ICT and the reasons for giving attention and then investment in ICT. Also it illustrates the most important ICT components and its mechanism applied in economic institutions because it has become competitive strategic weapon at the hands of these institutions.
The Concept and Importance of Information
The age nowadays without any doubt is the information age, or as it is called the information revolution and these names came due to the role Information played and still plays to change the lives of organizations and communities, so in this section we will investigate the different terms concerning information and stand on its importance, types and sources and their role in achieving competitive advantage for business organizations.
When we talk about information, we illustrate the information cycle that starts from facts to data then information and after that knowledge. Facts are bunch of things proved by observation coincidence to the extent that human ability permit. Data group of raw Elements that are not treated or processed as an event in its raw shape where its origin is a result of a note or a measure where it can be qualitative such as red colour or quantitative such as the temperature. The data always characterized by objectivity.
Data is unstructured pieces of information that have been estimated from primary sources such as measurement devices, people or others and secondary sources such as reports, records, brochures or others. Data can be obtained from inside or outside the organization. This means that the data may reflect the numbers, words, symbols or facts, raw statistics that are not related to each other, and they are not reader used, so they have no real meaning and do not affect their action or behaviour of whom using them. Even though data are important for organizations because they are the basis of information generation.
Information are data that have been processed in a meaningful way to be a basis for decisionmaking and they are the result of data collected on a particular topic. If data are reorganized and arranged and processed correctly then they will work to change or modify the cognitive and knowledge status of the human being and thus will affect the decision whether to individuals or to practical organizations. The term information is linked to the term of data from one side, and to the knowledge on the other side. Knowledge is the final important use and investment of information by decision-makers and other users who turn information into knowledge toll.
Knowledge is a set of experiences, information, values and data correlated and combined with each other’s in order to provide suitable environment that helps on evaluation, judgment, learning, self-evident and take advantage of the experience. Knowledge also can be considered as the possibilities and capabilities that relished by someone in the analysis, the ability to integrate information, deductive ability, the development of plans and find solutions to the proposed problems. Knowledge also stems from analytical capabilities, strategic abilities, independence, supervision, dialogue solutions to do certain things spontaneously and spontaneity.
CHAPTER THREE
METHODOLOGY AND DATA
The Basic Study Model (the first study model)
The dominant target of a society is to advance the quality of life and increase the standards of living of its people, where here the economy acts the important role, within the context of socio-economic, geopolitical and cultural issues. Nowadays ICTs have a great impact in every aspect of our life, as an economic and social actuality. There is a difference between consumptive and productive functions. As the economic theory states that the standard living of the people is subjected to consumption, but over time we must challenge the difficult of increasing the production competences of a country in a sustainable approach, if so economic growth can be advanced and extended to economic development.
There are twofold of ICT nature, the productive side (infodensity) and the consumption one (info-use). Infodensity denotes to the portion of a country’s whole capital and labour stocks related to ICT and represent the productive side. Info-use denotes to the ICTs consumption side. In principle, the two can be combined to represent the amount of a country’s ‘ICTization’, or infostate. The difference in infostates among economies can relatively measure the Digital Divide.
The relationship between GDP per capita and ID is linear, and there is strong correlation between them, that is, over time as ID increases, GDP per capita increases. Also this relation can be proved by Granger causality test. The Study will test the null hypothesis “H0: log GDP per capita does not Granger cause log Info density (ID)”, we also test the opposite null hypothesis “H0: log Info density (ID) does not Granger cause log GDP per capita”. For the first hypothesis we accept it as the level of acceptance more than 0.05, meaning that GDP per capita does not cause ID. As for the second hypothesis, we reject it if the significance value is less than 0.05, meaning that ID cause GDP per capita.
CHAPTER FOUR
EMPIRICAL FINDINGS AND ANALYSIS
The Impact of ICT in a depressed economy using the basic model
The estimated results that represent the impact of ICT represented by infodensity on economic growth for Nigeria represented by GDP per capita are shown in table 5.4. The validity of the estimated model can be proved through statistically evaluation method as follows:
F-test (Fisher test): The significance for the model as a whole is explained as the calculated F-statistics (471.21) is greater than the tabular one (F= 4.45), so the alternative hypothesis is accepted and the whole model is significant. Also the level of fisher significance is zero (Prop (F-statistic) =0.0).
CHAPTER FIVE
CONCLUSIONS AND RECOMONDATIONS
Conclusions
First we analysed the impact of ICT index (represented by infodensity that signifies the production part of ICT and proposed by ORBICOM) on GDP per capita individually for each West African country. The results showed positive impact of ICT index for each individual country (except for UAE which encountered insignificant ICT index elasticity and Djibouti with negative and significant impact) ranged from 0.10 for Lebanon to 0.469 for Nigeria.
A penal regression is used in this study with 341 observations for the base model and 331 observations for the extended model which includes other standardized significant macroeconomic control variables. The panel regression results showed that ICT has a positive and significant impact on GDP per capita for the whole study sample of 18 West African countries with impact of 0.208 using the FE model as an appropriate model (according to Hausman test). This result is accommodated with other research results illustrated in this study. The extended model showed that ICT positively and significantly affects GDP per capita with impact of 0.108, in addition, GCF have positive and significant effect on GDP per capita with elasticity of 0.129. Openness has positive and significant impact on economic growth with 0.068 point and inflation with negative and significant impact of 0.088 point.
Population growth is insignificant to economic growth.
The 18 West African countries were divided into three sub groups according to their infodensity levels. The research results showed that the first group with relatively high infodensity values and GDP per capita encounters an ICT impact of 0.264 point less slightly than the impact of ICT of the second group (with intermediate values of infodensity) with 0.310 point. The gap of ICT impact between the first and second group from one side and the third group (with low infodensity and GDP per capita values) on the other side is relatively large indicating that these countries of third group have a back seat to the other two groups regarding the spillover of ICT.
The second model of this study uses Cobb-Douglas production model and applied using ARDL approach to investigate the importance of ICT capital services for economic growth depending on five West African countries (according to the availability of data) for the period from 1993 to 2014. The main issue we investigated using this model is whether the investments on ICT assets are positive on economic growth and to what extent. The regression result tells a positive and significant elasticity of ICT capital services at short and long run where there is a cointegration relationship between ICT capital services and GDP growth, and indicates that ICT capital services causes economic growth as Wald test proves, and this value is more than the compensation share of ICT capital services, which indicates ICT spillover in these West African countries. Labour services impact on GDP growth was positive and significant on long run, but for non-ICT capital services there is negative and significant impact at the long run. The results also show that the impact of capital services provided by ICT assets on economic growth is positive and significant for each individual country of the second sample study. Our significant concluded point that it is worth for the West African countries to efficiently invest more in ICT assets as they have positive impact on economic growth with restructured and adjusted ICT strategies and policies.
Recommendations
Although this study captures the impact and degree of impact of ICT and other sources of capital and labour on economic growth and not the underlying ways for this impact improvements, some general recommendations can be suggested in the light of this study results as follows:
- There is a need for West African countries to plan efficiently to invest more in ICT parts such as networks and skills.
- There is a need to establish a competent ICT infrastructure, where as illustrated from the study, West African countries still lag developed countries in ICT infrastructure components especially in fixed and mobile broadband internet penetration. Increasing the investment in broadband internet penetration is worth and advances the establishment of an appropriate competitive industries in the ICT and non-ICT fields, helps in developing various ICT services and applications in different fields such as e-government, e-health, e-education, e-business and so on, and allows to raise productivity and increase economic growth rates.
- As the ICT basket price is relatively higher than that of developed and emerging countries, which may impede the spillover of ICT in the West African society, so the Government policies for ICT have to be adjusted to efficiently influence the ICT public and private institutions to offer competent prices.
- There is a need to embed the education and training of ICT knowledge and practice in different educational institutions so as to accumulate the labour skills for beter utilization of ICTs.
- There is a need to establish ICT training centres that promote the ICT practices in various life and work applications and incubate ICT innovative projects that advances ICT spillover.
- As the impact of ICT capital and labour in West African countries less than that of other countries, it is important to restructure the strategies and policies concerning the investment and adoption of ICT in these countries. Also as the impact of growth of capital services delivered by ICT Assets is more than the compensation share of ICT capital services to GDP growth, it is important to continue on investment on ICT assets efficiently so as to advance the ICT spillover.
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