Effect of ICT and Urbanization on Economic Growth: New Insight from OIC Countries

ABSTRACT

This paper examines the relationship between ICT, urbanization, and economic development. The context of the analysis is the Organization of Islamic Countries from 1997 to 2019. We develop an original empirical approach based on principal component analysis to generate ICT index. To mitigate any endogenous issue, we utilize the instrumental variable generalized method of moments. Further, we use pooled mean group estimation to check the short-run and long-run relationships between the variables. Our results have two significant implications. First, we demonstrate the favorable influence of ICT on economic growth in OIC nations in both the short and long term. Second, both urbanization and economic growth have a clear and substantial impact in the short and long term. Finally, our analysis supports the feedback hypothesis between ICT and economic growth. These novel empirical findings will help policymakers design ICT development policies to fulfill sustainable economic development in OIC countries.

KEYWORDS:

• Economic growth
• ICT
• OIC
• panel data
• urbanization

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Muhammad Noshab Hussain

Muhammad Noshab Hussain is a research scholar in the School of Economics and Finance at Xian Jiaotong University, China. His areas of interest are macroeconomics, transportation economics, tourism, information and communication technology, energy, and environment.

Zaiyang Li

Zaiyang Li is an assistant professor in the School of Economics and Finance at Xian Jiaotong University, China. His area of interest is macroeconomics, infrastructure development, tourism, and energy economics.

Shaohua Yang

Shaohua Yang is an associate professor and vice director of the Teaching Superintendence Center of the School of Economics and Finance at Xian Jiaotong University, China. Her areas of interest are macroeconomics, international business negotiations, organizational behavior, and world economic geography.

Mouna Benabdejelil

Mouna Benabdejelil is a professor at the High Commercial Studies Institute, University of Sousse, Tunisia. His areas of interest are fintech, energy economics, and macroeconomics.