Information and Communications Technology (ICT) and Spillover: A Panel Analysis

The pervasive role of information and communications technology (ICT) in the new economy is well documented. There is now considerable agreement among scholars regarding the ICT contribution to national productivity growth. On the other hand, the production spillover and network externality associated with ICT capital draws its contribution beyond the neoclassical baseline. Many researchers have provided empirical evidence for the correlation between ICT spillover and national productivity. Nevertheless, the ICT spillover in international context is still an unexplored area. Inspired by the belief that ICT bears the features of knowledge capital, we conjecture that ICT-related knowledge spillover could happen in today’s open world economy. We conduct empirical tests on a balance panel of annual data series from a sample of 29 countries over period 1993-2001. The empirical results confirm the existence of international ICT spillover and the pattern of such spillover for two distinguished economic groups. With reference to these findings, policies in regard to promoting knowledge flow and trade openness are discussed for economies to fully reap the benefits of the international ICT spillover effect. * Corresponding author, Tel.: +65–68744866; Fax: +65-67794580; E-mail address: [email protected]