Who Enjoys ICT Development? An Investigation into the Role of ICT Development in Asian Countries Using Dynamic Panel Data

Paper in proceeding, 2010

Asian countries are at different development stages in the building of an information and communication technology (ICT) industry. Although East Asian countries, especially Japan and Korea, have reached a high penetration rate of broadband and telephony, most of the South and South-East Asian countries are still at the early stage of the diffusion process. It is even more interesting that some Asian countries have recently achieved robust growth in the penetration rate of particular ICT devices, for instance, cellular ones, amid sluggish socio-economic performance. This phenomenon raises the question of how the contribution by ICT affects society and who enjoys the development of this sector? In order to address these questions, this study aims to relate the network externality with regard to socio-economic variables included in the calculation of the Human Development Index (HDI): educational attainment and health (life-expectancy rate). The ICT variables of the analysis include the penetration rate of the fixed-line, Internet subscriber, computer and TV. The study covers roughly 35 selected Asian countries that represent all the sub-regions in Asia based on the World Bank and International Telecommunication Union’s database, and the figures range in time from 1983 to 2005. The study first identifies the unit root test and then builds cointegration between the series. As there are many gaps in the data, the Maddala-Wu (1999) estimation is implemented while the Westerlund (2007) cointegration test is applied to non-stationary series. The results are quite surprising in that most ICT device development has no statistical evidence of cointegration with socio-economic variables. Primary education has very weak cointegration with the development of ICT devices however. Thus, there is a need for further innovation in this sector to provide more socio-economic devices to support a better level of welfare.