How does the ICT affect human development? Evidence from developing vs. developed countries

Abstract

This study aims to assess the impact of information and communication technology (ICT) on human development (measured with the human development index – HDI). The authors have analyzed the countries with different development levels in order to identify the possible differences in these impacts when observing the level of income (development of the country). The paper uses a static panel data regression analysis, while a fixed-effects estimator (FE) is used for estimation. To address the possible endogeneity problem caused by reverse causality, we also perform a dynamic panel data regression using the Generalized Methods of Moments (GMM) estimator. The results support our hypothesis and show that ICT use and tertiary education positively affect human development, although the results vary by estimator. While in the case of the FE estimator, the effects are significant and positive across all observed countries, the results with the GMM estimators show a significant impact of ICT only in the case of upper-middle-income countries. However, it also implies that the lagged value of the HDI has significant and positive effects on the observed HDI. For economic policy, the results pinpoint the importance of ICT as a relevant instrument that can positively influence people’s lives directly or indirectly.