Research and Describe The Impact Of ICT On Economic Growth (Research Paper Sample)

THE IMPACT OF ICT ON ECONOMIC GROWTH
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Introduction
The increasing research and development in ICT has considerably transformed the way our lives. ICT infrastructure has been a key ingredient the realization of economic development both in developing and developed countries. In general, ICT infrastructure is largely attributed to connectivity and mobile communication (Dawson and Mackintosh 2003). With mobile communication, one can access internet services, which has been a major boost to economic growth. The wireless communication devices have enabled people seek employment opportunities, create employment and do business at their discretion, the greater the penetration the greater the economic growth. This paper provides a critical analysis of the effects of ICT on economic development.
Discussion
Evidence from a number of studies reveal a positive correlation between changes in ICT development and internationally recognized economic development indicators such as education, morality rate, poverty level, among others (World Bank 2002). In general, the relation between ICT and economic development can best be observed on by focusing on the impact of ICT on economic development of developing countries, which is apparently discussed in the subsequent paragraphs.
ICT penetration has been on an increasing trend over the recent past, according to a World Bank survey. For instance, in 2009, the World Bank report showed a10% average increase in the penetration of ICT services in developing countries that was coupled a increase of 0.81% in economic growth (World Bank, 2009). One of the most obvious effects of ICT on economic development is the massive creation of employment opportunities (Dawson and Mackintosh 2003; Sridhar 2004). Information technology and telecommunications have been able to employ a larger majority of the population is the developing countries. It is argued that ICT does not only provide opportunities for the mobile companies and the internet service but also third party companies (Williams et al. 2011). In Philippines, for instance, IT services were anticipated to have directly provided employment opportunities for about 1 million people in 2010. This implies the ICT sector accounted for about 27% of all new jobs created in that year (World Bank 2009). The same statistics, World Bank (2009), showed that during the projected year, ICT was expected to provide more 3.5 million either directly or indirectly to people in Sub-Saharan Africa.
Advance in ICT, particularly in developing countries tend to act as an incentive for investment. Since the ICT markets in developing countries like sub Saharan African countries are still fresh and untapped, such markets have attracted a lot of investors. Over the years 2000-2012, evidence reveals that most regions in the Sub-Sahara Africa received an estimated investment large of $85 to $98 billion in mobile industries. As such, the total investment in ICT has reached an average of 5-6 percent of the total investment in the region (Zibi 2009).
From a financial perspective, ICT has boosted the collection tax revenues in developing countries. A lot of taxes have been collected in developing countries since the inception of ICT. This has largely been attributed to an improvement in the administration of taxes, which have been fueled by advancement in ICT infrastructure. Moreover, the amounts of taxes revenues have increased tremendously owing to the increasing number of investment ventures and businesses (Clarke and Wallsten 2006). Over the past decade till 2012, most governments in Sub-Saharan Africa have received about $71 billion in tax revenues attributable to ICT industry. In this case, the average mobile tax contribution occupies about 7% of the total national tax revenues collected over the same period (GSMA 2008).
Different sources confirm that ICT play in facilitating trade and rural development in developing countries. It does this play fostering economic development by elevating business environment in non-urban areas. In Niger, for instance, the use of mobile phones (ICT) has helped to trim down the search costs of traders by about 50% (Aker 2008). According to Jensen (2007), the expansion of mobile coverage in India reduced the price of consumers by 4% while keeping the profits of fishermen up by 8%.
The banking infrastructure is relatively weak in most developing countries. For instance, empirical data postulates that over 97% of the population in Afghanistan has no access to financial services. The introduction of ICT in some countries has shown a considerable impact on banking. For instance, ICT has greatly boosted mobile banking in Kenya. Only 2 years after its launch, the mobile banker (Safaricom) now counts close to 8 million m-banking customers and about 9000 agent outlets (World Bank 2009).
Evidence also reveals that ICT has also fostered innovation among businesses (Dawson and Mackintosh 2003). Many new products and new business approaches have been developed as result of ICT. Further, some sources indicate that ICT has been a key pillar in supporting health sectors in developing countries. Further, as cited in Dawson and Mackintosh (2003), it is imperative that ICT has considerably contributed to economic globalization among countries. Further, for export-oriented economies, the benefits of ICT are remarkable. As shown in a study by Clarke and Wallsten (2006), a 1% increase in the number of internet users is positively correlated with a 3.8% increase in exports, particularly from developing (low income) to developed countries.
ICT has also helped in promoting education in the developing countries through the e-learning platform that has been created to offer distant learning. A good number of people have testifies to be beneficiaries of the e-learning and online based schools. This has increased the number of skilled graduates (labor force) in these regions. This has promoted the economic development of many developing countries. A session paper from the World Bank presented by Pigato (2001) clearly reveals how ICT have impacted the level of education and literacy in developing countries. Over the period, 1991-1998, the study indicates an average drop of about 10% in the level of illiteracy in southern African Countries such as Lesotho, Botswana and Namibia following the introduction of ICT in the countries’ education systems (Pigato 2001).
The economic theory that can be applied in this paper is the diffusion of innovation theory (Sridhar 2004). According to the theory, it tries to explain the process through which ICT was born and accepted in the whole world. This theory also attempts to explain the process that an innovation is processed and passed through channels over a certain period of time and among the members of a social system. In the same line of thought, in the field of ICT, there were the innovators who made ICT and Telecommunications and dream come true. Then there were the early adopters that saw the opportunity early enough and exploited and are able to...