Do Internet and Human Capital Matter for Economic Growth in Developing Countries? Empirical Evidence from WAEMU Countries

Abstract

In the attempt to establish new sources of economic growth in the West African Economic and Monetary Union (WAEMU) countries except Gunea Bissau for sustainable growth of the region, this study aims to empirically assess the role of internet and revisit the impact of human capital in these countries based on panel data from 2009 to 2014. We firstly use the principal component analysis technique to build the internet network development index and the human capital index. Then we estimate a Cobb-Douglas function under the neoclassical Solow model to establish the relationship between gross domestic product and internet and human capital by using the fixed effects estimation technique. The findings indicate that internet network development constitutes an important pillar for economic growth in WAEMU countries at the current prevailing economic environment. In addition, they reveal that the performance of human capital in terms of economic growth is weak, a result which can be attributed to the poor quality of educational systems of the union. Physical capital is another source of economic growth of the WAEMU countries established by this study. Policy message drawn from this study encourages strategies aiming to strengthen internet network development in WAEMU countries.

Effects of telecommunications investment and ICTs diffusion on economic growth in the West African Economic and Monetary Union

“…In view of the current state of ICTs diffusion in the Union and the controversial literature on the issue of the effects of ICTs on economic growth, this research also aims at giving answers to the question what are the effects of ICT on economic growth in WAEMU countries? Other authors such as Johnson (2016), Chabossou (2017) and Karabou and Adeve (2018) have already asked questions similar to those of this research in the WAEMU.…”

“…ICT capital explains less than one-sixth of the total contribution of capital in Latin America. Johnson (2016) questioned the importance of the Internet for economic growth in developing countries, particularly those of the WAEMU. Over the period 2009-2014, he shows that the development of the Internet is an important pillar of economic growth in WAEMU countries excluding Guinea-Bissau.…”

“…In the present research it depends on the level of ICTs diffusion in the economy. This ICTs diffusion affects the level of total factor productivity in an economy (Cette et al, 2005;Johnson, 2016). Thus, endogenous technical progress is formalized as follows:…”

“…Karabou and Adeve (2018) obscure the role of the technological capital stock in their analysis of the effects of ICTs on economic growth in the WAEMU. Johnson's (2016) research focuses mainly on the effects of Internet diffusion on economic growth in the WAEMU. Thus, this author uses only a few observations (46 in total) to estimate the relationship between ICTs and economic growth in the Union.…”

Impact of media technology on wage changes: The case of Thailand

“…As one of the most popular media technology devices in the world, the Internet has contributed to improvement of a variety of industries and has enhanced productivity by reducing transaction costs and increasing allocative efficiency in business. Moreover, Internet communication plays a crucial role in business and in the economy, culture, and society (Salahuddin & Gow, 2015;Johnson, 2016). This progress can be seen in the social media as the dissemination of social media does change people's communication platform.…”