Do digital governments foster economic growth in the developing world? An empirical analysis
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Do digital governments foster economic growth in the developing world? An empirical analysis Muhammad Tariq Majeed 1 Accepted: 29 July 2020/ # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract The research has largely documented favorable economic outcomes of investing in Information Communication Technologies (ICTs). Does implementation and adoption of ICT in the public sector also lead to favorable economic gains? The answer to this question has received little attention. The available evidence is largely country-specific from the developed world. This study contributes to the empirical literature on ICTgrowth nexus by analytically exploring and empirically testing the relationship of egovernment with economic growth of 122 developing economies over the period 2003–2015. The empirical analysis is based on Fixed Effects, Random Effects, and System Generalized Method of Moments (GMM). The results show that an implementation of an e-government in developing economies causes a robust positive impact on economic growth. This finding is shown to be robust to different specifications, to different econometric techniques and to the endogeneity problem. Keywords Economic growth . ICT . E-government . Developing countries . Panel data JEL classifications C23 . H10 . O40
1 Introduction What are the essential causes of large differences in income per capita across countries? Why do some countries produce high and sustained levels of economic development and others do not and what determines economic growth? These questions have received substantial attention of the economists and policy makers at least since the time of Adam Smith. In the recent decades, one important line of research which focuses on ICT as a cause of economic growth has gained momentum.
* Muhammad Tariq Majeed [email protected]
1
School of Economics, Quaid-i-Azam University, Federal Capital, Islamabad 44000, Pakistan
M. T. Majeed
It is now widely believed that ICT development serves as a potential determinant of economic growth variations across countries. For instance, Quah [40] argues that the ICT revolution is improving broad-based education, labor skills and consumer sophistication. The increasing use of technology improves labor productivity and as a result economic growth increases. Levine [25] argues that ICT helps to relax barriers to information access that increases investment and growth. In recent years, e-government as another important force has captured the attention of researchers and policy makers to enhance economic development. E-government is referred to as the use of ICT by governments for “delivering and sharing” information and better services with the people [11, 22]. E-government applications promote economic development of an economy by assuring accountability and transparency in a country [9, 38, 45]. The theoretical research on e-government suggests that it improves the quality of services and responsibilities of public sectors [2, 46, 50], strengthens the role of the public and the democracy [46,
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