Assessing the role of information and communication technology in reducing the gap between rich and poor: the case of South Asia

Abstract

PurposeThe widening income gap between rich and poor has gained worldwide recognition in recent decades. This income gap between rich and poor is defined as the extent of income unevenly distributed in a host country. This study provides an empirical view of the association between information and communication technology and the widening of the income gap.Design/methodology/approachThe study used panel data from 2005 to 2019. To detect unit root issues, Levin and Lin (LL) and Im, Pesaran and Shin (IPS) tests were first employed. The pooled mean group and mean group estimators were employed to investigate the short and long -term impact of information and communication technology and other control factors on reducing the gap between rich and poor in South Asia.FindingsThe results showed that the Pooled mean group's findings are more efficient and consistent as compared to mean group estimators. The results of the paper showed that the greater penetration of information and communication technologies in the economy negatively and significantly affects income inequality. Moreover, the information and communication technology, foreign remittances and foreign direct investment (FDI) significantly reduce the gap between rich and poor in the long run.Practical implicationsAt last, the findings of the study serve as an excellent roadmap for policymakers seeking to address the issue of growing income inequality in the South Asian regions and worldwide.Originality/valueBased on the findings of this study, South Asia can reduce the gap between rich and poor by investing more in the information and communication technology sector.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2021-0638