ICT AS A SOURCE OF ECONOMIC GROWTH IN THE INFORMATION AGE: EMPIRICAL EVIDENCE FROM ICT LEADING COUNTRIES

The goal of this paper is to undertake a panel data investigation of long-run and short run Granger causality between total factor productivity, ICT contribution and real GDP for panel of six countries. We use a Generalized Method of Moment (GMM) to test causality and find out that there are unidirectional Granger causality running from ICT contribution to TFP and economic growth in the long-run where ICT contribution did not have a robust short-run causality relationship with economic growth. The negative and statistically significant coefficient of ICT confirms the slow acceleration of TFP among the EU countries. Finally, the long-run relationship between growth and ICT contribution in the 2000s is higher, more significant and robust than in the 1990s. These results point to several important policy implications such as prevailing arguments in favour of technological capacity-enabled growth has not taken into account short-term costs that may include reduced economic growth as shown by our results for the 1990-2000 periods.